Nearly half of venture-backed Nigerian startups founded within the last ten years make less than ₦10 million ($6,000) in annual revenues, according to a new report by TLP Advisory, a venture capital law firm. 49% of startups surveyed in the report generate less than ₦10 million a year, while only 15% generate above ₦250 million ($149,000) annually.
These startups attributed their financial struggles to the lack of sufficient capital which slows their ability to grow and expand, limited market reach due to poor marketing, lack of clear regulatory policies, and their revenue models needing revamp. 16% of them say they have not grown in the last decade and 8% say they’re unsure if they’re growing at all.
“One thing you learn as a founder in Africa is the resilience and grit that’s required, because the market moves crazy, and you need to be crazier than it in some way,” said Ifeoluwa Dare-Johnson, CEO of health-tech startup, Healthtracka.
Raising capital is a challenge for most Nigerian startups, with 30% of the startups stating that it took them at least four years to secure their first funding. Founders cited stress, complex processes, and lack of information and access to investors as reasons why they’ve been unable to raise capital.
11% of the founders surveyed who started their companies in 2024 said they did not require external capital—funding their operations through personal savings or alternative forms of financing. Other founders said the high interest rates have deterred them from seeking funding opportunities with venture capital (VC) firms.
“People who raised money in US dollars, who are earning in Naira, and who have to report to investors who invested in US dollars, need to be doing almost three times more work and earning three times more income because the currency has devalued by more than 70%,” said Femi Longe, co-founder and non-executive director of Nigeria-based accelerator, CcHub.
Yet, there are signs that founders are adjusting to the whole process of raising capital, as nearly one-third of them raised money to run their startups during their first year.
Beyond VC funding, alternative funding sources have played a role in driving growth for Nigerian startups. Angel investors (including family and friends) have been the most significant contributors, supporting 43% of startups, while 18% have turned to debt financing, and 15% have relied on grants to lift off.
Talent churn, another problem particularly common in marketing departments which has led to inadequate marketing activities, has stalled visibility and growth for these startups. This could be due to the lack of any identifiable company culture as they struggle to retain talent. 20% of these Nigerian startups admitted to not having any identifiable company culture.
The flying remote work culture and the transferability of tech skills into different roles and industries have made job-hopping easier. Companies without a strong culture that prioritise employee welfare, stability, job engagement and satisfaction, as well as offer no clear route to career advancement, will bear the brunt of talent loss.
“Culture is what your company rewards and what your company punishes. So, the kind of behaviours that get you promotions and bonuses are the behaviours that, over time, get embedded into the company culture,” said Tomiwa Aladekomo, CEO of Big Cabal Media.
Founders also highlighted the regulatory environment of Nigeria as one of the barriers to business growth.
Taxes, compliance requirements, and licencing processes are particularly challenging for these businesses. Yet, founders hope that things will change soon, with some calling for stronger collaboration with policymakers under the Nigerian Startup Act, aimed at simplifying regulations and supporting innovation.
“It’s still day zero because if you look at our trajectory against other markets like India and Latin America, they’re probably 10-15 years out so it’s still a journey to go,” said Olumide Soyombo, founder of Voltron Capital.
