It was reported that in Q1 of 2024, Nigerian startups received 35% ($160m) of Africa’s total  $466m investment, the bulk of which was Moove’s joint equity and debt financing of $110m.

It was reported that in Q1 of 2024, Nigerian startups received 35% ($160m) of Africa’s total  $466m investment, the bulk of which was Moove’s joint equity and debt financing of $110m. In Q2, however, the total funding received on the continent amounted to $314m. From all public funding announcements gathered, Nigeria’s contribution was only 2.8% of that, with $8.9m across three startups.

While investments keep dropping on the continent, the Q2 figures for Nigeria are poor and indicate a continuous decline in investments in the country’s startups. Nigeria, which once accounted for 30% ($4.4bn) of the continent’s total $15bn investments since 2019, has been depreciating in funding dominance.

According to a 2023 report by Africa: The Big Deal, this is what funding distribution looked like among the continent's ‘big four’ from 2021 to 2023.

In 2021:

In 2022:

‍In 2023:

Source: Africa: The Big Deal (2023)

While Nigeria consistently maintained the highest receiver position from 2019 to 2022, that dropped in 2023 and is still dropping in 2024. According to The Big Tech’s report for the first half of 2024, Kenya remains in the lead with $244m, Nigeria with $172m, Egypt with $101m, and South Africa with $85m.

The rest of this report will examine the three Nigerian startups that received funding this quarter and the one acquisition, as well as what all of this means for the Nigerian tech sector.

Nigerian Startups that Raised Funding in Q2 2024

According to the funding announcements available when writing this, only three Nigerian startups were found to have raised funding in this quarter. No announcements were published in June.

Chowdeck

The food delivery, aka logistics tech startup, reportedly raised $2.5m in seed funding in April 2024 to optimise operations and support expansion into more cities across the country. This round included investments from YCombinator, Goldwater Capital, Founder XVentures, Shola Akinlade and Ezra Olubi (co-founder of Paystack), among other investment companies and individuals.

Seamfix

Seamfix, a digital identity solutions company, raised $4.5m in equity funding from Alitheia IDF in May. This funding round aims to facilitate the startup’s expansion to other African countries with a more stable dollar rate. These target markets include Ghana, Kenya, and South Africa.

Renda

Renda is a three-year-old  Nigerian logistics tech company that provides end-to-end fulfilment and retail distribution for businesses in Nigeria and Kenya. In May, TechCrunch reported Renda’s pre-seed raise of $1.9m in equity and debt funding. Their equity raise of $1.3m was led by Ingressive Capital, with contributions from other venture capital firms. Meanwhile, Factory Africa and SeedFi contributed $600,000 in debt funding. With this funding, Renda plans to improve its offerings and expand into more cities across Nigeria and Kenya.

The Nigerian Startup Acquired in Q2 2024

Unlike in Q1, when there was no acquisition news, in May, Brass Banking, a digital bank for small and medium enterprises (SMEs), was acquired or bought by Paystack and PiggyVest. The acquisition does not directly impact customers, as the business remains the same. Only the co-founders have had to exit the company as part of the deal, meaning that all of Brass’s assets and liabilities now belong to the new owners.

What All This Means for the Nigerian Tech Industry

While investments in the ecosystem have drastically reduced over the years, especially in early-stage startups, the number of startup shutdowns or folding news has also increased in the country. Many of them cite the inability to secure funding, no product-market fit, or misuse of funds as the reason why. There are possible solutions or suggestions to help with this issue:

• There is a need for more local-based investors or investment companies: While quite some exist currently, like Ingressive Capital, which led Renda’s fund round, an increase in homegrown venture firms focused on the local market and ideas can help provide an alternative source of funding for startups.
• More focus and investment in market research: To understand product-market fit, more new founders need to invest in learning the market and how their product will fit in and eventually scale. An idea may seem lucrative on paper, but if it is not the right market for it, it simply isn’t.
• A change in investor-founder relationships: For investors who may now distrust investing in Nigerian startups, especially those by first-time founders, placing extra focus on due diligence and a more hands-on investment approach could be a solution. Instead of only giving money to an idea, working closely with the founders to manage assets and growth should be a significant part of the process.

As reported for Q1, there has been a shift in investment interest from FinTech to transport or logistics tech, a trend that once again repeated itself in Q2 and across Africa in H1. This may be a good time for startups looking to pivot into logistics to research the market and make that move.

References

Africa: The Big Deal. (2024, January 8). 2023 Big Four Domination. https://thebigdeal.substack.com/p/2023bigfour

Africa: The Big Deal. (2024, July 4). “H1 2024: A slow start of the year.” https://open.substack.com/pub/thebigdeal/p/h124sum?utm_campaign=post&utm_medium=web

Africa: The Big Deal. (2024, June 10). “May (not meh).” https://open.substack.com/pub/thebigdeal/p/may2024?utm_campaign=post&utm_medium=web

Chowdeck. (2024, April 30). Chowdeck Secures $2.5 Million Seed Funding to Optimize On-Demand  Food Delivery In Nigeria. https://chowdeck.com/blog/Chowdeck-secures-2-point-5-million-seed-funding-to-optimize-on-demand-food-delivery-in-Nigeria

TechCabal. (2024, May 7). Identity company Seamfix raises $4.5 million in first funding round to expand outside Nigeria. https://techcabal.com/2024/05/07/seamfix-raises-4-million/

TechCabal. (2024, May 28). Paystack-led consortium acquires Brass, replaces CEO. https://techcabal.com/2024/05/28/paystack-leads-investors-in-brass-acquistion/

TechCabal. “Shutdown tag.” https://techcabal.com/tag/shut-down/

TechCrunch. (2024, May 2). “Renda, which provides order fulfilment  for businesses in Africa, takes in $1.9 million.” https://techcrunch.com/2024/05/02/renda-which-provides-order-fulfillment-for-businesses-in-africa-takes-in-1-9m/

Veriv Africa. (2024, June 3). “How The Nigerian Tech Industry Performed in Q1 of 2024: Funding and Growth Areas.” https://www.verivafrica.com/insights/how-the-nigerian-tech-industry-performed-in-q1-of-2024-funding-and-growth