Nigeria’s Tech Crisis: Why 49% of Our Startups Struggle to Make ₦10M a Year

A recent report by TLP Advisory has confirmed what many in Nigeria’s tech space have been quietly worried about: almost half of our tech startups make less than ₦10 million (about $6,000) a year. To put it simply, many small shops in Lagos might be making more money than these startups, which are meant to be the future of Nigeria’s innovation.

The Hard Facts

The numbers are worrying. While we hear stories of big investments and billion-dollar valuations, the truth is, 49% of Nigerian tech startups founded in the last 10 years are barely surviving. Only 15% earn over ₦250 million (about $149,000) a year. Even worse, 16% have seen no growth in a decade, and 8% don’t even know if they’re growing. These aren’t just numbers; they’re signs of deep issues in our tech industry.

Struggles with Funding

Getting funding is another big challenge. About 30% of startups take more than four years to secure their first investment. This shows that the system isn’t working as it should.

Femi Longe, co-founder of CcHub, points out that startups raising money in US dollars but earning in naira face serious problems because the naira has lost over 70% of its value. This means they must work much harder to meet investor expectations. It’s a tough situation.

Talent Problems and Culture Gaps

Another major issue is that 20% of startups say they don’t have any clear company culture. This is a big mistake, especially now that workers can easily find remote jobs with companies worldwide.

Tomiwa Aladekomo, CEO of Big Cabal Media, explains it simply: “Culture is what your company rewards or punishes.” Without a strong culture, startups will struggle to keep their best workers.

Beyond Just Raising Money

Many startups focus too much on raising funds instead of making real money. While 43% have turned to angel investors and 18% rely on loans, this mindset is hurting the industry. Interestingly, 11% of founders who started their companies in 2024 without outside funding seem to have the right idea. They’re focusing on building businesses instead of just creating flashy presentations for investors.

Dealing with Regulations

Nigeria’s rules and regulations make life harder for startups. Complicated tax systems, licensing, and compliance requirements take up too much time and energy, leaving founders with less time to focus on their products.

Going Forward

Olumide Soyombo of Voltron Capital reminds us, “It’s still early days. When compared to markets like India or Latin America, we’re about 10-15 years behind.” This means we still have time to grow, but we need to act fast and wisely.

Here’s what needs to change:

1. Focus on earning money, not just raising it.

2. Build business models that work for Nigeria’s economy.

3. Create strong company cultures to keep talented workers.

4. Solve real Nigerian problems with your products.

5. Make government rules easier for startups to follow, using tools like the Nigerian Startup Act.

Why It Matters

This isn’t just about whether startups succeed or fail. It’s about the future of Nigeria’s economy. If we can’t build successful tech companies now, we risk falling behind other countries as the world goes digital.

Nigerian tech has the talent and the market to succeed. But we must be honest about what’s not working and start fixing it.