Are Startups the new 419 in Nigeria?
Many aspiring founders are jumping into startups for the wrong reasons, and the current crop of founders are showing some troubling signs.
The blessing
Let's give credit where it's due—the Nigerian startup boom has been nothing short of a miracle. If you're in tech, finance, marketing, or anything remotely resembling those fields, you’ve probably joined the “Thank God for Startups” choir. Foreign VCs and angel investors have poured in enough dollars to make us all believe in miracles again. Competitive salaries? Yes, please.
And it’s not just about the money; these investments have powered up startups like Paystack and Flutterwave to fix real problems. Remember when accepting payments online in Nigeria felt like trying to solve a Rubik’s cube blindfolded? Yeah, those days are (mostly) over. Now, businesses can function like they're in a first-world country, and everyone benefits.
In short, startups have been our tech saviors, blessing us with jobs, boosting the economy, and finally pushing us into the digital age. Hallelujah!
The Curse
But, of course, every blessing comes with a curse. In our case, it’s a nasty little cocktail of shady financial practices, reckless spending, and—wait for it—people entering startups with the full intention of pulling off a legal 419. This isn’t just bad news for the startups; it’s a ticking time bomb for the entire ecosystem. When the trust evaporates, so does the money.
Let’s start with the "financial practices" (and I use that term loosely). Picture this: a founder is chilling with a $100,000 annual salary, while the senior manager (yes, senior) is surviving on ₦12 million a year—about $7,500 if you’re feeling charitable with the exchange rate. For context, that’s not even enough to keep up with Nigeria's inflation, let alone live the champagne startup lifestyle. So, what happens next? Employees get demoralized and start updating their LinkedIn profiles, hunting for jobs at foreign companies where they might be able to afford groceries.
Then, we have the “What, this isn’t my personal piggy bank?” founders. You know the type: Investor funds somehow end up funding vacations, romantic getaways, and international “retreats” where the only thing they’re strategizing is how to blow more money. Expensive cars, luxury condos, lavish dinners—everything but investing in the actual business. When the cash finally runs out (as it inevitably does), they cut staff salaries because, hey, those first-class flights to Paris won’t pay for themselves.
And then there’s the crème de la crème: the outright fraudsters. These guys should get an award for Best Fiction in a Pitch Deck. They have all the right buzzwords, the fancy demo (that barely works), and just enough charisma to make investors think they’re funding the next unicorn. Spoiler alert: they aren’t. Once they’ve pocketed the cash, they scramble to actually build the product, but since half the numbers were fabricated, it’s just a matter of time before the whole thing collapses in a heap of excuses and "Oh well, we tried." Investors? Left holding the bag, with a mental note to avoid Nigerian startups like the plague.
The Truth
Fixing this isn’t as straightforward as you’d think. Part of the problem is that it’s deeply ingrained in the way we do business here. Scamming is practically a cultural institution. We’ve all heard the stories: the real estate agent who sells you a house that’s already been sold to five other people; the Computer Village vendor who swaps your shiny new phone for a glorified paperweight. Corruption has become so normalized that even in startups, some founders treat it like a business strategy.
And sure, we could bring in the government to regulate things, but let's not kid ourselves. More government involvement will likely result in startups being seen as new ATMs for taxes, bribes, and whatever else they can cook up. The last thing we need is more bureaucracy, with officials rubbing their hands together at the thought of all that juicy foreign investment.
So what’s the actual solution? Honestly, it’s you. Yeah, you—the one reading this. If you’re a founder or in a leadership role, maybe don’t be a terrible person. Hold yourself accountable. Set standards that don’t make people regret ever giving you money. If enough of us do this, we might just create an environment where fraudsters get weeded out, and investors don’t feel like they’re playing startup roulette every time they write a check. The rest? They’ll either get publicly shamed or ghosted by users.
Thanks for reading,
Obi