2024 was a harsh reality check for the Nigerian startup ecosystem. While a few standout companies scaled, a sobering number quietly–or not so quietly–shut down. From promising fintechs to ambitious edtechs, startups across sectors folded under the pressure of macroeconomic shocks, shifting regulations, and strategic missteps. But failure doesn’t have to be the end of the story. In fact, for the ecosystem to mature, we must understand why startups fail in Nigeria, and what surviving ventures did differently.
This isn’t just a post-mortem. It’s a playbook for what to avoid, what to fix early, and how to build resiliently.
The Startup Shutdown Wave of 2024: What Happened?
Startups like Thepeer, Chopnownow, Quizac, BuyCoins Pro, and HerRyde made headlines–not for raising millions, but for bowing out. While not all shutdowns were publicized in detail, the trend was clear: H1 2024 was particularly brutal.
Venture capital had slowed, FX volatility was punishing, and inflation peaked at 34.8%. According to TechCabal’s Nigerian Startup Health Report, over 40% of startups funded between 2021 and 2023 had shut down by Q2 2024. Most lacked resilient models, scalable unit economics, or the runway to survive prolonged funding droughts.
We previously examined some of these closures in our article, Failed Nigerian Startups: Why They Collapsed & Lessons for Future Entrepreneurs. In this follow-up, we go deeper into the reasons behind those failures.
“In 2024, growth-at-all-costs became a death sentence. Profitability is the new scale.” — Lagos-based VC Partner
7 Reasons Why Startups Fail in Nigeria
1. Unsustainable Unit Economics
For startups like Chopnownow, operating margins simply didn’t make sense. Delivery costs surged with diesel prices, and customer retention outside Lagos was low. Logistics-heavy models couldn’t scale profitably, especially in a fragmented infrastructure environment.
2. Regulatory and Compliance Headwinds
BuyCoins Pro and Thepeer operated in highly regulated spaces–crypto and fintech infrastructure. In 2024, the SEC introduced tougher requirements for Virtual Asset Service Providers (VASPs), including a ₦75 million (~$50,000) licensing fee, six-month approval timelines, and enhanced KYC/AML obligations.
These regulatory shifts increased operational costs and uncertainty. For early-stage startups, navigating compliance without legal expertise or investor backing became a dealbreaker.
3. Poor Product-Market Fit
Quizac’s closure reflected a common issue: building products for investors, not users. While edtech is a promising sector, the platform struggled with user engagement.
Interviews with teachers revealed a deeper gap–educators wanted grading automation and curriculum tracking, not gamified quiz creation. The platform missed the market’s most pressing pain points.
4. Talent Drain and Founder Burnout
Nigeria’s Japa wave, the mass emigration of tech talent, took its toll. The 2023 Andela Talent Report estimated a 15% decline in available senior tech talent, with average salary expectations up by 30%.
Startups without flexible work models or global hiring capacity found themselves understaffed. Lean founding teams were forced to overcompensate, leading to burnout and delivery delays.
Deep Dive – What is the Japa wave, and how is it impacting Nigeria’s workforce? (BBC)
You can also explore how talent retention is evolving in our piece on How Nigerian Startups Are Pivoting in 2025.
5. Lack of Operational Focus
Many startups tried to solve too many problems at once. Whether it was bundling unrelated services or overbuilding features, a lack of focus diluted their core value.
Compare this to early-stage Flutterwave, which focused solely on a B2B payment API before expanding. Focus wins. Feature creep burns cash.
6. Over-Reliance on External Funding
When the VC pipeline dried up in early 2024, startups without sustainable revenue models were left exposed. Fundraising strategies built entirely around “the next round” fell apart.
In a climate of rising interest rates and cautious investors, startups had to do more with less–or shut down.
7. Weak Governance and Investor Support
Some startups lacked structured boards or experienced advisors. Investors, especially at pre-seed, were often hands-off beyond writing the cheque.
Take Paystack, for instance. Pre-Series A, they brought on a compliance advisor with regulatory experience, long before the CBN introduced fintech guidelines. Governance wasn’t an afterthought; it was a growth strategy.
📊 Visual Summary
Here’s a quick infographic highlighting the most common failure points Nigerian startups faced in 2024 and how they compare across sectors:
External Shocks That Accelerated Shutdowns (Startup Shutdowns Nigeria)
2024 didn’t happen in a vacuum. Inflation, currency devaluation, CBN reforms, and rising energy costs all played a role in startup shutdowns across Nigeria.
- Inflation hit a 27-year high at 34.8%
- Naira fell to over ₦1,700/$1, complicating cross-border payments and imports
- CBN regulations introduced transaction levies and capital repatriation restrictions
- Diesel prices jumped by over 60%, devastating logistics-heavy businesses
The result? Thinner margins, slower delivery times, and pricing fatigue among end users.
What Surviving Startups Did Differently
Not every founder folded. Some pivoted. Others doubled down on sustainable practices.
- Sun King: Partnered with global NGOs and impact investors to sign dollar-denominated solar contracts, buffering against naira volatility.
- Kippa: Pivoted from agency banking to an AI-powered SME learning tool, targeting a clear market need with immediate adoption.
- PaidHR: Prioritized core clients, focused on automation, and invested in internal capacity building to reduce attrition risk.
These startups adapted. They aligned with fundamentals and stayed close to user pain points.
Lessons for Founders and Investors
For Founders:
- ✅ Validate real demand before building.
- ✅ Stay lean and delay complex scaling.
- ✅ Plan for compliance costs from day one.
- ✅ Build boards and advisory layers early.
For Investors:
- ✅ Look beyond vanity metrics to revenue clarity.
- ✅ Provide advisory, not just capital.
- ✅ Support board formation and governance early.
Conclusion: Failure as a Filter, Not a Finale
Startup failure isn’t new, but in 2024, it became a filter. It separated hype from value, survival from scale, and vision from vanity. Many failed startups in Nigeria weren’t doomed from the start; they simply lacked the levers to course-correct fast enough.
The Nigerian startup ecosystem is learning. And as it learns, it’s maturing.
If you’re a founder navigating this space, let this year’s losses become your insights. And if you’re an investor, remember: your influence doesn’t stop at the cheque.
📌 Looking for more deep dives? Explore our insights on the Nigerian Startup Reboot in 2024.
💬 Will your startup be a 2024 casualty or a 2025 success story? Share your thoughts below.
