In its latest report titled “The Global Startup Ecosystem Report 2023,” Startup Genome, a policy advisory and research organization, has revealed that the technology ecosystem in Lagos State is estimated at $8.4 billion as of the end of 2022.
Although this value falls below the global average of $34.6 billion, the report highlights the significant potential and rapid growth of the Nigerian city’s startup scene.
The report sheds light on Lagos’ emergence as Africa’s largest metropolitan area and a prominent commercial centre. With a population of 24 million residents, Lagos has established itself as a vibrant and fast-growing tech hub, hosting over 88 percent of Nigeria’s total startups, totalling around 400 companies.
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Funding Landscape and Investor Interest
Startup Genome’s report reveals that Lagos’ technology ecosystem attracted a total of $824 million in early-stage funding from the second half of 2020 to the end of 2022, slightly below the global average of $970 million. Additionally, the venture capital funding received by Lagos-based startups amounted to $3.3 billion, below the global average of $6.6 billion. However, the median Series A round in Lagos reached an impressive $15 million, surpassing the global average of $6 million.
The report also emphasizes Lagos’ growing pool of tech talent and its attractiveness to global companies seeking skilled professionals. With a median age of 18.1 years and accounting for 82 percent of Africa’s telecom subscribers, Nigeria has become a hotbed for tech talent. Google and Accenture’s Africa Developer Report 2021 highlights that Lagos alone added 5,000 software developers between 2020 and 2021, reaching a total of 89,000 developers. The city’s thriving tech ecosystem has become a magnet for these talented individuals, resulting in increased interest from global firms looking to tap into Lagos’ wealth of expertise.
Fintech Dominance and Cashless Policy Boost
Lagos stands as the epicentre of fintech innovation in Nigeria, with over 90 percent of the country’s fintech companies based in the city. In 2022, fintechs in Lagos raised an impressive 49 percent of the total investment in the country. The report attributes this success to Nigeria’s cashless policy, introduced in 2012, which has spurred the development of fintech startups. These companies primarily focus on lending and payment solutions, capitalizing on the growing demand for digital financial services.
Sub-Saharan Africa’s Growth and Lagos’ Emerging Ecosystem Ranking
While no sub-Saharan African ecosystems made it into the top 30+ runners-up ranking, the report emphasizes that the region is experiencing significant activity.
From 2018 to 2022, early-stage funding in Sub-Saharan Africa grew by an impressive 227 percent, with a 43.8 percent increase in the number of early-stage deals. Lagos, despite not securing a position in the top 30+, maintained its status within the 51-60 range of the emerging ecosystems ranking, showcasing its sustained growth and potential.
Lagos: A Hub for Innovation Across Sectors
Adenike Adeyemi, the Executive Director of FATE Foundation, praises Lagos’ dynamic and resilient startups for leading innovation across multiple sectors, including financial services, health, climate change, and education.
“Lagos is home to dynamic and resilient startups that, despite a challenging macro environment, continue to lead innovation across many sectors, including financial services, health, climate change, and education. They do so not just within Nigeria but across the continent.” She said.
Despite facing challenges within the macro environment, Lagos-based startups continue to drive innovation not only within Nigeria but also across the African continent.