How to think about market size in Nigeria
Nigerian startup valuations are on the rise

A few weeks ago, we looked at the philosophy behind valuing startups and drew related important conclusions. The first was that valuing early-stage startups in early-stage ecosystems is closer to analysing abstract art than calibrating mathematic equations. The second is that even if these valuations are nonsensical, they are extremely important for the ecosystem.


Key takeaways:

  • At first glance, various estimates of Nigeria's current market size provide little justification for rising investment in Nigeria's tech ecosystem. 

  • Investment in Nigeria's tech ecosystem is a bet on the future of startups and the markets they operate. By adopting a more dynamic view of Nigeria's market potential, we can form a solid case for the substantial investment appetite in Nigeria's tech ecosystem.

  • Debates about startup valuations are ultimately disagreements about Nigeria's future market. A pessimistic view of Nigeria's future market, or startups' ability to capture it, would result in significantly less funding and lower valuations. 


Since that conversation, a lot has happened in the Nigerian tech ecosystem; some good, some bad.

We celebrated MTN MOMO’s Payment Service Bank (PSB) license and the telecoms giant’s imminent foray into Nigeria’s financial services industry. We also celebrated $2.3 billion coming into the African tech ecosystem between January 2022 and March 2022, 44% of the 2021 value and already more than in 2019 ($2 billion) and 2020 ($1.4 billion).

Fintech especially has been on a tear. $793 million of that $2.3 billion (a third) went to fintechs, with Nigerian fintechs alone raising $426 million in the first quarter of 2022,

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Michael Famoroti

Michael Famoroti

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