How Nigerian Tech Startups Raised Over $2bn From 2015 to 2022

A new report has highlighted how Nigeria is the most popular tech startup investment destination in Africa – between 2015 and 2022, 383 tech startups raised a combined US$2,068,709,445.

That is according to the Nigerian Startup Ecosystem Report 2022, released by startup-focused content and research company Disrupt Africa, which utilises Disrupt Africa’s datasets, expertise and networks to document what startups are doing in the country, who is making investments, and who is providing ecosystem support.

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It is released in partnership with Quona Capital, a venture firm focused on fintech that can expand access for underserved customers and small businesses in emerging markets; Sabi, Africa’s leading provider of commercial infrastructure for the distribution of goods and services; and MAX, which is building Africa’s largest mobility-tech platform. Other partners are Talking Drum Communications, Newtown Partners, Kwik, and LipaLater.

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Nigeria is the most popular investment destination on the continent. Between 2015 and 2022, 383 tech startups raised a combined US$2,068,709,445 – a higher total than any other country.

While the number of Nigerian startups raising funding grew steadily over the first few years of tracking, the real spike has occurred since 2020. That year, the number of startups securing funding shot to 85 from the previous year’s 48. In 2021, the figure almost doubled again, to 161. This year, by August 2022, 107 Nigerian startups had raised funding – well on track to beat last year’s figure again.

These 107 startups also account for almost a third of the total number of African companies (341) to have secured investment so far this year – a statistic far, far beyond any other country on the continent.

The growth in the total amount of investment secured by Nigerian startups has been phenomenal.  Back when Disrupt Africa records began in 2015, Nigerian startups raised a combined US$49,404,000. Fast-forward to August 2022, and so far this year US$747,908,000 has already been secured. This figure is just shy of Nigeria’s annual total of US$793,790,000 in 2021. As such, we can expect another stand-out figure by year-end.

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Nigeria was also home to the biggest round on record ever, earlier this year – fintech Flutterwave netted a US$250 million Series D round, reflecting both the enhancing maturity of the Nigerian ecosystem, and it’s prowess in the fintech space.

In fact, in Nigeria, it’s all about fintech. It has been the best funded of any sector each year since Disrupt Africa records began, and investment is only increasing. So far in 2022, the space has already attracted US$507 million – accounting for 67.8 per cent of Nigeria’s total funding for the year to date. The growth in the amount of investment going to Nigeria’s fintech sector is also astonishing, particularly so in the past couple of years when the total amount of fintech funding has begun to top the half billion dollar mark.

Nigeria also attracts the highest number of investors of any African country. Between 2015 and 2022, at least 641 entities made equity investments into the country’s tech startups. Compare this to the continent’s closest contenders, South Africa and Egypt, which have seen activity from 382 and 203 investors respectively over the same period, and the scale to which Nigeria is leading is evident.

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Growth in the annual number of investors in Nigeria has really taken off since 2020, when suddenly the number hit triple digits. That year there was activity from 133 investors. In 2021, the tally grew to 323. So far in 2022, 281 entities have made equity investments.

On acquisitions, Nigeria lags behind South Africa and Egypt when it comes to acquisitions of its startups, with only 15 such deals taking place since Disrupt Africa started tracking this data in 2016. That places the country third on the continent, accounting for 13.2 per cent of the 114 acquisitions that have taken place in this time period. 

M&A activity in Nigeria was almost non-existent until 2020, when the acquisition of fintech startup Paystack by global payments leader Stripe in October kicked off a new era of activity. With only six deals taking place between 2016 and 2020, a total of seven startups were acquired in 2021, accounting for almost half of all Nigerian startup buyouts.

Given there was such little activity until 2021, it is not surprising that there are no real trends to be found, yet the Paystack deal ignited M&A activity in Nigeria’s fintech space. Six of seven acquisitions in 2021 were of fintech startups, as were both the deals done so far in 2022.

A majority of these deals, eight in all, have been “intra-ecosystem” ones, with one Nigerian startup buying out another one. Indeed, Nigerian startups have proven themselves to be active acquirers, whether of local or international counterparts, with the likes of Autocheck, EdenLife and TradeDepot active in this regard in the last 12 months alone.

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A further six were what Disrupt Africa would refer to as genuine, bonafide exits for startup founders and their investors, where a successfully scaled, or quickly scaling, startup has been bought out by a larger, corporate entity – either local or international – for a significant cash fee. There was one investor acquisition.

The Nigerian Startup Ecosystem Report 2022 is available to all for free, making the data and analysis contained in its pages accessible to those for whom the information is most valuable – entrepreneurs.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry