Why Many Nigerian Startups Are Failing

Over the last few years, Nigeria’s startup ecosystem has dazzled with big headlines: millions of dollars raised, young founders featured on magazine covers, and a growing narrative of Africa as the next big tech frontier. From fintech to edtech, the energy has been infectious and

the ambition inspiring. But as the dust settles, a sobering reality is emerging, one that we can no longer ignore.

One by one, startups that once raised millions are shutting down. Teams are disbanding, investors are frustrated, and trust in the ecosystem is wearing thin. Okra, Bento, Edukoya, Joovlin, the list grows longer each quarter. And with each collapse comes the same question: what went wrong?

At the heart of this crisis lies a dangerous illusion, the idea that raising money equals success, and that venture capital is free money. It isn’t.

Somewhere along the way, we began to treat fundraising as a destination rather than a starting point. Many founders celebrate the day the money hits the account as if the journey is complete, rather than seeing it for what it truly is (a new and heavier responsibility). Social media has amplified this illusion as sometime, cheques are posted, photoshoots are staged and many parties are thrown. We forget that fundraising is not an achievement in itself as it is not a gift, it is not free.

Whether it comes as debt or equity, capital is a claim on your future success. It is a loan against your vision, backed by other people’s trust. Every dollar or naira raised belongs to the business, to the mission, and to the people who believed enough to invest in you. The obligation is real to your investors, your employees, and your customers, and it does not disappear simply because you raised the money.

Beyond the illusion of free money, another critical gap in the ecosystem is leadership. Too many founders leap into entrepreneurship with little or no managerial experience. They have never built or led a team, managed a budget, or faced the relentless pressure of meeting payroll when cash flow dries up. Then they suddenly find millions in their account and, instead of building structure and discipline, they indulge in excess.

Worse still, many founders forget what they are : startups, not corporations. They flush with venture capital and begin to spend like large companies, trying to look like large companies, and even behaving like large companies long before they have achieved product–market fit.

This premature empire‑building (hiring too many people, creating rigid hierarchies, renting impressive offices, instituting needless processes) gives the illusion of maturity but often hides a fragile foundation. In reality, a startup’s strength lies in its agility, frugality, and obsessive focus on solving a real customer problem. Mimicking the structures and spending patterns of established corporations too soon only accelerates collapse when revenues fail to catch up with ambition.

Of course, the challenges facing startups in Nigeria extend beyond individual choices. Investors often feed the hype, throwing money at hot sectors without insisting on governance or accountability. The broader environment — regulatory uncertainty, poor infrastructure, and inconsistent connectivity, volatile foreign exchange—makes scaling even harder. But even in these conditions, leadership remains decisive. Money cannot compensate for the absence of vision, humility, and disciplined execution.

And beyond founders and investors, the media also has a role to play in reshaping the narrative. Too often, our media celebrates fundraising announcements as the pinnacle of success — amplifying cheques and valuations, splashing photos of founders on covers, and crafting stories that glorify the money raised rather than interrogating the value created. This celebratory reporting feeds the illusion that raising funds equals winning, and it shields important questions: is the startup solving a real problem? has it achieved product–market fit? how sustainable is the business model?

We need more critical, constructive reporting , the kind of journalism that asks the tough questions, scrutinizes business fundamentals, and holds founders and investors accountable without dampening the entrepreneurial spirit. The media must move beyond cheerleading to thoughtful oversight, helping the ecosystem mature with honesty and integrity.

We need a mindset shift that reframes what it means to build a company and what it means to raise capital. Founders must see fundraising as a responsibility, not a trophy. Investors must insist on more than just hype; they must demand governance, mentorship, and accountability. The media must also do its part by shining a light not just on money raised but on value created. Leadership coaching should be normalized for first-time founders, and we must begin to see entrepreneurship for what it truly is as a stewardship of people, capital, and mission, not a shortcut to personal glory.

The collapse of so many startups should not discourage innovation, but it should humble us. The real work begins after the press release, when the cameras are gone, and the spreadsheets are staring back at you. Fundraising is not free money. It is a loan against your ability to build something meaningful.

For the sake of the ecosystem, and for the young people watching and dreaming, we must do better.