• $200m investments lost in 1 year
By Chinenye Anuforo
A silent virus appears to have crept into the Nigerian fintech startup landscape leading to the early demise of hitherto promising firms.
A reasonable number of them abruptly shut down even before the fanfare that heralded their take-off faded.
The recent fall of Okra, a prominent Nigerian open banking startup that had attracted over $16 million in funding, has swelled the number of fintech obituaries.
The development has sent tongues wagging as experts worry over the deepening crisis.
Listed as major culprits are; macroeconomic instability, regulatory hurdles, severe funding drought and internal crisis.
Over $200 million investment loss from just 15 African tech startups, including several Nigerian ventures, in 2023 alone, highlights a substantial erosion of investor confidence and capital.
The trend is further exacerbated by a significant decline in venture capital deals for African fintechs, which plummeted by 52% between 2022 and 2024, with overall investment falling by 37%.
The funding drought is leaving many promising startups running out of money and struggling to secure essential follow-on rounds.
Okra’s demise in May 2025, after quietly discontinuing its core Application Programming Interface (API) business and cloud services platform, Nebula, exposes many contributory factors.
Analysts infer that delays in the enforcement of Nigeria’s open banking rules until August 2025 stalled potential revenue streams, while severe naira depreciation inflated dollar- denominated cloud costs, making operations increasingly unsustainable.
Intense competition from better-funded rivals like Mono and Stitch, coupled with the capital expenditure demands of its pivot to Nebula, further sealed its fate.
Beyond Okra, numerous other Nigerian tech startups have quietly folded in the last three years, representing millions of dollars in investment capital, much of it from foreign firms.
The scathing reality is pushing local venture capitals offshore and has even led Y Combinator, once a significant gateway for Nigerian startups, to effectively close its doors to them.
As one expert lamented, the early-stage market is quietly starving, emphasising the need for patient, diaspora-backed capital.
For instance, 54gene (Nigeria, Genomics/Healthtech) wound down operations in 2023 after it raised $45 million.
Pivo (Nigeria Fintech), which shut down in late 2023, raised over $2.6 million. Reasons for the collapse included co-founder conflict.
Again, Lazerpay, a Nigeria, Web3/Crypto payments, packed up in April 2023 after it raised $1.1 million. Reason for ‘death’ was funding drought and regulatory uncertainty.
Another company, Bundle Africaz a Nigeria Crypto, shut down its social payments app in 2023 due to restructuring by stakeholders.
The exact amount lost in the deal was not clearly stated but it was incubated by Binance Africa.
Zazuu, a Nigeria/UK, Fintech/Remittance, wound up in November 2023. It raised $2 million in July 2023 but failed to secure growth funding.
Vibra, Nigeria crypto trading platform collapsed in July 2023 after it raised $6 million in December 2021. There was no reason for the demise but many suggested its inability to generate commensurate revenue. OkadaBooks, a Nigeria digital publishing company, closed down in November 2023 after 10 years. It cited rough macroeconomic conditions and its specific funding not widely reported.
Joovlin Nigeria, a Fintech/Supply Chain), fizzled out in January 2025 and had raised $100,000. It struggled to secure additional funding amid low revenue.
Edukoya, a Nigeria Edtech, went under in February 2025 after raising $3.5 million in pre-seed funding. It faced many headwinds like; market readiness issues, connectivity problems, low disposable income, returned capital to investors. Bento Africa, Nigeria, HR & Payroll Tech, temporarily ceased operations in February 2025, facing allegations of tax/pension scam and internal turmoil. It raised over $15 million.
These aforementioned firms and more went under in very unavoidable circumstances, dragging along with them over $200 million pooled investments.
The funds were largely from foreign firms who burnt their fingers while trying to tap into Nigeria’s vast unbanked and underbanked population.
According to analysts, the reasons behind these collapses are complex and multi-layered, ranging from macroeconomic pressures to internal governance issues.
Commenting on the epidemic ravaging the Nigerian tech landscape, the Founder of Vlundcruch, a technology company in Nigeria, Chinedu Chidi, explained that startup failures are always a concerning phenomenon, especially given the associated loss of investment and human resource displacement. He described it as a global challenge and not peculiar to Nigeria or Africa alone.
“Globally, startup failure rate is quite high, put at 90% by some estimates. In Nigeria, tech startup failure rate is estimated at 61%.
“Something that possibly explains widespread startup failure is the adventurous and disruptive nature of the innovative enterprise, one that seeks to remake or even create new offerings or markets, a highly-risky endeavour.”
Chidi further explained that beyond the general tendency associated with startups, especially tech startups, different climes have their unique challenges that account for the other particular and direct reasons for startup failure. Some are tied to the macroeconomy, while others are tied to the existing startup funding ecosystem. There are also micro factors which are shared with other company types, like management structure, corporate governance, product/service quality, market strategy, team quality, customer service, among others. “In Nigeria, economic pressures tied to inflation, currency devaluation, policy fluctuations, cost of capital, and cost of operations are significant issues. Combined with corporate governance and performance issues, you have a complex challenge.”
Reiterating this, another tech enthusiast, Gabriel Okonkwo, pointed out key reasons for startups’ failures.
He said, “Many fintech startups build what looks good on pitch decks but fail to solve real, urgent and scalable local problems. The value proposition might excite foreign investors, but it often misses the mark with the average Nigerian user.”
To back this, he gave an instance of building sophisticated APIs in a market where most businesses still use Excel and manual ledgers.
He also explained that founders’ over-dependence on foreign funding is another reason while startups fail. “While raising money is great, too many startups scale prematurely based on investor pressure, not actual demand. Growth becomes about vanity metrics (users onboarded, transactions processed) rather than profitability and sustainability. When the next funding round doesn’t come, they crash hard.”
