Over 25 million Nigerians have dipped their toes into the world of crypto assets, embracing digital currencies like stablecoins with open arms. These virtual currencies, particularly stablecoins such as USDT, are revolutionizing how money is transferred, stored, and used in Nigeria. From facilitating peer-to-peer remittances to simplifying cross-border business transactions, stablecoins have become an integral part of everyday financial activities for many Nigerians.
Despite the impressive adoption rates of cryptocurrencies in Nigeria, there seems to be a puzzling trend unfolding in the world of Web3 startups – they are struggling to secure adequate funding. According to a recent report by Hashed Emergent, a VC firm specializing in Web3 technologies based in India, Nigerian startups operating within the Web3 sector managed to raise a meager $20 million in 2024. This figure represents a slight decrease from the $22 million raised in the previous year.
In contrast to this stagnation in funding for Nigerian Web3 startups, other sectors across Africa experienced a more significant decline in investment levels. In 2024, African startups collectively secured $2.2 billion in funding—a 25% drop from the figures recorded in 2023. However, it is worth noting that the decline observed among Nigerian Web3 startups has regressed to levels reminiscent of those seen back in 2021.
The apparent paradox here lies in the mismatch between the growing demand for crypto solutions at a local level and the waning confidence exhibited by global investors towards supporting these ventures financially.
The Rise of Blockchain Infrastructure Projects
While some segments within the Web3 space are facing funding challenges, blockchain infrastructure projects continue to attract investor attention and capital infusion. These projects accounted for over half of all funding allocated across various sectors throughout 2024.
One standout deal that captured market interest was Zone—a blockchain-based payment processor that successfully closed an impressive $8.5 million financing round during 2024. Similarly, Hyperbridge—an interoperability project specializing in cross-chain technology—gained substantial traction after securing $5.3 million through seed funding initiatives.
Conversely, Web3 finance startups no longer enjoy robust support from investors as they once did. Platforms focusing on areas such as cryptocurrency exchanges, decentralized finance (DeFi) applications, and real-world asset (RWA) platforms witnessed subdued activity throughout 2024 compared to their peak performances recorded back in 2021 and 2022.
Investor Sentiments and Shifting Priorities
The dwindling investments seen across financial app-centric startups signal a notable shift occurring within investor circles regarding priority sectors for deployment of capital resources.
Crypto Valley VC (CV VC), one of Africa’s active venture capitalists with keen interests within the tech space has pivoted towards providing funds primarily through ecosystem-led grants aimed at nurturing early-stage Web3 enterprises.
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Ecosystem-backed Funding Initiatives: A Balancing Act
To mitigate risks associated with investing within uncertain regulatory landscapes like Nigeria’s evolving Web3 ecosystem landscape; noteworthy VC entities such as CV VC have embarked on issuing small-scale investments dubbed ecosystem-led grants aimed at fostering growth while keeping abreast with emerging trends.
In recent years CV VC extended its financial backing towards Nigerian-based web ventures Ivorypay and Jamit by injecting $135k via its CV Labs accelerator programs aimed at equipping promising start-ups with requisite tools necessary for scaling up operations.
Regulatory Hurdles: Impeding Growth Trajectory
Navigating through Nigeria’s intricate regulatory framework proves daunting for many budding entrepreneurs seeking stability within their operational environment.
The Central Bank of Nigeria’s (CBN) stringent stance on cryptocurrencies backdated to its restrictions imposed during 2021 coupled with recurrent crackdowns targeting crypto exchanges significantly clouds operational clarity.
Even though efforts put forth by authorities like The Securities and Exchange Commission (SEC) outlining an Accelerated Regulatory Incubation Programme (ARIP) appear promising; inconsistencies alongside persistent delays hamper seamless entry points for Virtual Asset Service Providers (VASPs).
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This uncertainty often compels start-ups to explore offshore bases which inadvertently curtails local impact whilst complicating access routes pertinent regional financing avenues.
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Web Ventures Expanding Horizons – Yet Facing Financing Quandaries
As burgeoning web start-ups strive beyond domestic borders envisioning continent-wide expansions especially targeting nations boasting robust crypto ecosystems – namely; Nigeria,
Ethiopia,
South Africa,
and Kenya where digital currency acceptance thrives.
A clear illustration can be deduced from Kenyan-based Kotani Pay venturing into South Africa acquiring requisite licenses owing primarily due “Kenya’s ambiguous regulatory climate concerning virtual assets”.
## Stablecoin Surge Amidst Funding Freeze##
While traditional fundraising mechanisms experience downturns; stablecoin adoption surges rapidly both locally alongside global domains prompting profound impacts especially within payments sector.
Significantly exemplified manifested Circle launching Circle Payments Network involving key affiliates Flutterwave & Onafriq designed fostering swift cheaper settlements courtesy USDC Stablecoin abbreviation
Mastercard spearheads novel partnerships partnering OKX card payments company Nuvei blockchain-based financial payments behemoth Circle initiating launch cards & payment utilities geared merchants facilitate accepting stablecoin payments thereby bridging digital currencies closer mainstream acceptance paradigm.
Emphasizing broader undertakings Mastercard delves deeper furthering partnership trajectories aligning Consensys-owned MetaMask Baanx allowing MetaMask users exercise cryptocurrency utility fulfilling regular purchases fiat currency.
### Conclusion
As capital flow recedes startup founders proactively pivot resort crowd sales graft programmes sustaining project viability evolutionarily catalytic roles encompassed ecosystem-led driven initiatives collaborating symbiotically amplifying growth horizons.
Developer communities flourishing notably illustrated quintessential examples showcased via thriving platforms namely;
WebBridge cited SuperteamNG amassing colossal support base under auspices L1 & L2 blockchains advocating indigenous talent cultivation.
Alas progress tangible materialization hinges upon definitiveness regulators SEC asserting dominance officially enunciating jurisdiction pertaining digital assets pledging laying detailed directives crucially pivotal juncture witnessing maturation typical uncertainties discernible capacious desires aspiring talents remain unmet awaiting favorable capitulation ensuing scale attainment homegrown terrain remains formidable enduring challenge manifestly.
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