In early 2021, Nigeria’s tech ecosystem seemed unstoppable. Venture capital flowed, bold founders emerged, and headlines talked about unicorns, startups with valuations north of $1 billion.
But as the global economic landscape shifted and currency storms gathered, that promising trajectory hit a snag.
By the close of 2025, Nigeria’s startup funding had dipped sharply, falling 17 percent year-on-year to just $343 million, according to the latest Africa, The Big Deal data.
The slump didn’t come from lack of talent or innovation; it came from shifting investor priorities, currency challenges, and tougher economic conditions that reshaped where capital flows.
A Return to Reality after the Boom
The surge of capital that powered Nigeria’s tech rise in the early 2020s was, in hindsight, partly fueled by ultra-low global interest rates and outsized optimism toward emerging markets.
When markets tightened and interest rates climbed in the US and Europe, that easy capital began to evaporate.
For many startups that had expanded quickly during the boom years, the new environment meant pulling back, focusing on fundamentals, and for some, scaling down.
“Investors now want proof: real traction, products that work, revenue, governance,” says Lola Masha, partner at Antler Africa told BusinessDay. “The era when a pitch deck could raise money is over.”
Currency Headwinds and Investor Caution
Unlike some of its peers on the continent, Nigeria was the only one among the “Big Four” startup markets, alongside Kenya, Egypt, and South Africa, to record a year-on-year decline in funding in 2025. It also saw its share of Africa’s total startup capital shrink to just 11 percent, the lowest since 2019.
A major factor is currency volatility. Startups often earn revenues in naira but raise funding in dollars. With the naira’s steep depreciation, at times sliding from around ₦400 to over ₦1,600 against the US dollar, early investors saw their dollar-denominated value erode dramatically.
That makes future returns harder to justify and forces capital to be more cautious.
“When liquidity tightens globally and the currency swings wildly, it creates a double-layered risk,” notes Uche Aniche, general partner at Rebel Seed Capital. “Capital sources aren’t growing fast enough to match the ecosystem’s maturity.”
Deal Counts Show Resilience – But Size Matters
Despite the drop in total capital, deal activity remained the highest on the continent, Nigeria led in the number of startups that raised at least $100,000 in 2025, though this still represented a 14 percent decline from the year before.
This gap between deal count and deal size tells a nuanced story: investors are still writing cheques for promising ideas, but they are smaller and more cautious.
Mega-rounds that once fueled big valuations have become rarer, and capital is concentrating around later-stage companies with proven models or clear paths to dollar returns.
Ecosystem Voices: Discipline Over Hype
Industry observers believe this shift could be healthy in the long run. Early-stage investors are demanding real operational progress rather than lofty projections, pushing founders to focus on unit economics and sustainable growth.
As Masha put it, “discipline, governance and founder presence on the ground have become non-negotiable.”
Yet the path forward isn’t without challenges. Joy Mabia, a startup visibility and strategy expert, warns that global capital remains cautious and that local angel networks and micro-equity vehicles need to step up to bridge funding gaps, especially in pre-seed and seed rounds.
Outlook: A Market Rebalancing, Not a Collapse
Nigeria’s tech scene didn’t stop innovating in 2025, it adjusted. The decline in total funding reflects broader shifts in the venture landscape rather than a fundamental failure of Nigerian startups.
A new narrative is emerging where smarter capital, stronger business fundamentals, and currency-resilient strategies are now the benchmarks of success.
As other African markets attract larger cheques and the competition for capital intensifies, Nigeria’s challenge in 2026 will be in turning its deal-making momentum into scalable, high-impact ventures that draw disciplined, long-term investment, not just headlines.
Nigeria’s ecosystem isn’t shrinking, it’s recalibrating. And that may be the key to a more resilient future.
