TLP Advisory has revealed that 49% of Nigerian startups, founded in the last decade, generate less than ₦10 million ($6,000) in annual revenue.
This degeneration signals significant financial struggles for the country’s emerging businesses.
In contrast, only 15% of these startups report annual earnings exceeding ₦250 million ($149,000).
The report highlights several challenges that these startups face, including limited capital, inadequate marketing, and regulatory barriers.
Many founders attributed their struggles to the difficulty of raising funds, poor market reach, and the need to revise their revenue models.
Alarmingly, 16% of startups surveyed reports no growth over the past ten years, while 8% are uncertain about their growth trajectory.
CEO of health-tech startup, Healthtracka, Ifeoluwa Dare-Johnson, in his comment reflects the tough reality of navigating Nigeria’s volatile startup environment as raising capital continues to be a major hurdle.
“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.”
According to the report, 30% of startups took over four years to secure their first funding, with many founders citing stress, complex processes, and limited access to investors.
Moreover, 11% of the 2024 founders did not require external capital and self-funded their businesses through personal savings or other financing options.
High interest rates are also a deterrent, pushing many founders away from venture capital (VC) firms.
Additionally, the co-founder of Nigeria-based accelerator, CcHub, Femi Longe, added that:
“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%.”
Despite these obstacles, many founders are learning how to better navigate the fundraising landscape.
Nearly a third of startups managed to raise funds during their first year of operation, with angel investors (including family and friends) being a primary source of financial support for 43% of startups.
While 18% used debt financing, and 15% relied on grants to boost their operations.
