From Startup Fragility to Financial Resilience: Lessons Nigerian Entrepreneurs Must Learn

By Olumide Caleb

The Nigerian startup ecosystem stands at a decisive moment. On one hand, the country has become Africa’s leading hub for venture capital, attracting over $1.2 billion in funding in 2022, according to Partech’s Africa Tech Venture Capital Report. On the other, many of these ventures remain structurally fragile, scaling too quickly, burning cash unsustainably, and relying on weak foundations that leave them exposed to shocks.

The irony is clear. Capital continues to flow, yet survival rates remain low. The African Development Bank estimates that nearly 80 percent of African startups fail within five years, and Nigeria is no exception. For every celebrated success story like Flutterwave or Paystack, many promising ventures quietly shut down. The lesson is simple: capital matters, but resilience, governance, and discipline matter more.

From my perspective, the biggest cracks lay beneath the surface. Many startups are founded by brilliant innovators who neglect governance. Boards often exist in name only, offering little real oversight. Without accountability, decision-making becomes erratic, exposing businesses to regulatory risks and reputational damage. Neglecting governance is one of the most avoidable yet costly mistakes.
Business models are another weak point. The “growth at all costs” mantra may have worked in Silicon Valley, but in Nigeria’s volatile environment of inflation and currency depreciation, it is a dangerous gamble. When global capital slowed, many startups had no pathway to sustainable revenues. Copying foreign growth strategies without tailoring them to local realities left too many ventures vulnerable.
Weak financial management further compounds fragility. Too many startups operate without budgets, cash flow projections, or internal controls. Personal and business finances are often blurred, expenses go untracked, and compliance is treated as an afterthought. I have seen cases where sudden tax liabilities or penalties consumed resources that could have extended a startup’s runway. These are not failures of vision, but failures of discipline.

The wider environment has only amplified these weaknesses. Inflation is high, access to foreign exchange remains difficult, and new rules in fintech, data protection, and taxation raise the bar. Only ventures with sound systems and strong governance can navigate these realities effectively.

What must change is not only how startups raise capital but how they build. Governance must be substantive, not ceremonial. Boards should guide strategy and provide oversight, not act as rubber stamps. Financial discipline must become central to strategy, not an afterthought. Proper bookkeeping, regular cashflow reviews, and tax compliance may not be glamorous, but I believe they are what separate survival from failure.

Equally, sustainability must replace vanity. Startups should focus less on inflated growth metrics and more on recurring revenues, loyal customers, and positive margins. Processes such as payroll, procurement, and reporting may sound routine, but they form the scaffolding that enables scale. In my opinion, the absence of such processes explains why many promising ventures stumbled when asked to grow.

Investors themselves have begun rewarding resilience. With global venture funding slowing, I believe scrutiny has increased. Governance, audited accounts, and credible profitability paths are now decisive. Startups that embrace transparency and financial discipline stand out in this new environment.

There are lessons in the firms that endured. Those that invested early in governance, adapted products to local realities, and diversified revenue streams proved stronger when storms hit. In my view, resilience behaves like compound interest. Small, consistent acts of prudence accumulate into lasting strength.
Nigeria’s entrepreneurs are among the most creative in the world, but creativity alone will not sustain businesses. The failures of recent years should serve as a wake-up call. Fragility must give way to resilience, and short-term hustle must give way to long-term stewardship.

I believe the opportunity before us is immense. With a population of over 200 million and a rapidly growing digital economy, the rewards for building disciplined, resilient companies are immense. But the future will belong to founders who recognize that governance, financial discipline, and structured processes are not optional. They are the very foundation of enduring success.

If Nigerian entrepreneurs embrace this shift, the next decade will deliver not only celebrated valuations but lasting companies that transform industries, create jobs, and strengthen the economy. That, in my opinion, is the change we must now pursue.