This was revealed in the South-South and South-East Startup Ecosystem and State of Digital Jobs Report 2025 launched by #StartupSouth.

The report found that the South-East now accounts for 51.3% of startups in the region, up from 48.2% in 2023.

While Rivers is still the largest startup hub with 27.3% of all startups identified, its share has declined from two years ago as other states expanded their startup communities.

The study, which drew on data from 304 startups, 234 digital talents, 29 employers and 98 enterprise support organisations, found that startup activity in the region has expanded commendably since 2023.

The number of mapped startups rose by 54.3%, while disclosed funding increased from $7.89 million to $10.23 million.

More startups are also securing investment. The share of ventures that have received funding climbed to 52.6% in 2025 from 32.5% two years earlier, although funding is highly concentrated among a small group of companies.

Rivers accounted for 83 startups, representing 27.3% of the regional total. Enugu followed with 54 startups or 17.8%, while Abia and Anambra recorded 34 startups each, representing 11.2% apiece.

At the city level, Port Harcourt was the region’s leading startup hub with 77 startups. Enugu ranked second with 39 startups, while Aba and Awka recorded 22 startups each.

The report also showed that most ventures were still at an early stage of development. More than half of all startups mapped were still pre-revenue, revealing the need for stronger access to capital and market opportunities.

Funding is the biggest challenge facing founders across the region. About 82.5% of startups identified access to funding as their primary concern.

Lack of government support was mentioned by 30.7% of respondents, while 29% pointed to high operational costs.

Despite these challenges, startup activity has contributed to job creation. The 304 startups surveyed employ 2,837 people, comprising 1,528 full-time workers and 1,309 part-time staff.

The report found that there is still a gender imbalance within the ecosystem. Men account for 80.2% of lead founders, while women make up 19.1%, a figure the report described as only a marginal improvement on the 2023 baseline.

Among digital professionals surveyed, employment indicators showed signs of progress. Full-time employment increased, while unemployment declined compared with 2023.

However, many workers still rely on freelance and remote opportunities, usually serving employers outside the South-East and South-South regions.

According to the report, 69.5% of employed digital talents work remotely, with most providing services to Nigerian employers, particularly firms based in Lagos, although a growing number now work for organisations in Canada, the United Kingdom and the United States.

The report concluded that the South-East region’s startup ecosystem growth is commendable in size and attracting more funding, but there are still challenges limiting access to capital, weak support structures and a shortage of local opportunities capable of absorbing its expanding pool of digital talent.

Meanwhile, U-Law said it is set to assist startups to tackle this challenge.

Held on Friday, November 28, 2025, the themed forum, “From Local Genius to Global Demand: Powering Startups with Innovation, Funding, and Market Access”, brought founders, investors and operators into one room for an insightful conversation on scaling responsibly. 

More than 60% of Nigerian startups never make it past 10 years, with many failing within just two. Beyond the usual challenges such as funding gaps, capital limitations, and weak market insight, U-Law pointed out one problem almost every founder underestimates: legal compliance.

Startups think first about raising capital, but ignore the “simple agreement between myself and my co-founder” until it becomes a threat. Founders were warned about building products without defining who owns the IP, operating in regulated sectors without licences, or onboarding employees without contracts. 

Some startups have stalled because a CTO resigned, claimed ownership of the product, and refused to sign over rights. One of U-Law’s goals is to prevent situations like this, ensuring that startups scale properly and avoid the mistakes others have made in the past.

That urgency framed the rest of the afternoon.

PANELLISTS BREAK DOWN WHAT REALLY DRIVES SCALE

The discussion featured Subuola Oyeleye (Founder/CEO, Beauty Hut Africa), Victoria Fabunmi (National Coordinator, ONDI), Chidimma Uzoma (Founder, Zayith Food Company), and Folasade Dapo (Head, Legal & Investor Relations, CCA). 

Each shared practical insights about growth, capital, governance and the realities of operating in Nigeria.

Building structure before raising money

Oyeleye, whose company recently turned two, said she planned from day one to build a venture-backed business. That meant installing clarity, not confusion:

“Investors fund clarity and not chaos.”

