Introduction
60% of Nigerian startups fail within their first three years. Among the top reasons are poorly chosen business strategies and startup models that were never suited to local realities. This article identifies the startup models to avoid in Nigeria, especially in light of the harsh lessons from 2024.
While poor execution is often blamed, many of these failures are rooted in something deeper: flawed business models that were never suited to the local market in the first place.
This article is a follow-up to Part 1: 7 Startup Mistakes Nigerian Founders Should Avoid in 2025. That piece explored execution-level issues and what founders do wrong. This one focuses on the models themselves, the kinds of businesses that, despite sounding promising, are structurally risky in Nigeriaโs current climate.
From crypto-first ventures to prestige partnerships and quick-commerce dreams, here are six startup models Nigerian founders should carefully rethink before building in 2025.
Why This Follow-Up Matters
Understanding the startup models to avoid in Nigeria isnโt just about fear but focus. In an ecosystem where time and capital are limited, knowing what not to build is as valuable as knowing what to pursue.
The Nigerian startup landscape in 2024 was turbulent. The naira crashed past โฆ1,700 to $1, inflation soared above 34%, and funding slowed down significantly. Several high-profile startups, including Thepeer, BuyCoins Pro, and HerRyde, shut down, while others pivoted or downsized.
Despite the chaos, a wave of new founders continues to enter the space with energy and optimism. Thatโs great. But weโve also seen too many of them walk straight into familiar traps. This article unpacks those traps so you donโt have to fall into them.
1. Crypto-Heavy or Crypto-Only Startups
Why itโs tempting: Blockchain is hot. Crypto promises cross-border scalability, decentralized finance, and financial inclusion.
Why it fails: Nigeria’s crypto landscape is murky. While the SEC launched the Accelerated Regulatory Incubation Programme (ARIP) to provide licensing for VASPs, full regulatory clarity is still evolving. Banks remain hesitant, and user trust is low, especially after past clampdowns.
Example: BuyCoins Pro and Thepeer shut down in 2024 despite earlier traction and funding. The lack of a stable regulatory environment, combined with compliance burdens, played a significant role.
What to do instead: Use blockchain as a backend enabler, not a front-facing core. Focus on utility, not trendiness. Engage early with regulators and plan for compliance as a long-term cost of doing business.
Related Resource: SEC ARIP Licensing Announcement โ SEC Nigeria
2. Over-reliance on Prestige Partnerships
Why itโs tempting: Partnering with banks, telcos, or multinationals gives your startup instant credibility, visibility, and potential user reach.
Why it fails: These partnerships often come with hidden costs โ long negotiation cycles, integration fees, policy changes, and bureaucratic delays. If the partnership breaks down, your entire model can collapse.
Example: A logistics startup folded after an exclusive telco partnership fell apart during contract renegotiations. MTNโs 2024 SME API price hike disrupted numerous platforms relying on its infrastructure.
What to do instead: Build traction independently first. Use partnerships to scale, not to survive. Test distribution channels early. Maintain a backup plan that doesnโt rely on a single corporate relationship.
Checklist: Avoiding Partnership Dependency
- Validate your value proposition independently
- Diversify key distribution and infrastructure channels
- Avoid exclusivity clauses in early-stage contracts
3. Solving First-World Problems in a Survival-First Market
Why itโs tempting: Founders want to innovate and often look to the West for inspiration. Niche wellness apps, pet services, or premium coworking spaces seem fresh.
Why it fails: Nigeriaโs middle class is shrinking. A large portion of the population still grapples with erratic power, transport challenges, and basic affordability. “Nice-to-have” solutions get ignored in favor of survival spending.
Example: A premium dog food subscription service shut down after 8 months due to poor demand. It never resonated with the broader market.
What to do instead: Ground your product in real pain points. Reposition luxury offerings as affordable or essential or build for underserved but high-need sectors like informal health, education, or agriculture.
Caveat: Some ultra-niche services may work in elite enclaves, but they require micro-targeted marketing, not mass adoption assumptions.
4. Founder-Centric Business Models
Why This Is One of the Startup Models to Avoid in Nigeria
Why itโs tempting: Nigeriaโs startup culture celebrates charismatic founders. They become the brand, the face, the energy of the company.
