Nigeria’s Startup Funding Drought: Can FinTechs Survive in 2025?

Nigeria’s startup funding has fallen 65% since 2021, yet fintechs continue to

attract investors. What makes this sectors so special? Discover the key reasons behind

investor confidence and what it means for the future of Nigerian tech.

In 2021, Nigeria’s startups raised $2B. In 2025? Just $280M. Venture capital has vanished, but not for everyone. The 2021-2022 boom was largely driven by fintech giants such as Flutterwave, Opay, and Andela, which secured massive funding rounds and positioned Nigeria as Africa’s leading startup ecosystem. During this period, investor confidence was high, and the country’s tech scene flourished, with numerous startups scaling rapidly and expanding across the continent. This changed radically in 2023 and 2024 when funding fell by over 50%.

This sharp fall was explained by several factors, such as a worldwide retreat of venture capital, a foreign exchange crisis in Nigeria, and skyrocketing rates of inflation.

This economic instability left investors wary, thus causing a huge decrease in the inflow of capital. As all the investors attempted to evade risks, the investment environment in Nigeria experienced a paradigm shift.

The investors who previously had an interest in supporting high-growth startups with ambitious expansion plans have now shifted their focus to profitability rather than fast scale. This change obliged numerous young organizations to implement harsh cost-saving strategies, cut down

their operations, and concentrate on long-term income generation instead of radical market

penetration.

The increase in regulatory scrutiny, especially about fintech, was another important

factor that affected the mood of investors. The Central Bank of Nigeria (CBN) implemented

new, more stringent policies, such as the strictest Know Your Customer (KYC) requirements,

as well as the outright prohibition of some cryptocurrency activities. The regulatory changes

brought about ambiguity, which put off some investors who had the fear that additional

government regulation would interfere with the business models.

Fintech’s Fight for Survival was to follow 3 strategies:

1. Embedded Finance Integration: Companies like Moniepoint and Bumpa evolved

into B2B enablers, offering SMEs tools for invoicing, payroll, and inventory

Management: Monetising Efficiency in a Cash-Strapped Economy.

2. Partnerships Over Competition: Former rivals allied with banks and

telecommunication services. Opay’s 2025 banking license allowed it to leverage

MTN’s MoMo infrastructure, while Paga integrated with Sterling Bank for low-cost

liquidity.

3. Revenue Diversification: Neobanks added non-traditional revenue streams. Kuda

Bank launched merchant services and insurance bundles, while Carbon shifted from

consumer loans to SME credit scoring.

These adaptations signaled a broader maturation fintechs were no longer "disruptors" but essential infrastructure players solving Nigeria’s core challenges, which include cash scarcity, inflation, and financial exclusion.

The most resilient proved that unit economics trumped user growth. Moniepoint’s 2024 profitability, achieved by monetizing 600,000 merchants, became a sector blueprint. Opay’s pivot to agency banking created revenue stability despite currency volatility. These adaptations signaled a broader maturation: fintechs were no longer "disruptors" but essential infrastructure players solving Nigeria’s core challenges, which include cash scarcity, inflation, and financial exclusion. By mid-2025, the sector’s survival was no longer in doubt, but its shape had irrevocably changed. The funding winter had weeded out unsustainable models, consolidated power among compliant players, and forced innovation toward tangible pain points. As Ndubuisi Ekekwe, founder of FASMICRO, noted: "The era of fantasy valuations is over. Today, survival belongs to those who make ₦1 profit from ₦1 revenue."

Which Nigerian startup do you think will thrive?

Share your thoughts in the comment section!