In 2025, the Nigerian tech ecosystem is seeing scattered interest in early-stage funding activity, with occasional spurts of startups securing small-ticket pre-seed and seed funding rounds. However, a deeper dive into recent investment data by Launch Base Africa reveals a more concerning reality: a significant funding cliff awaits companies poised to scale, underscoring a lack of late-stage growth capital in Africa’s largest economy.

While founders are successfully launching and securing initial backing, the path to raising a Series B round and beyond is the exception, not the rule. This funding gap threatens to hinder the growth of promising scale-ups before they can achieve regional dominance.

A Trickle of Growth

The data clearly highlights an investment landscape heavily skewed towards the early stages of the startup lifecycle, signaling caution among investors who seem uncertain about Nigeria’s economic trajectory. Seed rounds are notably substantial (although few and scattered compared to other ‘Big Three’ ecosystems in Africa this year), with companies from various sectors securing essential capital. Examples include:

• Cutstruct (Construction Tech): $1.5M Seed
• Carrot Credit (Fintech): $4.2M Seed
• Platos Health (Healthtech): $1.4M Pre-seed
• Salpha Energy (Clean Energy): $1.2M Seed

In stark contrast, late-stage deals are virtually non-existent in 2025 from reported funding information. The sole example is Arnergy’s $15 million Series B extension, a deal that notably relied on a consortium of Development Finance Institutions (DFIs) and impact investors like British International Investment (BII) and All On, rather than traditional global growth equity funds.

While a few companies have raised significant, eight-figure sums, they are outliers and often not traditional Series B rounds. LEMFI’s massive $53M round and Kredete’s $22M Series A show that large cheques are available for standout fintechs. However, these successes underline the scarcity for everyone else and highlight that even large rounds are often still at the Series A stage.

Why the Late-Stage Gap Exists

The bottleneck at Series B is not a result of a shortage of promising companies — Nigeria is full of them, particularly following its recent successes. The real challenges seem to lie in a combination of investor caution, macroeconomic pressures, and an evolving exit landscape.

1. Macroeconomic Headwinds: For global growth-stage investors, deploying large amounts of capital (typically $20M+) into a market with significant currency volatility like Nigeria presents a substantial risk. The long-term hold required for a Series B investment is complicated by unpredictable foreign exchange fluctuations.
2. Scarcity of Growth-Stage Funds: The Nigerian and broader African VC landscape is largely dominated by funds specializing in pre-seed and seed investments. This year, many Nigerian VC funds have notably shifted focus, seeking opportunities in Egypt, Ghana, and Francophone countries. Locally or regionally focused funds with the mandate and capital to lead a $25M+ Series B round are scarce. As a result, startups are left competing for the attention of a small pool of global investors who may not have a specific focus on Africa.
3. Uncertain Exit Pathways: Late-stage investors write sizable cheques with the expectation of a clear path to an even larger exit, typically through an IPO or a major acquisition. However, Nigeria’s public markets are not yet a common exit route for tech companies, and large-scale acquisitions by global players remain infrequent, even five years after Paystack’s landmark exit. This uncertainty around potential returns makes growth equity investments less attractive. Most investors seem to favor early-stage deals, driven by opportunities in the secondary markets. Limited partners, perhaps, are now enforcing more rigid business terms.

Debt and DFIs Bridge the Void

In the absence of traditional venture equity, Nigerian scale-ups are increasingly turning to alternative financing. The data shows a notable presence of debt financing and specialized funding facilities, often provided by DFIs and local banks. 

• Babban Gona, an agritech company, secured a $7.5M debt round from BII.
• Odyssey Energy Solutions landed a $7.5M funding facility, also from BII.
• gamp, an IT management fintech, raised an undisclosed debt round from local financial institutions.

This trend indicates that while equity for growth is scarce, debt and alternative capital from development-focused institutions are becoming a critical lifeline for companies needing to scale operations without giving up significant ownership.

For Nigeria’s tech ecosystem to produce more continental and global giants, closing the late-stage funding gap is the next critical challenge. While the seed-stage foundation is growing, it still lags behind other global markets. The real hurdle at the moment lies in building the bridge to scale.