She recalled being asked for supplier contracts and internal processes by investors, documents many competitors don’t even have. She stressed that founders must think like investors: contracts, compliance, risk management, spend control, clear financials, and documented IP must exist early.

VC is not the only route, founders need blended capital

Dapo dismantled the idea that every founder must chase venture capital.

She explained the different funding paths available, including angels, family offices, grants, foundations, government-backed credit lines, and debt, and urged founders to know their “investor universe”.

“It’s not the only way to fund.”

She emphasised that not all investors fit every business, and founders must learn which ones belong in their “universe”.

Manufacturing founders can raise money too

Uzoma addressed a common misconception: that manufacturing is unattractive to investors. She stressed that the investors exist, founders just don’t look for them.

She urged traditional businesses to adopt a blended funding approach combining grants, equity, and debt. Her company runs all three concurrently.

On Nigeria’s infrastructure failures, she explained that manufacturing cannot rely on erratic power. Her company runs “the hard way”, funding generators to keep cold-chain operations running 24/7. She noted recent policy discussions on industrialisation and said power remains the single biggest limitation.

On logistics, she said partnerships saved them. “We would not invest in an area that somebody is already running as a business and is giving us a great price point.”

Investors look for more than decks

Fabunmi outlined what investors actually review beyond pitch slides and projections. Founders with discipline, accountability, openness and the mindset for scale. She underlined three areas: intentionality, resilience, and mindset.

Fabunmi also said investors increasingly want founders who can build beyond their local markets, founders who understand scale in the context of AfCFTA and global competition.

STRONG FACTS ABOUT GOVERNANCE

The Q&A session pushed further into governance, where many Nigerian startups fail after raising capital.

Dapo said one of the biggest issues investors encounter is poor corporate governance:

“You can have the best business model, but if you back the wrong founders, it doesn’t matter.”

The panellists at the U-Law Black Friday forum noted the basics that must be in place even before investment:

• Company registration
• Correct licences
• Tax registration
• Compliance obligations
• Contracts for employees and suppliers
• Accounting and finance systems
• Bank account separation
• A simple functional board
• Delegation of authority
• Clear mission, vision, and performance tracking

Corporate governance isn’t a waste of time, she stressed; it is what keeps founders accountable and makes businesses investable.

BUILDING TEAMS, LETTING GO AND RETAINING TALENT

Oyeleye tackled the difficulty founders face when releasing control. “Scaling does mean letting go, but letting go means creating structure.”

She said Nigeria’s labour market usually requires hand-holding because skills vary widely, so founders must create clear SOPs and train teams.

On employee turnover, she said culture helped Beauty Hut retain staff. Exit interviews revealed basic issues like long commutes, which brought about new hiring strategies.

Uzoma added that younger employees move faster, but businesses should prepare for that with succession plans. Her approach:

“Every manager has an exec, every exec has an assistant… so that it’s easier for people to live and leave without disrupting the system.”

THE NIGERIAN ADVANTAGE — RESILIENCE

Fabunmi wrapped up with a perspective foreign investors sometimes overlook: Nigerian founders are already hardened by the environment.

“Because we’ve suffered a lot here, it’s easier for you to take more to the market.”

She argued that the challenges in Nigeria sharpen entrepreneurs, making them bolder in other markets.

U-LAW CLOSES WITH TAX REFORM GUIDANCE

The session returned to U-Law, this time focusing on the 2025 tax reform regime. The team explained upcoming changes:

• Nigeria Revenue Service replaces FIRS
• New small-business thresholds
• Changes to company income tax bands
• New 4% development levy replacing several older levies
• Personal income tax rising to 15%
• Capital gains tax tied to income bands
• VAT exemptions for small companies
• Mandatory registration and monthly filings for virtual asset service providers
• New incentives for angel investors and VCs under the Startup Act

U-Law advised SMEs to register early, file required returns, and use available exemptions as the firm introduced its compliance calculator, designed to help startups understand their tax obligations.

THE BIG PICTURE

The U-Law Black Friday forum highlighted that Nigerian founders must build properly if they want to scale, and U-Law intends to be the partner guiding them through compliance, governance, agreements, tax, and structure.

In a country where resilience is high but failure rates are higher, U-Law says start right, structure early, scale without trouble.

