Why has Nigeria fallen behind in startup funding after four years of dominance?
Nigeria once dominated Africa’s startup funding, but in 2025 it’s trailing Kenya, South Africa, and Egypt—we unpack the numbers and the reasons behind the slip.
For much of the last decade, Nigeria wore Africa’s startup crown. Ask where the continent’s next unicorn would come from, and the safe bet was Lagos: a fintech giant in the making, an e-commerce disruptor, or another scrappy upstart drawing millions from Silicon Valley.
But in 2025, that crown has slipped. Badly. By August, African startups had already raised about $2.8 billion across 500+ deals, more than the $2.4 billion raised in the same period last year.
Yet Nigeria, once the biggest magnet for venture dollars, managed just $186 million (via Briter Bridges’ Africa Venture Pulse). That’s less than a quarter of Kenya’s $879 million, behind South Africa’s $848 million, and even dwarfed by Egypt’s $561 million. For the first time in four years, Nigeria sits at the bottom of Africa’s “Big Four” startup ecosystems.
That’s not just a dip. It’s a reversal. In 2024, Nigeria led the pack with $353 million by August. In 2021, it pulled in more than $1.7 billion; more than Kenya, Egypt, and South Africa combined. Today, the giant looks diminished.
From dominance to decline
The irony is that Nigeria still produces more startups than anywhere else on the continent. By September 2025, Tracxn counted over 20,600 startups in Nigeria—compared to about 8,000 in Egypt, 6,000 in South Africa, and 3,500 in Kenya. On raw entrepreneurial energy, Nigeria still dwarfs its rivals.
But if you’re an investor, you don’t back headcounts; you back momentum. And this year, momentum shifted south. South Africa hosted Africa’s first healthtech mega-deal when hearX pulled in $100 million through a merger with U.S.-based Eargo.
Cleantech, largely concentrated in South Africa, has pulled close to $1 billion this year alone, mostly through debt financing. Kenya, meanwhile, has cemented its reputation as a hub for impact-driven and climate-focused startups, luring investors with a mix of scale and purpose.
Nigeria's fintech stars remain strong, but the nine-figure rounds that once defined its dominance have dried up. Global capital is tighter, and this year, it has chosen elsewhere.
The weight of macro headwinds
Numbers only tell part of the story. The bigger drag is Nigeria’s domestic climate. Currency devaluation has shredded dollar returns. Inflation is running in double digits. Political and regulatory uncertainty keeps investors second-guessing.
And then there’s the “japa” problem: Nigeria’s brightest engineers and product managers, the very people who built Flutterwave, OPay, and Andela, are leaving in droves for jobs abroad. If you’ve watched friends board that flight, you know the sting. When your strongest asset, talent, is hollowed out, confidence at home inevitably suffers.
For years, blockbuster fintech raises have papered over these cracks. But by 2025, the cracks are too wide to ignore.
A recalibration, not a collapse
Not everyone sees Nigeria’s slump as a straight decline. At GITEX Nigeria 2025, Yemi Keri, president of the African Business Angel Network, argued the downturn is part of a continental recalibration.
“It is not a peculiar problem for Nigeria,” she told Business Insider Africa. Investors, she explained, “have sort of withdrawn” across Africa, realizing their assumptions didn’t fully hold. In her view, this isn’t abandonment; it’s regrouping.
That regrouping has raised the bar. Foreign investors now want local capital on the table first. “One of the things that they are looking for mostly is for local investors to have started to invest in companies before they do so,” Keri said. Translation: global VCs want proof of domestic skin in the game.
And she stressed something the numbers miss: Nigeria’s ingenuity hasn’t gone anywhere. If you’ve ever handed your card to a roadside POS agent under an umbrella when the networks go down, you’ve seen the kind of scrappy innovation Keri was talking about. This is the DNA that birthed Moniepoint, OPay, and Flutterwave. “We understand problems. We are way ahead.”
In other words, the heartbeat is still there, even if the funding isn’t.
Kelechi Edeh
Geography decides the money
Still, the recalibration hasn’t been equal. If Nigeria is regrouping, its rivals are capitalizing. Kenya’s $879 million haul this year reflects not just investor appetite, but also a friendlier policy climate and startups aligned with global impact trends. South Africa’s resurgence has been fueled by cleantech and cross-border mergers, while Egypt continues to tap Gulf investors despite its own macro pressures.
Geography, in other words, is now shaping Africa’s venture map. Nigeria may have the largest market and the deepest founder pool, but investors don’t fund size alone. They fund confidence, policy clarity, and momentum—three things Kenya and South Africa are projecting more effectively right now.
What comes next
So, does this mean Nigeria is finished as Africa’s startup leader? Hardly. Its fundamentals remain staggering: a massive, youthful population, expanding data infrastructure, and an entrepreneurial culture that doesn’t quit. Global names like Visa, QED, and the Gates Foundation still see Nigeria as a market too big to ignore.
But here’s the truth we can’t avoid: reputation alone won’t bring the dollars back. Nigeria has to fix its macro mess, reassure investors, and crucially diversify beyond fintech. Otherwise, the story risks repeating: plenty of startups, not enough scale, and not enough capital.
For now, Kenya and South Africa are writing Africa’s funding story. Nigeria, the onetime star of the show, is watching from behind; proof that in venture capital, the crown doesn’t stay put. We all know this much: in this game, you have to earn it, deal by deal, year after year.
