In Nigeria the optimism of Lagos start-up scene prevails

Entrepreneurs show much can be achieved with relatively small investments

Ifeoluwa Dare-Johnson’s career as a start-up entrepreneur in Nigeria began with a personal tragedy. Her father died of a treatable condition which nobody in the family knew he had.

“I got a call that I lost my Dad and that really changed everything for me — because I realised that, no matter what your ambitions, without good health they come to nothing,” she says.

“He had diabetes and hypertension for so long and nobody knew,” Dare-Johnson adds. “He didn’t feel there was any need for him to go and have a check-up and then, one day, he just slumped.”

Her grief was mixed with a sense of guilt because she had studied medical science and knew the importance of conducting regular check-ups. “I began to ask all my friends and nobody was paying attention to their own health.”

Her answer was to co-found Healthtracka in 2021, funded partly out of Silicon Valley. It offers home health tests, online consultations with doctors, and an app that logs test results so users can track their health readings.

Healthtracka is one of many participants in a Nigerian start-up boom that has sucked in venture funding from the US, Europe and Asia. Investors are betting that, if they can make it in Africa’s biggest national market, they may be able to build a business that spans the whole continent.

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This has lifted venture capital funding in Nigeria from an estimated $50mn in 2015 to nearly $1bn in 2022, says Benjamin Dada, publisher of Bendada.com, a local tech media publication. This year, funding has cooled because of a global crunch attributed mainly to rising interest rates, Dada notes.

Nevertheless, the optimism that underpins start-ups such as Healthtracka remains palpable as digital platforms enable companies to build scale at a speed barely imaginable a decade ago.

Healthtech, fintech, agritech, renewable energy, logistics and education are some of the sectors that have experienced strong inflows of capital, says Abubakar Suleiman, chief executive of Sterling Bank, a Nigerian commercial lender that invests in several domestic start-ups.

In addition to speed, another attraction of Nigeria’s tech scene is the ability to make an impact with relatively small investments. Healthtracka has delivered 20,000 tests to 5,000 users in 14 Nigerian states in the two years since it was founded, but it had seed capital of just $1.2mn, according to Dare-Johnson.

Its tests detect common conditions, including diabetes and some forms of cancer. One offering on its website is advertised as a “pre-wedding test” that allows users to “walk down the aisle with complete assurance”. It screens for tuberculosis, HIV, testosterone, hepatitis B and pregnancy.

Kola Aina, founding partner at Ventures Platform — a fund with a pan-African portfolio of 80 companies that have together raised more than $1bn — estimates that “about seven” unicorns (start-ups valued at more than $1bn) have emerged from the Nigerian tech scene in recent years.

“The number of unicorns will continue to grow,” comments Aina. “They are now a critical part of the national economy.”

Unicorns . . . are now a critical part of the national economy
Kola Aina, Ventures Platform
Aina adds that, while venture capital from the US, Europe and the UK has helped fuel start-ups across Africa and in Nigeria in particular, local capital is crucial: “We are seeing the rise of local capital. We think that merely having international capital without local capital can be problematic.”

Bigger ticket funding rounds are increasingly common. Manoj Sinha, chief executive of Husk Power Systems, a US clean energy company based in Colorado, is confident of raising $100mn in a current funding round to set up solar power installations in Nigeria and other countries in Sub-Saharan Africa.

Husk installs “mini-grids”, or solar modules, that enable rural and semi-rural communities to switch from expensive and polluting diesel generators, or to receive electricity supplies.

The change that such technologies promise is considerable in a country where many rural communities are isolated and as many as four out of 10 people live below the national poverty line.

Other start-ups work to improve the social fabric. Chibuzo Opara is co-founder of DrugStoc, a company that raised $4.4mn in 2021 to help combat the national scourge of fake medicines.

Since its 2017 launch, it has set up direct links with about 270 drug manufacturers and 3,500 hospitals and clinics, allowing them to cut out middle men who have long profited from inserting counterfeit drugs into the medical supply chain, Opara says.

DrugStoc has attracted investment from the Africa HealthCare Master Fund, a Singapore-based fund backed by Japanese money that has a portfolio of investments across Africa. Further investment has come from Vested World, a Chicago-based venture firm, and the German Development Bank.

Opara says it took trial and error to develop a system that ensures purity in the supply of medicine to hospitals and clinics. Technology in Africa is becoming “quite Afro-centric”, he says.

In the past, the view was, “‘I am just going to take whatever Amazon is doing and slap an African flavour on to it.’” But, now, “these innovations have matured and the growth models have indigenised”.