According to a recent analysis by venture capital law firm TLP Advisory, nearly half of funded Nigerian businesses established in the previous ten years generate less than ₦10 million ($6,000) in revenue annually. Just 15% of the startups polled in the report make more than ₦250 million ($149,000) annually, while 49% make less than ₦10 million.
These firms ascribed their financial difficulties to a number of factors, including inadequate funding that hinders their growth and expansion, a restricted market reach brought on by subpar marketing, unclear regulations, and the need to update their revenue models. Eight percent say they are not sure if they are growing at all, and sixteen percent claim they have not grown in the past ten years.
Most Nigerian entrepreneurs struggle to raise money; according to 30% of them, it took them at least four years to get their first round of funding. The founders attributed their inability to raise funds on stress, intricate procedures, and a lack of knowledge and access to investors. According to 11% of the entrepreneurs questioned who launched their businesses in 2024, they were able to finance their operations using their own funds or other sources of money and did not need outside assistance. According to some founders, the high interest rates have discouraged them from looking for venture capital (VC) firm investment options.
According to Femi Longe, co-founder and non-executive director of the Nigerian accelerator CcHub, “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%.” However, given that almost one-third of entrepreneurs raised funds to operate their firms in their first year, there are indications that they are getting used to the entire process.
Alternative funding sources, in addition to venture capital, have contributed to the expansion of Nigerian companies. The largest donors have been angel investors, which include friends and family. They have helped 43% of firms get off the ground, compared to 18% who have resorted to debt financing and 15% who have relied on grants. These firms’ visibility and progress have been halted by talent churn, another issue that is especially prevalent in marketing departments and has resulted in insufficient marketing efforts. Their inability to retain personnel may be the result of their unrecognizable corporate culture. Twenty percent of these firms in Nigeria acknowledged that they lacked a distinct corporate culture.
Job-hopping has become easier due to the culture of remote work and the transferability of computer skills across industries and jobs. The loss of talent will be felt most acutely by organizations that lack a strong culture that places a high priority on employee welfare, stability, job engagement, and satisfaction, as well as providing no clear path to career advancement.
