A new report by TLP Advisory, a venture capital law firm, has found that only 15 percent of Nigerian startups make above N250m ($149,000) annually.

The report, “A Decade of the Nigerian Venture Ecosystem 2024—Numbers, Insights & Stories,” further revealed that 30 percent of the startups generate between N50 million and N200 million annually, with 49 percent generating less than N10 million in the same period.

According to the report, founders have said that revenue is largely determined by the cost of doing business, which is high, as over half of the startups have said that they are currently not making a profit.

“Fifty-one percent of startups are not making a profit, leaving 49 percent recording profitability,” the report read. In funding, the tech ecosystem has had it better with the $1.75 billion raised in 2021. However, between 2022 and 2023, it dropped from $1.2 billion to $500 million, leading to the shutdown of numerous startups.

TLP Advisory reported that access to finance is the biggest hurdle for over 20 percent of founders, with 18 percent claiming it as their main barrier.

“Limited or no access to finance is the primary barrier to business growth, with 22 percent of the founders stating it to be their chief problem, coming ahead of “inadequate marketing,” with 18 percent confirming it as their main barrier and 15 percent stating their chief problem was “business/revenue model” and “government policies” respectively,” it said.

These findings align with other research on access to finance, infrastructure and power supply, government policies, and talent acquisition and retention as the critical challenges of the Nigeria tech ecosystem.

The effect of reduced funding in the ecosystem has been felt across the board, as 54 percent of the respondents indicated that they had not raised any capital—for some of these companies, that means since inception.

Founders revealed that the top reasons for the inability to raise funds were “access to investors,” followed by “access to funding information,” and “high interest rates.”

However, many founders noted that funding was “not needed,” while others felt it was too early for their businesses to seek financing.

“People who raised money in US dollars, who are earning in naira, and who have to report to investors who invested in US dollars need to be doing almost three times more work and earning three times more income because the currency has devalued by more than 70 percent,” said Femi Longe, co-founder and non-executive director, CcHUB.

For businesses that raised funds within the past 10 years, TLPAdvisory’s findings suggest that it might be relatively easier to raise funds in the earlier years of a business as 81 percent of the companies secured their funding within the first 4 years of operations, while the other 19 percent were able to secure funding from the fifth year onward, with the number of companies able to secure funding dwindling with each passing year of their existence.

The report revealed that the most common funding sources were angel investors (including friends and family) (43 percent).

It read, “Forty-three percent of startups raised funds from angel investors as well as friends and family, with 24 percent raising venture capital funding while 18 percent and 15 percent secured funding through debt financing (including convertible notes) and grants, respectively.”

The report added that companies believe in having a company culture, with 80 percent of founders indicating that their firms have identifiable company cultures.

When asked about the aspects of their culture that sustain their business, “collaboration and teamwork” emerged as the most significant aspect of culture as 13 percent of respondents confirmed, followed closely by “open communication” and “innovation and creativity” with 12 percent respectively.

Global startup acquisitions are dynamic and competitive, with various countries emerging as leaders in fostering innovation and entrepreneurial activity. In recent years, the growth of startup ecosystems has been particularly pronounced in nations that combine robust economic frameworks with supportive regulatory environments.

The Tech Startup M&A 2024 report states that the leading sectors for investment have been healthcare/biotech and AI-related companies between 2000 and today.

There is a significant change in the global large company revenue and countries around the globe are investing heavily in startups to stay competitive. The report sheds light on the countries at the forefront of acquiring startups, with a particular focus on sectors like healthcare, biotech, and artificial intelligence (AI).

According to Tech Startup M&A 2024 report, here are the top 10 countries leading the chart in global startup acquisitions

United States

The U.S. reigns supreme in the world of startup acquisitions, dominating with an impressive 71% of global deals. Silicon Valley is the engine of this growth, with tech giants like Google, Apple, Amazon, and Microsoft driving almost a third of startup acquisitions within the Fortune Global 500. Since 2000, these American companies have invested nearly $477 billion across 1,785 deals, underscoring the nation’s unshakeable influence on the startup scene.

China

While China’s influence in Fortune 500 rankings has skyrocketed to an astonishing 27% representation, the nation plays a more conservative role in startup acquisitions. Major players like Alibaba and Xiaomi are expanding their reach abroad, with China completing 78 deals worth $32.2 billion. Although China’s global impact faces headwinds due to recent U.S. restrictions, the nation’s tech sector continues to make waves globally.

United Kingdom

Though the UK’s slice of the Fortune 500 pie has narrowed, it remains Europe’s strongest contender in startup acquisitions. Leading the way in tech and finance, UK companies are heavily involved in Europe’s total of 471 startup deals, collectively valued at £97 billion. With a strong focus on sectors such as fintech and clean energy, the UK shows no signs of slowing down in the acquisition race.

Japan

Japan has seen its presence on the Fortune Global 500 dwindle over recent decades, yet the nation remains a powerful force in global acquisitions, particularly in automotive and advanced tech. Japan’s companies are evolving to stay competitive, acquiring startups that fuel next-gen technologies and robotics, underscoring Japan’s resilience in the global arena.

Germany

Germany’s prowess in engineering and manufacturing is well known, and it leverages this advantage to make targeted startup acquisitions. German companies remain invested in Europe’s evolving tech scene, focusing on sustainable technology and industrial AI solutions. With an eye on the future, Germany is securing its position in the M&A world, even as Fortune 500 representation declines.

France

France is making bold moves in the global startup scene, with a keen interest in biotech, AI, and green technology. French companies are making significant strides in digital health and sustainability solutions, solidifying their role as one of Europe’s major startup investors. While Fortune 500 rankings may fluctuate, France is building a future-ready business ecosystem.

South Korea    

South Korea’s presence on the Fortune Global 500 has grown steadily, from 11 companies in 2000 to 18 today. Tech heavyweights like Samsung and LG are at the forefront, acquiring startups that specialise in semiconductors, electronics, and cutting-edge AI. South Korea’s rise reflects its determination to stay competitive in an innovation-driven economy.

Canada

Canada’s startup scene is flourishing, and so is its influence on global acquisitions. Canadian companies are increasingly targeting startups in artificial intelligence, renewable energy, and healthcare, reflecting the nation’s commitment to future-forward industries. With 14 companies in the Fortune Global 500, Canada is punching above its weight in the global M&A game.

India

India may be relatively new to the Fortune 500 roster, but it’s making big moves in the startup world. As one of the fastest-growing tech hubs globally, Indian companies are acquiring startups in e-commerce, fintech, and digital services to strengthen their position in a highly competitive market. India’s startup acquisitions signal a larger economic strategy aimed at sustained growth.

Brazil

Brazil’s business landscape has undergone a significant shift, with the number of Fortune 500 companies climbing from two to eight. Brazilian firms are increasingly active in startup acquisitions across Latin America, particularly in fintech, agriculture, and logistics. Brazil’s rise in the startup M&A space is a testament to its growing economic influence and regional leadership.