Moderated by Pamela Onah, senior associate at U-Law, the session, titled “Building Big in Naija: Behind the Scenes of a Scaling Success Story”, revisited how Shuttlers has helped thousands of Lagos workers survive the city’s demanding commute. 

Okafor expatiated the startup’s survival instincts and the realities of building a transport-tech business in Nigeria’s unpredictable environment.

A Business Built From a Chevron Internship Shock

Recounting Shuttlers’ beginnings, Okafor explained how the idea originated from co-founder Damilola Olokesusi’s early experience at Chevron. She enjoyed the stability of corporate staff buses during her internship, but once it ended, the challenges of public transport hit hard. 

That led to the foundational question; Why shouldn’t other companies enjoy the same quality of staff mobility without owning buses?

He said, “Perhaps there could be a way that companies can benefit from the value that comes with providing a relationship, but why not necessarily incurring the overhead?” 

By 2019, both founders aligned, and in 2020 they began building technology systems to scale a problem everyone recognised but no one had solved.

Nigeria’s Challenges: Drivers, Fleet Partners and the Disarray of Transport

On the toughest part of Shuttlers’ growth journey, which Okafor revealed as supply-side instability, he said: “We’re selling reliability,” he noted, “but to make it work in an environment like ours, it’s just difficult.”

Shuttlers built an entire operational framework from scratch, onboarding tests, performance monitoring, back-office processes, psychometric assessments, marshals for high-capacity buses, and real-time trip management. Redundancies were added everywhere because the business could fail in seconds.

Mobility, he stressed, is politically sensitive. “You can’t do it without understanding the plans of the government or the laws that exist,” he warned. 

In Lagos, Shuttlers even co-created its regulatory category with the Ministry of Transportation.

Fundraising: Showing Investors You Understand the Nigerian Problem

Shuttlers raised $1.6m in 2021 and $4m in 2023, but Okafor made one thing clear; the money was won on operational discipline, not pitch decks.

Investors wanted proof of order in a famously disorderly sector. So the founders demonstrated the seven-stakeholder ecosystem, clear unit economics, and the ability to track every vehicle, driver, partner, and passenger activity end-to-end.

For him, honesty and realism were important: “You have to be grounded in reality… but you also have to be an optimist.”

He emphasised founder-investor fit, choosing investors who understand real-sector problems, not just technology.

When Tinubu Announced Fuel Subsidy Removal — “A Crazy Week”

On inauguration day, when the President declared “subsidy is gone”, Shuttlers faced immediate problems:

• Fleet partners panicked about high fuel prices.
• Corporate clients insisted on two weeks’ notice for any price change.
• Drivers threatened to abandon routes.

Shuttlers responded by securing bulk fuel ahead of market shocks. “We went to filling stations… and loaded them with upfront money so that they’ll be able to give us fuel when we need it.”

That move stabilised partners long enough to renegotiate with corporate clients. Having strong legal contracts, including force majeure, prevented business-crippling issues.

“That was a crazy week. Sleepless nights,” he recalled.

Building for the Long Term: Hiring, Systems and Staying Grounded

On how founders can build sustainably without burning out, Okafor admitted it’s still a learning curve. His biggest regret? Hiring too quickly in the early years.

He said founders must design roles clearly, assign measurable KPIs, and avoid the fantasy that “the right hire will magically solve everything.” 

He explained how Shuttlers now operates with precise ratios: how many operations staff per number of trips, how customer service scales with demand, and how to predict problems before they occur.

Advice to Founders: Entropy Is the Competition

“The biggest competition that you have in Nigeria, the sheer fact that it’s unorganised. Anything can come from anywhere, that’s your competition.”

Only founders with the stamina for constant uncertainty can survive.

The One National Reform He Wants

At the U-Law Black Friday event, Okafor was asked the one thing he’d like to change. He said that would be to create a national registry for commercial drivers, with clear identity, history, and penalties: “So that any problem you see today will not be inherited by the next generation.”

On Pricing, Profitability and Scaling with Debt

Shuttlers aims to remain affordable while becoming gross-margin positive. The real capital burden is the vehicles, which the company does not own. To grow its fleet beyond the current 457 vehicles, Shuttlers is now working with debt financiers to fund asset acquisition for its top-performing partners.

