Nigerian startups are currently navigating significant hurdles, from funding constraints to talent shortage, amidst regulatory complexities.
This is according to a new report by TLP Advisory, which highlights the state of Nigeria’s tech-driven innovation landscape and offers actionable recommendations for building a resilient ecosystem.
The report titled, “A Decade of the Nigerian Venture Ecosystem: Numbers, Insights & Stories” noted that while 2021 marked a high point for Nigerian startups with $3 billion in venture capital investments, 51% of startups surveyed have been facing difficulties in securing funding due to currency devaluation and limited investor access.
It was, however, that Angel investors have emerged as a vital funding lifeline during this turbulent period, stepping in to fill gaps left by larger investment bodies.
Talent and regulatory framework issues
The report further revealed that Nigerian startups are struggling to attract and retain top talent, an issue compounded by a highly competitive labour market.
- TLP Advisory in the report noted the importance of efficient operations and customer-focused strategies as key survival mechanisms for these enterprises.
- However, complex regulatory frameworks remain a significant obstacle, with 30% of startup founders identifying these challenges as a primary concern.
- The report calls for more effective collaboration between policymakers and the startup ecosystem, particularly under the Nigeria Startup Act, which provides a legal framework to support innovation-driven enterprises.
Recommendations for strengthening the ecosystem
The report outlines several strategies for fostering a robust startup ecosystem, which include:
- Deepening Strategic Partnerships: Strengthening collaborations between startups and corporates to open new markets and navigate regulatory challenges.
- Investing in Talent Development: Addressing skill gaps to improve talent acquisition and retention.
- Engaging in Policy Development: Actively participating in policy discussions to create a supportive regulatory environment for startups.
Insights from key ecosystem players
Commenting on the report, co-founder of TLP Advisory, Odunoluwa Longe, expressed optimism for the Nigerian tech ecosystem despite the challenges, saying:
“This report reflects both the resilience and evolution of the Nigerian tech ecosystem. It’s not just about technology; it’s about building a future where founders, investors, and the public sector work together to make Nigeria a leader in innovation and digital solutions.”
Executive Director of FATE Foundation, Adenike Adeyemi, highlighted the impact of an unstable regulatory environment:
“Founders here often have to navigate unique complexities, and a supportive policy framework is essential for unlocking their full potential.”
Kola Aina of Ventures Platform emphasized the need for proactive policy engagement, stating:
“The ecosystem must become more deliberate and take the job of engaging in government policy design more seriously, ensuring we shape the policies that govern our industry.”
What you should know
Launched in 2014, TLP Advisory has advised over 250 clients in the Nigerian technology and venture ecosystem on transactions ranging from institutional investments, M&A, intellectual property, international expansion strategies and more.
- TLP was also one of the only two law firms that drafted the landmark 2023 Nigerian Startup Act, which created the legal framework for key regulatory bodies to provide an enabling environment and support to startups in Nigeria.
- In addition to its data-driven insights, the TLP Advisory report features stories from prominent ecosystem players, including Odunayo Eweniyi (Piggyvest), Nichole Yembra (The Chrysalis Co), and Olumide Soyombo (Voltron Capital).
These narratives provide a closer look at the challenges and opportunities that define Nigeria’s innovation landscape.