In 2020, locally registered Nigerian firms raised a total of $64 million, which pales in comparison to the $241 million raised by South African startups.
The Nigerian startup ecosystem is expanding, and a number of incubation/innovation hubs have been established to help young entrepreneurs and foreign investors.
The demand for online payment processing companies has expanded as Ecommerce retailers and the freelance gig economy have grown in Nigeria. This has paved the way for the establishment of a slew of fintech businesses in Nigeria.
Fintech businesses are Nigeria’s most successful startups, attracting a large number of foreign investors for funding. In addition, health-tech businesses were the second most well-funded in 2020. Online e-commerce enterprises are also among Nigeria’s fastest-growing venture capital companies.
Here are a few instances of Nigerian startups that have been successful:
Flutterwave is a fintech firm that makes it simple to handle payments online in major African retail marketplaces. It is Nigeria’s fastest-growing fintech business, with many rounds of successful venture capital funding.
It closed a $35 million venture capital round in 2020, making it one of the largest in the Nigerian startup sector. Flutterwave is expected to commence active operations in Africa in the near future.
Flutterwave, one of Nigeria’s most valued businesses, became Africa’s fourth unicorn last year after earning $170 million in a Series C round.
In February of 2022, the firm added the icing to the cake by raising $250 million in its single-largest investment round to date, valuing the company at more than $3 billion, as it pursues mergers and acquisitions and expands its existing customer base.
This is yet another major Nigerian fintech and online payment processing company. Paystack has raised $8 million in venture capital and will be partially bought by Stripe in 2020 for a massive $200 million. This is one of Africa’s largest company purchase agreements.
About Paystack and Their Growth
Paystack, a payments business located in Lagos that assists merchants in accepting payments from clients, has evolved to the point that it now processes more than half of Nigeria’s online transactions.
Currently, the network is used by over 60,000 businesses in Nigeria and Ghana to collect online and physical payments.
Paystack was the first Nigerian firm to be accepted into Y Combinator (YC), a seed-stage accelerator based in the United States.
Their success in YC paved the way for more Nigerian businesses to join, gain access to foreign capital, and raise considerable amounts of money.
Stripe, a US payment behemoth, purchased Paystack for more than $200 million (76 billion) in 2020. Paystack was bought by Stripe in order to speed up online commerce in Africa.
Stripe led a $8 million Series A investment for Paystacks in 2018, which included Visa, Tencent, and others.
The Stripe-Paystack partnership has marked a watershed moment in Nigeria’s startup industry. The new “Paystack” will attract even more investors. Nobody wants to be the last one standing.
Remita is one of Nigeria’s biggest online payment processing firms, handling the majority of local internet payments. The Nigerian government uses it to make payments easier throughout the country’s various government entities.
Internet Banking, Debit/Credit Cards, Bank Branch, POS Terminals, Mobile Wallet, Cash Agents, mPOS, Direct Debit, Standing Order, and Electronic Purse are just a few of the payment options available through Remita.
It is completely free to set up Remita for your company.
Remita charges 2% for domestic transactions and 4% for international transactions.
Doctors on the Move
This is a health-tech company that provides air ambulance services to those in need of immediate medical care. The company has expanded its services throughout Nigeria, saving many lives as a result of its on-demand emergency health care services.
Lifebank is a healthtech firm that ensures that patients in need of blood transfusions get the blood they need as soon as possible. Lifebank has made it easier to get blood products to people in rural locations and to people who need emergency blood transfusions. Since the beginning, the creator has also garnered international grants and honors.
This is a web-based e-commerce platform that connects car owners (sellers) with potential buyers. Cars45 has received $5 million in venture capital funding.
Nigeria’s Most important Business Concepts
Many issues face Nigerian society, providing opportunity for new businesses. Consider the following undiscovered business opportunities:
Nigeria has a wide area for agricultural activities, and because of its growing population, there is a steady demand for food crops and livestock products such as meats and poultry.
Through the central bank of Nigeria, the federal government intends to diversify the economy and lessen reliance on crude oil products by granting subsidies to agricultural business owners.
If you have an agricultural company idea, the Bank of Agriculture of Nigeria, a bank committed to offering grants to agricultural entrepreneurs, can help you get funding.
Natural gas and oil
Nigeria’s abundant crude oil allows entrepreneurs to develop private enterprises such as local petrol stations, the manufacturing and sale of petrochemical products such as engine oil and paints, the sale and distribution of cooking gas, and so on.
Logistics and Transportation
Because some manufacturing enterprises are located distant from retail locations that are accessible to consumers, transportation businesses are required. Logistics companies are in high demand to assist in the transportation of large objects and products from one point to another.
You can choose from a variety of markets to serve, such as building materials and consumer product transportation.
Management of waste
The amount of waste generated and the necessity to keep the environment clean have overwhelmed the government at all levels. In Nigeria, poor trash recycling is a serious issue.
This creates a financial opportunity for private waste management and recycling companies to come in and collect, recycle, and dispose of individual and industrial garbage properly.
Real Estate Demand for available housing in urban areas has increased as a result of urbanization. People are constantly on the lookout for residences to rent or buy. As a result, you may start a real estate firm that offers house deals to customers looking to rent or buy a home.
Designing for the Fashion Industry
Nigerians dress up for special occasions such as birthdays, anniversaries, and burial rites. This is a great business idea if you are a talented fashion designer, because these socialites require a fashion designer to sew the clothes for each event.
In addition, there is an increase in the number of private primary and secondary schools, which may require fashion designers to create school uniforms for their kids.
5 Entrepreneurial Skills for Starting a Business in Nigeria
The Nigerian business climate has its own set of characteristics and challenges.
You must study and gain the following abilities in order to run and grow your business in Nigeria:
- Creativity: You’ll need a steady stream of ideas to offer your company an edge over its competitors, so this is a must-have ability.
- Marketing: To recruit and retain customers, you must have good marketing skills.
- Financial abilities: Your ability to track and manage income and expenses impacts the possibility for your business to expand.
- Administrative/human resource: Hiring the right people to assist manage and run your organization efficiently requires solid judgment and interpersonal skills.
- Resource management: Nigeria’s resources, such as power and capital, are limited. Entrepreneurs must be able to make the best of limited resources in order to service their clients and achieve their business objectives.
Fintech, health-tech, and e-commerce startups are among the fastest-growing venture-backed businesses.
To succeed as a Nigerian entrepreneur, you must develop particular business abilities such as inventiveness and resource management in order to deal with the country’s difficult business environment.