Nigerian Tech Funding Failures: $79M Lost in Recent Shutdowns

Gigi Kenneth
Jul 6
7 min read

The Nigerian tech ecosystem has experienced a devastating wave of closures, with well-funded startups collectively losing over $79 million in investor capital between July 2024 and July 2025.

The most significant closure was Okra, which returned only $4-5.5 million to investors after raising $16.5 million, highlighting the broader funding crisis facing African startups. This represents the largest capital destruction event in Nigerian tech history, affecting companies across fintech, edtech, healthtech, and crypto sectors.

The timing coincides with African startup funding plummeting 57% in the first half of 2024, creating a perfect storm where even promising, well-funded companies couldn't secure follow-on rounds or achieve profitability in time.

Major company closures and their funding history

Okra: Nigeria's biggest funding loss

Sector: Open Banking API Infrastructure

Total Funding: $16.5 million across three rounds

Shutdown: May 2025

Okra raised the most capital of any recent Nigerian startup closure, securing $1 million in pre-seed funding from TLcom Capital in 2020, followed by a $3.5 million seed round led by Susa Ventures in 2021, and a $12 million Series A led by Base 10 Partners in 2022.

Key investors included Accenture Ventures and several prominent angel investors from Robinhood and GoFundMe.

The company aimed to democratize financial services through open banking APIs, connecting over 400 fintech companies. However, rising infrastructure costs, regulatory delays (Nigeria's open banking rules were postponed until August 2025), and competitive pressure from established players forced the closure. In an unusual move, Okra returned an estimated $4-5.5 million in unspent capital to investors, representing a "responsible exit" according to co-founder Fara Ashiru Jituboh.

Edukoya: Africa's largest edtech pre-seed failure

Sector: K-12 Educational Technology

Total Funding: $3.5 million (Africa's largest pre-seed for EdTech)

Shutdown: February 2025

Founded by former Kuda Bank CMO Honey Ogundeyi, Edukoya secured record-breaking pre-seed funding led by Target Global in 2021.

Notable investors included Paystack CEO Shola Akinlade, Kuda founders Babs Ogundeyi and Musty Mustapha, and Stash founders Brandon Krieg and Ed Robinson.

Despite impressive traction serving 80,000+ students, facilitating 15+ million answered questions, and hosting thousands of daily live classes, the company faced insurmountable market challenges.

Widespread connectivity issues, limited device access, and low disposable income among target families made the subscription model unsustainable. The 50% increase in telco tariffs and naira devaluation further compressed the addressable market. Ogundeyi concluded the company was "ahead of its time" and chose to return capital to investors rather than continue burning through funds.

Thepeer: Controversial fintech API shutdown

Sector: Fintech API/Payments Infrastructure

Total Funding: $2.3 million

Shutdown: April 2024

Thepeer raised $220,000 in pre-seed funding from Paystack co-founder Ezra Olubi in 2021, followed by a $2.1 million seed round led by Raba Partnership in 2022. Other investors included RaliCap, Timon Capital, BYLD Ventures, and Musha Ventures.

The company's closure became controversial when shareholders discovered only $450,000 remained from the $2.1 million seed round, prompting calls for an audit. CEO Kosisochukwu Chike Ononye cited compliance issues and slow wallet payment adoption as primary reasons for failure. The company attempted to connect fintech wallets across Nigeria's fragmented payments landscape but struggled with regulatory hurdles and market acceptance. In a rare move, Thepeer returned the remaining $500,000 to investors.

54gene: Nigeria's largest biotech failure

Sector: Genomics and Precision Medicine

Total Funding: $45 million

Shutdown: July 2023 (process extended into 2024)

The genomics company raised $4.5 million in seed funding from Y Combinator and others in 2019, followed by a $15 million Series A led by Adjuvant Capital in 2020, and a $25 million Series B in 2021. Key investors included Cathay AfricInvest Innovation Fund, KdT Ventures, Endeavor Catalyst, and Ingressive Capital.

Founded by Dr. Abasi Ene-Obong, 54gene aimed to build Africa's largest genomics database for precision medicine and drug discovery.

The company's downfall involved allegations of financial impropriety, three CEO changes in the final year, and a valuation collapse from $170 million to $50 million. Revenue from COVID-19 testing couldn't offset high operational costs and governance issues. The closure process involved seeking buyers for valuable biobank assets containing African genetic samples.

Sector-specific breakdown and patterns

Fintech dominance in failures

Fintech companies represented 50% of major closures, reflecting both the sector's heavy funding activity and structural challenges.

Beyond Okra and Thepeer, other notable fintech failures include:

Pivo ($2.6 million, Y Combinator-backed) shut down in December 2023 due to co-founder conflicts between CEO Nkiru Amadi-Emina and COO Ijeoma Akwiwu.
Lazerpay ($1.1 million, backed by Paystack's Shola Akinlade) closed in April 2024 after failing to secure additional funding amid crypto regulatory uncertainty.
Zazuu ($2 million, backed by Kuda's Babs Ogundeyi) folded in November 2023 just four months after raising its Series A.

Crypto casualties from regulatory uncertainty

Nigeria's unclear cryptocurrency regulations decimated the Web3 sector. Three major crypto companies shut down: Lazerpay (payment gateway), Bundle Africa ($450,000 funding), and Vibra ($6 million, backed by Dragonfly Capital).

