FROM PITCH TO PROFIT: LEGAL MUST-KNOWS FOR BUILDING AND SCALING STARTUPS IN NIGERIA

Entrepreneurship has become the backbone of Nigeria’s economy. A 2023 Forbes Africa statistics report stated that the number of startups in Nigeria surpassed 3,360, ranking among the highest in Africa.[i] The report further states that these
startups are responsible for a notable increase in employment in the Nigerian labour sector. This article highlights the key legal considerations every entrepreneur must know to build and scale a sustainable startup in Nigeria.

WHAT IS A STARTUP?
A startup is an early-stage business built on a scalable model with the aim of achieving rapid growth. According to the Nigeria Startup Act (NSA), 2022, a start-up is a company which has been in existence for a period not more than 10 years with its objectives being the creation, innovation, production, development or adoption of a unique digital technology innovative product, service or process.[ii] The Companies and Allied Matters Act (CAMA) 2020 is the primary legislation governing the creation and establishment of businesses in Nigeria. However, in relation to startups in Nigeria, the Nigeria Startup Act 2022 has been enacted to make provisions solely for the regulation of startup businesses in Nigeria. This Act represents a novel attempt to centralize and streamline startup regulation in Nigeria, reflecting the government’s recognition of tech startups as key economic
drivers.

The Nigerian Startup Act 2022 establishes the National Council for Digital Innovation and Entrepreneurship (The Council), with representation from relevant Ministries and Agencies of the Federal Government and the Nigerian Startup Ecosystem, to support complementary policy-making and approve programs for the development of startups in Nigeria.[iii] The Act also provides for the establishment of the StartupInvestment Seed Fund, managed by the Nigerian Sovereign Investment Authority (NSIA), to support pipeline development and improve access to seed capital for tech-enabled startups. [iv] The Act simplifies registrations and access to government services through the Startup Support and
Engagement Portal and introduces several incentives to improve theviability of startups and facilitate investment in Nigerian startups.[v]