Why it fails: If everything revolves around the founder, what happens when they leave? Investors hesitate. Teams lose direction. Customers get spooked.
Example: A Lagos-based fintech that had raised a $1 million seed round lost over 60% of its clients after its CEO resigned amid fraud allegations. The brand couldn’t survive the reputational hit.
What to do instead: Build systems, not cults. Highlight team expertise. Ensure processes, not personalities, drive your business.
Actionable Steps: Building Beyond the Founder
- Create documented SOPs and decentralized workflows
- Train senior leadership to share the spotlight
- Build a brand voice that stands independently of the founder
5. Hyperlocal Delivery Networks
Why itโs tempting: The instant delivery craze, like 15-minute groceries and same-day fashion, feels like the future.
Why it fails: Nigeriaโs infrastructure isnโt built for it. Traffic gridlock, addressing issues, and low order density outside urban hubs like Lagos or Abuja make it unscalable.
Example: A quick-commerce startup burned over $500,000 a month running a motorbike fleet before pivoting to pickup hubs.
What to do instead: Focus on cost-effective logistics. Next-day delivery or strategic pickup locations work better in Nigerian cities. Learn from models like Sabon.Sano.
Did You Know? According to the Nigerian Ecosystem Report 2024, over 70% of last-mile delivery startups pivoted or shut down within their first 18 months.
6. โRevolutionizingโ Cash Transactions
Why itโs tempting: Going fully digital looks sleek. Itโs efficient, traceable, and modern.
Why it fails: Nigeria still runs on cash, especially in informal markets. Over 65% of Nigerians distrust digital payments for large transactions (NBS 2024). Ignoring cash alienates a huge segment of users.
Example: A B2B commerce platform lost 80% of its vendors after banning cash-on-delivery. Many merchants simply didnโt trust full prepayment online.
What to do instead: Blend cash and digital options. Let users choose. TradeDepot, for instance, lets field agents collect cash while still automating procurement.
Related: Explore pricing strategies that actually convert: Digital Business Models in Nigeria: Freemium vs Subscription vs Pay-Per-Use
Summary
Across these models, a common theme emerges: mismatched assumptions. Whether itโs infrastructure, user behavior, or regulatory reality, Nigerian startups often stumble when they copy-and-paste models that ignore local nuance. Avoiding these traps isn’t about playing small but building smart.
Final Thoughts: Build for Context, Not Just Vision
The startups that surviveโand thriveโare often those that sidestep the common startup models to avoid in Nigeria. Instead of imitating what worked in other countries, they design for trust, infrastructure gaps, and spending realities here.: Build for Context, Not Just Vision
Ambition is good. But in Nigeria, ambition must meet reality. Models that work elsewhere may crumble under local conditions โ not because the founders werenโt smart, but because the terrain is different.
So before you build, ask: โIs this model grounded in how Nigerians live, spend, and trust?โ If not, it may be time to rethink.
Related: Want to dive deeper into what causes startup failures? Read Why Startups Fail in Nigeria: Lessons from 2024โs Closures and learn how to manage operating costs with Startup Burn Rate in Nigeria: Burn Rate vs Runway
Call to Action
Still refining your business idea? Donโt miss this guide: 5 Make-or-Break Nigerian Startup Questions to Answer Before You Launch
Curious about scaling beyond Nigeria? Check out: Nigerian Startups Going Global: How Local Founders Are Scaling Internationally
Want to avoid high-risk startup models and build smarter?
Follow the PlanetWeb Blog for founder insights, real-world case studies, and practical strategies tailored to Nigerian realities.
๐ง Missed Part 1?
Catch up here: 7 Startup Mistakes Nigerian Founders Should Avoid in 2025
๐ More Insights for Nigerian Founders
- Why Startups Fail in Nigeria: Lessons from 2024โs Closures
- 5 Make-or-Break Nigerian Startup Questions to Answer Before You Launch
- Digital Business Models in Nigeria: Freemium vs Subscription vs Pay-Per-Use
- Startup Burn Rate in Nigeria: Burn Rate vs Runway
- Nigerian Startups Going Global: How Local Founders Are Scaling Internationally
