Within the past decade, many Nigerian startups funded by venture capital are facing financial challenges, with almost half generating less than ₦10 million in annual revenue. These struggles are attributed to issues like inadequate capital, limited market reach, unclear regulatory policies, and the need to revamp revenue models. Some founders have managed to sustain their operations through personal savings or alternative financing methods due to difficulties in securing external capital.
Raising funds remains a major hurdle for Nigerian startups, with complex processes and limited access to investors delaying the funding process for many founders. Despite these challenges, some startups have been able to secure funding within their first year of operation, and alternative sources like angel investors, debt financing, and grants have also contributed to the growth of these businesses.
Talent retention is another significant issue affecting these startups, particularly in marketing departments. The lack of a defined company culture and inadequate employee welfare programs have led to high turnover rates, hindering growth and visibility. Founders also face regulatory barriers in Nigeria, including tax obligations, compliance requirements, and licensing processes, which impact business growth.
While there are ongoing efforts to simplify regulations and support innovation through initiatives like the Nigerian Startup Act, founders acknowledge that there is still a long way to go in creating a conducive environment for startup growth in the country.