He added that some startups “hire too fast, lease expensive offices, or over-invest in marketing without a clear Return On Investment (ROI) framework.
“The pressure to appear successful leads to spending like unicorns without the unicorn revenue,” he stated.
Okonkwo also points to regulatory uncertainty as a roadblock for startups.
He said, “CBN and other regulators have a history of abrupt policy changes. From cryptocurrency bans to licensing delays, the lack of clear regulatory frameworks destabilises business models overnight.”
He added, “Many startup founders are tech-savvy but business-immature. Leadership struggles, power tussles or failure to pivot can lead to internal breakdowns. Sometimes boards are not strong enough to challenge poor decisions.”
On his own part, Jide Awe, Innovation and Technology policy Advisor and founder of Jidaw.com, said that while Nigeria has a large market, fintech startup failures often come from complex, interconnected issues that vary across ventures. “One critical problem is the growth-at-all-costs mindset, where startups chase growth and fundraising while neglecting profitability and sustainability. This focus on spreading rapidly drives up costs through issues like overhiring and high overheads while driving profits down.
“Building sustainably requires deep understanding of market demand and ensuring products solve real ‘must-have’ problems at scale,” Awe stated. “A great idea is not enough if the market does not need it. Interestingly, talent gaps, high turnover, and the ‘japa’ syndrome can deprive startups of the expertise needed for stable operations”, he said.
Awe also explained that regulatory instability further worsens the problem.
He noted that inconsistent, complex, and often slow regulatory processes undermine the agility required for fintech to thrive.
“Many startups also fail to realistically account for inflation, low disposable incomes, naira and FX volatility, poverty levels, low financial literacy and inadequate identity systems.
There is sometimes a tendency for overdependence on foreign funding to encourage ignoring these fundamentals. Infrastructure challenges, such as unreliable internet and power, is another challenge that can’t be ignored.”
He further stated that corporate governance was another critical area.
“Lack of operational discipline, transparency, and accountability leads to waste and undermines sustainability. Compromising corporate integrity is a luxury no organization can afford. Even with inspiring, intelligent founders, many lack the operational depth needed to build sustainably in Nigeria’s tough environment. Their ethical lapses, discipline failures, and capability gaps can be hugely problematic.”
Regarding Okra, Awe noted, “I don’t have specific details regarding Okra. However, it seems likely that inability to achieve sustainable, meaningful revenue, combined with slow market adoption, played a role in its shutdown despite the funds raised.”
To combat the worrying trend, experts offer a range of solutions that call for a fundamental shift in approach from all stakeholders.
Chidi suggested; “concerted effort must be made by the government to improve macroeconomic conditions. But even within the existing challenging environments, startups must develop clear adaptive strategies for success. More so, proper corporate governance, employee fit, enhanced product/service quality, and continuous innovation must be entrenched within startups towards sustained prosperity.”
He concluded, “Finally, funders must commit to the values of patient capital. They support startups towards long-term success, and not succumb to the temptation of immediate success.”
On the solutions, Okonkwo stated fintechs must “return to the drawing board: what financial pain points do Nigerians face daily? Solutions should be grounded in local context, not imported ideas.” He continued, “Raise money if needed, but grow organically. Prioritize unit economics and customer satisfaction over just growth. Scale after finding real product-market fit.”
He added that, “Startups should invest in strong boards, financial discipline, and performance reviews. Build startups like real companies, not passion projects.” Okonkwo also advises, “Instead of working around regulation, engage with it. Fintech founders should work hand-in-hand with regulators to shape the future of digital finance in Nigeria.”
He said that founders need “investors who understand the long game in Africa, not those seeking Silicon Valley-style 10x returns in 18 months. Alignment of expectations is key.” Okonkwo further emphasized, “Collaborate, don’t compete blindly. Share knowledge, open-source tools, and push for industry-wide standards. A strong ecosystem helps everyone.”
He concluded, “Fintech still holds massive promise in Nigeria from financial inclusion to cross-border payments but it needs to mature. The next generation of successful startups won’t just be the ones that raise the most money but the ones that build lasting value, navigate local complexities and adapt faster than they hype”
To prevent future failures, Awe noted that Nigerian fintechs must prioritize profitability and sustainability from inception, rather than chasing growth and fundraising for its own sake. “They need to design and operate in a way that takes the environmental shocks and challenges into consideration. This requires acknowledging that they do not operate in a perfect environment.”
“Startups should invest in realistic market research and user validation before scaling, listen to the market, and adapt as needed,” Awe advised. “The goal should be scalable products people are willing to pay for, emphasizing viability over vanity or visibility. The chasing of hype or rapid, unsustainable growth should be abandoned. The focus should be on grounded, strategic, and pragmatic approaches that align with local realities.”
He added that they must develop a genuine desire and the capability to solve real local financial problems while adopting creative funding strategies that reduce overdependence on foreign capital. “Innovation should incorporate Nigeria-specific realities rather than blindly copying and pasting foreign models. Addressing infrastructure shortfalls creatively in both offerings and operations is critical.”
“Corporate governance and operational discipline must be prioritized. Founders should invest in developing practical business management and execution skills. It is important to maintain ethical standards and establish effective governance structures to ensure accountability,” Awe stressed.
“Finally, constructive and continuous engagement with regulators is vital, from very early on. Startups should work with other stakeholders in finance and tech to advocate for clearer, consistent, innovation-friendly policies. Regulators themselves need to step up with forward-looking approaches to support innovation. Innovative regulation is critical for the financial sector,” the Jidaw founder stated.