Choosing a Market Focus

Across the continent, fintech is a popular sector with investors. This is also true in Nigeria, with companies like Riby and Paystack attracting significant investor interest.

Targeting Consumers

The most prominent tech start-ups globally are the ones people interact with on a daily basis, like Instagram, Venmo, WhatsApp, and the like. They target consumers, not businesses.

Many Nigerian start-ups, however, find it difficult to crack the B2C market, where the costs of acquiring a new user is high and the typical user’s spending power low. Besides the fast moving consumer goods (FMCG) companies, few companies have been able to tap into the B2C market successfully.

Start-ups’ lack of desire to target consumers is also because the potential market size is not as large as the headline numbers suggest. One entrepreneur, for instance, pointed out that telecoms sell data bundles that restrict data usage to specific apps, like WhatsApp or Facebook — they will not be able to access your start-up’s online service. Multiple other start-ups and investors also stated that while the country has a large population overall, it has a small middle class.

Targeting Businesses

For these reasons, many of the start-ups in Nigeria target businesses, who have more cash to pay for the start-ups’ products and services; start-ups who start out as B2C end up pivoting to B2B or business to business to consumer (B2B2C). If your solution is a truly B2C one, potential investors will likely ask a lot of questions around how you plan to make money in a market where so many others have not had success. Expressing the sentiment that Nothing goes viral in Nigeria, one investor in Nigerian start-ups said it is important for start-ups to think carefully through their customer acquisition and growth strategy.