Venture Capital - Nigeria

Nigeria

Highlights

The country in Nigeria is expected to see a Total Capital Raised in the Venture Capital market market reaching US$543.00m in 2024.
WithNigeria, Later Stage is set to dominate the market with a projected market volume of US$495.50m in 2024.
In global comparison, the United States will lead in Capital Raised, with US$136.6bn expected in 2024.
Nigeria's Venture Capital market is experiencing a surge in tech startups attracting international investors, signaling a growing interest in the country's innovation ecosystem.

Key regions:

Market definitionIn-Scope/Out-of-scopeMarket structureReportsMethodology

The Venture Capital market in Nigeria has been experiencing significant growth and development in recent years.

Customer preferences: Entrepreneurs and startups in Nigeria are increasingly turning to venture capital as a source of funding for their business ideas. This is driven by the fact that venture capital firms not only provide financial support, but also offer valuable expertise, mentorship, and networking opportunities. Entrepreneurs are attracted to the potential for rapid growth and scalability that venture capital funding can provide. Additionally, venture capital investors are often willing to take on higher levels of risk compared to traditional lenders, making it an attractive option for startups with innovative ideas.

Trends in the market: One of the key trends in the Venture Capital market in Nigeria is the increasing focus on technology startups. Nigeria has seen a surge in tech-enabled businesses, particularly in sectors such as e-commerce, fintech, and healthtech. This trend is driven by the growing internet penetration and smartphone adoption in the country, as well as the large youth population with a strong entrepreneurial spirit. Venture capital firms are actively seeking out these technology startups, recognizing their potential for high returns on investment. Another trend in the market is the rise of local venture capital firms. In the past, foreign venture capital firms dominated the Nigerian market. However, there has been a shift towards the emergence of local venture capital firms that have a deep understanding of the local market and can provide tailored support to Nigerian entrepreneurs. This trend is driven by the increasing number of successful tech startups in Nigeria, which has created a pool of experienced entrepreneurs who are now becoming venture capitalists themselves.

Local special circumstances: Nigeria's large population and growing middle class present a unique opportunity for venture capital investors. The country has a vibrant consumer market with a strong demand for innovative products and services. This provides a fertile ground for startups to scale and grow rapidly with the support of venture capital funding. Additionally, Nigeria's strategic location in West Africa makes it an attractive market for regional expansion, further adding to its appeal for venture capital investors.

Underlying macroeconomic factors: The Venture Capital market in Nigeria is also influenced by macroeconomic factors. The country has been experiencing steady economic growth, driven by sectors such as agriculture, manufacturing, and services. This growth has created a favorable business environment for startups and has attracted the attention of venture capital investors. Furthermore, the Nigerian government has implemented policies and initiatives to support entrepreneurship and innovation, including tax incentives and the establishment of startup incubators. These factors have contributed to the development of the Venture Capital market in Nigeria and are expected to continue driving its growth in the future.

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.