A Guide To Starting your Tech Investment Journey in Nigerian Startups

Nigeria is quickly emerging as a center for entrepreneurship and great inventions, and its startup scene is becoming well-known throughout the world. This on its’s own offers prospective investors a fantastic chance to participate in a thriving and expanding market.

Investing in Nigerian startup businesses can be financially profitable, as you probably know. Observe Moniepoint reach the unicorn status and assessed how much an early investor may have profited. Even how Paystack’s 2022 purchase changed the game for Nigeria’s digital economy by proving that businesses can generate massive windfalls, and you’re eager to capitalize on those windfalls.

Potentials abounds in the African startup landscape. It’s a thriving ecosystem that is ready for investment and bursting with creativity.

However, there are drawbacks to funding African entrepreneurs. It calls for a sharp eye for prospects and a thorough awareness of the local marketplace. This article will help and guide through salient things/steps to take on the journey.

Why choose Nigerian startups?

First off, the startup scene in Nigeria is a vibrant and quickly changing environment. It is fueled by a youthful, tech-savvy populace ready to tackle regional problems. Many Nigerian businesses use technology to solve real-world challenges. OPay, Moniepoint, and PalmPay were linked with successful purchases in 2023, as Nigerian bank apps struggled to meet increased demand during the cash shortage.

Important industries including agri-tech, fintech, and e-commerce are expanding rapidly. The nation’s digital transformation and the growing availability of mobile technologies are the main drivers of this increase.

Nigerian startup ecosystem has the following salient characteristics:

• A youthful, technologically adept populace.
• Quick changes in digital.
• Dominance of industries such as e-commerce, agri-tech, and fintech
• The development of technology centers around the continent

Nigerian start-ups are inventive. Touch & Pay (Cowrycard), a thriving firm that processed billions in 2024, introduced contactless payments to many Nigerians. In Lagos, Africa’s second-most populated metropolis, all passengers on government-run public transportation must pay with Cowry cards. CashAfrica even allows Nigerians to make contactless payments using their phones, and while the majority of startup investments are long-term commitments that require exit options like acquisitions and IPOs, there is still a possibility to earn a quick cash by investing in companies through secondary share sales.

How can I start investing in Nigerian tech startups?

There are various options for investing in Nigerian startups. As an angel investor, you can invest N5,000 to N10,000 in early-stage firms in exchange for stock through syndicates in some brands, which help to mitigate risk by pooling resources, knowledge, and networks with other angel investors.

You can also invest through small-ticket investment platforms like which allows you to contribute as little as N100 in exchange for shares in some firms.

What characteristics should you look for in a startup?

It is vital to undertake due diligence before investing in startups anywhere in the globe, including Nigeria. Before investing, make sure you understand the startup’s team. After studying about the founders, you should be confident that they have the necessary talents, expertise, and motivation to succeed.
You should also be convinced that the startup’s proposed solution will solve the problem at hand. Ideally, the startup should operate in a broad and growing market. It should also have significant customer growth, revenue milestones, and collaborations. To increase your chances of making a successful investment, the business should be able to scale swiftly without incurring significant costs.

In addition, you should evaluate their financial accounts to determine the startup’s burn rate and runway, ensuring they have a clear path to sustainability or profitability.

What risks should you be aware of?

Among the many dangers associated with investing in Nigerian companies is the unpredictability of regulations. Regulators prohibited five fintech companies from enrolling new clients in April 2024 and levied fines of up to ₦1 billion. Nigeria’s regulatory environment is infamously unstable and can well pose a risk to investments, so take not this.

Additionally, since startup investments are frequently long-term with few options for rapid exits, you will probably have to wait for acquisitions or initial public offerings (IPOs) before seeing any profits.

How can risks be decreased?

Begin modestly. As you develop startup investment experience, you should start with a sum that you can afford to lose To lessen your exposure, think about distributing your assets among several firms to create a portfolio.

Remember to keep an eye on the startup’s development as well. Requesting frequent investor reports can help you stay in touch with the businesses in your portfolio, monitor their progress, and handle any issues that may arise.

One interesting method to encourage innovation and maybe generate substantial rewards is to invest in Nigerian companies. You may make wise decisions, support the expansion of Nigeria’s vibrant startup ecosystem, and generate lucrative profits with careful research, a well-defined plan, and a willingness to take measured risks.

Conclusion

Investing in Nigerian companies presents a special chance to enter a market that is expanding quickly.

However, it necessitates a long-term investment approach, due investigation, and a thorough understanding of the local ecology. Yes, there are certain difficulties associated with investing in Nigerian startups, but there are also a lot of possible benefits. For investors looking to diversify their holdings and support the economic expansion of the continent, it’s an exciting frontier.