These companies collectively processed millions in transactions but couldn't navigate regulatory ambiguity and secure follow-on funding.

EdTech and healthtech struggles

Beyond Edukoya, the education sector saw Quizac shut down despite declining a $250,000 term sheet, only to be quickly acquired by Tekedia Capital.

In healthtech, 54gene's spectacular failure highlighted the challenges of high-capital, long-development-cycle businesses in emerging markets.

Investment patterns and investor impact

Major investors affected

TLcom Capital, Susa Ventures, and Base 10 Partners suffered the largest losses through Okra's closure. Target Global's investment in Edukoya and Y Combinator's backing of multiple failed companies (Pivo, 54gene) highlight how even experienced investors couldn't predict the funding winter's severity.

Prominent angel investors also faced significant losses, including Paystack CEO Shola Akinlade (invested in Edukoya and Lazerpay), Kuda founders (Edukoya and Zazuu), and multiple Paystack alumni across various companies.

Time between funding and failure

Most companies shut down 18-24 months after their last funding round, suggesting initial capital lasted longer than typical 12-18 month runways due to lower burn rates in Nigeria.

However, companies that raised in 2022 at the peak of the funding boom were particularly vulnerable as the market turned before they could secure follow-on rounds.

Underlying causes and market conditions

The funding drought effect

African startup funding dropped 57% in H1 2024, with Nigerian companies seeing a 77% decrease. This created a scenario where even companies with strong traction couldn't secure bridge funding or Series A/B rounds. The global rise in interest rates made capital more expensive, while geopolitical tensions reduced investor appetite for emerging market risk.

Regulatory and economic headwinds

Nigeria's 34.8% inflation rate and massive naira devaluation increased operational costs for companies with USD-denominated expenses (cloud infrastructure, international tools). Regulatory uncertainty, particularly around crypto and fintech licensing, created additional compliance costs and operational risks.

Market readiness challenges

Several companies discovered their solutions were "ahead of their time," particularly in EdTech where connectivity issues, device access limitations, and low disposable income made scaling difficult. The consumer market's limited purchasing power forced many B2C companies to pivot to B2B models or shut down entirely.

Investor behavior and capital preservation

Responsible exit trend

A notable trend emerged of founders returning unspent capital to investors rather than continuing to burn through funds. Okra returned $4-5.5 million, Thepeer returned $500,000, and Edukoya returned portions of their funding. This represents a maturation of the Nigerian startup ecosystem where founders make difficult but ethical decisions when facing insurmountable challenges.

Due diligence intensification

Investors increased scrutiny of portfolio companies, with Thepeer's shareholders demanding audits and Pivo's investors attempting intervention in co-founder conflicts. This reflects a shift from the rapid deployment strategies of 2021-2022 to more careful monitoring and governance.

My predictions for what comes next

I've always viewed venture capital as a legal gamble where investors see a promising project and want to extract as much equity value as possible from it. What really interests me is understanding what actually happened within these companies, was it founder greed or investor pressure that led to these failures?

Take the 54gene case, where the founder was essentially caught between a rock and a hard place and eventually forced to step down as CEO. This reminds me of a similar situation with the former CEO and founder of Leatherback, who built the company to popularity only to be asked to step down later. These patterns suggest deeper governance and power dynamics at play beyond simple market conditions.

The negative news cycle is already having consequences, for example, Y Combinator has stepped back from Africa. While some success stories might help remedy this perception, I suspect we'll see more funders retreat from the market.

However, the more experienced investors who understand that startup failures are part of the ecosystem may continue investing, potentially finding better deals as competition decreases.

Personal reflection

I think everything depends on what you're building and why you're building it. When we started building Asele, my team and I made a deliberate decision to bootstrap as much as possible and see how far we could go. We plan to hit product-market fit first and a few more milestones, then assess whether we actually want to raise funds or not.

After spending months researching while working as a program manager for what was essentially an accelerator, I've come to believe that funding rounds are overrated. Everyone loves a winner and wants to be part of the winning team so they can extract maximum value.

Here's my take: if you're building to scale fast and sell, keep raising rounds aggressively.

But if you're building something that's meant to last, you may want to seriously reassess your approach. Bootstrap longer, prove your model works, and only raise capital when you truly need it for sustainable growth, not just because it's available or expected...like Canva.

Conclusion

The wave of Nigerian tech company closures represents more than individual business failures; it signals a fundamental reset in the ecosystem. While the $79 million in lost capital is substantial, the trend toward responsible exits and capital returns suggests a maturing market where founders prioritize ethical behavior over prolonged struggles.

The failures highlight systemic challenges: regulatory uncertainty, market readiness issues, infrastructure constraints, and the global funding downturn. However, they also provide valuable lessons for future companies about sustainable business models, appropriate funding strategies, and the importance of achieving profitability before the next funding winter arrives.

For investors, these closures underscore the importance of supporting portfolio companies through difficult periods while also recognizing when responsible exits serve all stakeholders better than prolonged struggles. The Nigerian tech ecosystem's ability to learn from these failures will determine its resilience and future growth trajectory.

Resources

*Research compiled with AI assistance