Managing Dispatch Riders: Incentives, Telemetry and Zero Tolerance for Indiscipline

Okafor also advised founders running dispatch-dependent businesses. He pressed on three things:

• Use incentives tied to performance.
• Invest in telemetry to track behaviour.
• Remove riders who break rules like switching off devices or deviating from routes.

At the U-Law Black Friday event, Okafor explained further, “The cost of not getting it right is much more expensive.”

Nigeria’s business terrain is not for the faint-hearted, but with structure, honesty, deep operational discipline and relentless problem-solving, it is still possible to build big in the country.

However, Lagos is still the most prominent African city on the list and Nigeria’s single representative in the global top 100. 

The commercial hub scored 11.226 on the Index and recorded annual ecosystem growth of +14.7%, healthy growth by many measures, yet not enough to stop the slide in rank. 

At national level, Nigeria now sits 66th globally; the country recorded $176.4m in startup funding in 2024, has two unicorns, and counts 57 Y Combinator startups, but national ecosystem growth is +5.4%, and Nigeria slipped two places overall. 

Fintech is still the engine. The country “tops Africa’s unicorn charts” and the report reveals names you already know: Moniepoint and Flutterwave, both listed as unicorns and flagged among Lagos’ notable ecosystem champions (SB Scores: Moniepoint 669; Flutterwave 640). Nonetheless, the Index shows fintech’s success is concentrated: Lagos accounts for the vast majority of Nigeria’s startup growth. 

In simple terms, Lagos tops other cities across Nigeria. StartupBlink finds Lagos’s ecosystem is 11.8 times larger than Abuja’s, illustrating how national performance hinges on one city.

Abuja did, however, post extraordinary growth this cycle, climbing into the global top 400 at 399th with annual growth above 50%, the only Nigerian city to record a global climb in 2025. 

Other regional cities show mixed fortunes as Ibadan, Enugu, Port Harcourt and a newly listed Ilorin appear in the top 1,000 but most recorded declines. 

There is momentum — and there are gaps. Lagos benefits from a dense support network: Lagos Angel Network, Growth Capital Fund, Ventures Platform and Greenhouse Capital all play visible roles, while non-profits such as FATE Foundation provide training and mentoring. 

The federal architecture has started to respond: the Nigerian Startup Act, a National Council for Digital Innovation and Entrepreneurship, and a Startup Investment Seed Fund are now on the books. The government has also struck a public-private arrangement with JICA to seed a new fund. These steps matter; they show policy finally following promise. 

Infrastructure and capital remain the choke points. The report flags a shortage of financing options, low purchasing power, and a practical disconnect between Lagos and other local ecosystems. 

It notes that Nigeria’s internet quality has improved, Starlink came in during 2023, and that NigComSat’s 2024 accelerator has begun to seed activity in space and satellite technologies (20 startups were selected for intensive spacetech mentorship). Still, the broader infrastructure deficit and limited local capital markets hold back scaling. 

What this means for founders and investors

Lagos is still the gateway. If you are scaling a fintech or consumer startup with innovation across West Africa, Lagos offers the customers, talent and networks you need. 

But I’d caution founders to plan for friction; payments, purchasing power limitations and uneven support outside Lagos are real risks. The Index suggests diversification of hubs inside Nigeria must be a priority if the country wants comprehensive, resilient growth. 

A few immediate implications for policymakers and ecosystem builders (drawn from the report):

• Invest in road-and-digital infrastructure outside Lagos to reduce the games-of chance that currently shape who succeeds. 
• Scale financing instruments that target growth (not just seed), and encourage closer ties between Lagos capital and provincial startups.
• Sustain public-private programmes (like the JICA fund and NigComSat accelerator) that move beyond pilot stage into long-term commitments.

To close, the StartupBlink Index 2025 shows that Lagos is Africa’s headline startup ecosystem and Nigeria’s growth engine. However, the nation’s overall ranking and the concentration of success in one city expose strategic fragilities. 

If investors leverage Lagos as a launchpad, and aggressively invest in the next tier of cities, Nigerian entrepreneurship becomes broad, durable and not just Lagos-dependent.