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Lagos Start-Up Scene: Optimism Prevails in Nigeria

Entrepreneurs in Nigeria are demonstrating the potential for significant achievements with relatively small investments in the country’s booming start-up scene. One such entrepreneur is Ifeoluwa Dare-Johnson, whose personal tragedy of losing her father to an undiagnosed condition spurred her to co-found Healthtracka. This healthtech start-up, funded partly out of Silicon Valley, offers home health tests, online consultations with doctors, and an app for tracking health readings.

Nigeria’s start-up boom has attracted venture funding from around the world, with investors betting on the potential to build businesses that span the entire African continent. Venture capital funding in Nigeria has seen a substantial increase, from an estimated $50 million in 2015 to nearly $1 billion in 2022. Although funding has cooled in 2022 due to a global crunch attributed to rising interest rates, the optimism driving start-ups like Healthtracka remains strong as digital platforms enable rapid scalability.

Various sectors, including healthtech, fintech, agritech, renewable energy, logistics, and education, have experienced significant inflows of capital in Nigeria. Entrepreneurs are attracted to the ability to make a meaningful impact with relatively small investments. For instance, Healthtracka has delivered 20,000 tests to 5,000 users across 14 Nigerian states within just two years since its founding, despite having initial seed capital of only $1.2 million. Their tests detect common conditions such as diabetes and certain forms of cancer, with offerings like the “pre-wedding test” that screens for tuberculosis, HIV, testosterone, hepatitis B, and pregnancy.

Kola Aina, a founding partner at Ventures Platform, a fund with a pan-African portfolio of 80 companies that have collectively raised over $1 billion, estimates that around seven unicorns (start-ups valued at more than $1 billion) have emerged from Nigeria’s tech scene in recent years. These unicorns have become a critical part of the national economy. While international venture capital has played a significant role, Aina emphasizes the importance of local capital, which is seeing a rise in prominence.

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Larger funding rounds are becoming more common, with companies like Husk Power Systems aiming to raise $100 million to establish solar power installations in Nigeria and other Sub-Saharan African countries. Husk installs “mini-grids” or solar modules that enable rural and semi-rural communities to transition from expensive and polluting diesel generators, providing them with reliable electricity. These technologies hold significant promise for a country where many rural communities are isolated, and a substantial portion of the population lives below the national poverty line.

Other start-ups are focused on addressing societal challenges. DrugStoc, co-founded by Chibuzo Opara, raised $4.4 million in 2021 to combat the national issue of fake medicines. Since its launch in 2017, DrugStoc has established direct links with approximately 270 drug manufacturers and 3,500 hospitals and clinics, eliminating middlemen who have profited from inserting counterfeit drugs into the medical supply chain. The company has attracted investment from the Africa HealthCare Master Fund, Vested World, and the German Development Bank.

Opara highlights that developing a system ensuring the purity of medicine supply to hospitals and clinics required trial and error. Technology in Africa is evolving to become more “Afro-centric,” moving away from simply emulating models from Amazon and other global giants. The innovation and growth models in Nigeria have matured and indigenized.

Overall, Nigeria’s start-up scene is witnessing remarkable progress, driven by determined entrepreneurs who demonstrate that significant achievements can be made with relatively small investments. With the rise of local capital and continued support from international venture funding, Nigeria’s start-up ecosystem is poised for further growth and its innovations are contributing to the nation’s economy

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