Weathering the Storm - Nigerian Health Tech Year in Review - 2023 and 2024
Nigerian healthtech is undergoing a rough patch. Promising opportunities are, however, emerging buoyed by renewed public sector activity. Players that weather the storm can shape the future of health.
For the first time in 6 years, I didn’t write an annual review for 2023. Thank you to all that reached out and highlighted the value of a well informed annual review. My reviews have provided a valuable historical timestamp for the evolution of Nigerian health tech and last year’s omission left an unfilled gap. For this edition, I’ll reference 2023 and 2024 in order to fill that gap and create a coherent narrative.
To review previous editions, click on the corresponding year;
2017 | 2018 | 2019 | 2020 | 2021 | 2022
The previous edition of this review described a year of contrasts. Promising prospects on the one hand, yet depressing outcomes on the other hand. I signed off with the hopeful idea that the coming years would be time for healthcare to flourish. This has proven too optimistic as Nigerian healthtech is undergoing a rough patch. Promising opportunities are, however, emerging buoyed by renewed public sector activity. Players in the space have a golden opportunity to consolidate in order to gain the resilience this rough patch demands. Those that weather the current storms will be well positioned to capture significant value and define the future of healthcare. Here’s the state of healthtech in 2023 and 2024 interlaced with my predictions and recommendations for 2025.
Funding Winter Continues
The most obvious place to begin is with funding or the lack thereof. The signs of a contraction in VC funding that surfaced in 2022 worsened. In 2024, African startups raised $2.2 billion, 25% less than the $2.8 billion raised in 2023. A far cry from the $4.3 billion peak of 2022.
For healthtech, the annual value of VC investment on the continent slowed by 2% in 2023 and had slowed even further by 69% in the first half of 2024.
In 2023, 38% of the amounts raised was concentrated in the online pharmacy space.
Funding for Nigerian healthtech began to mirror the global move towards data and Artificial Intelligence (A.I.). PBR life sciences an alumni of Techstars’ now-defunct Lagos program, raised $1 million to help pharma companies access real world data to inform their operations. Xolani health, a teleradiology startup leveraging A.I. gained support from Techstars. Intron health another startup using A.I to drive clinical speech recognition for note taking also raised funding. This drive towards A.I will continue as more startups look to integrate A.I into their products, spurring more funding in the process. Helpmum’s A.I led vaccine optimisation tool supported by Google research and funding from Meta is an example of what’s possible. Outside A.I, Mdaas raised a $3 million pre-Series A to grow its diagnostics network, Figorr, the cold chain monitoring startup raised $1.5 million and Clinify raised the same amount to build an EHR.
These deals are misleading highlights from what was a slow period. Data from the big deal, a database of publicly available startup funding data, showed that just 24 Nigerian healthtech funding rounds were disclosed between 2023 and 2024. Down from the 2021 high of 24 deals in a singular year. Of note, no growth stage funding rounds were announced in 2024. Well except for Field intelligence’s $11m non-equity grant from the Gates foundation. In years gone by, there had been mega >$10 million rounds for the likes of Reliance, mpharma, and Helium health. The most recent mega round was Remedial health’s $12 million Series A in mid 2023. To continue to grow, it’s clear that more growth stage capital is needed in the industry. The $111 million Transform health fund is one fund hoping to bridge that gap. Other funds with a specific health mandate like Leapfrog, AAIC and Janngo capital have cumulatively raised over $1 billion and should deploy it in 2025 and beyond. A renewed focus by VCs on fundamentals means other generic funds with over $400 million to invest should look more to healthcare as an opportunity for sustainable growth. Funding will continue to be difficult to access in 2025, but those businesses that succeed at the fundamentals will secure the capital they require to scale.
Navigating difficult times
The funding winter coincided with a difficult period for startups. The Nigerian macroeconomy took a serious beating with inflation reaching record highs in the mid 30s. The Naira slid by 70% compared to the U.S dollar, contributing to GSK and Sanofi’s exit from the country. This also handicapped startups that raise in dollars but earn in Naira. Manifesting in high profile layoffs in mpharma and medsaf in 2023. The latter would eventually shutdown in 2024 after having raised a total of $3.6 million since its founding in 2017. Anecdotally, several startups continue to struggle with dwindling runways. Founders now increasingly seek moves to other opportunities, or countries, while exploring a safe landing for their budding ventures. A founder that navigated this challenging time well is Dr Debo of Doctoora. His startup, a marketplace for healthcare professionals, was acqui-hired by Evercare one of Nigeria’s largest private hospitals.
Mergers and acquisitions (M&A) like this provide an ideal option for founders looking to safely land their struggling startups, especially in a time of difficulty. Experience with them is still emerging in the ecosystem with only a handful so far. This includes Interswitch’s acquisition of eclat, Wellahealth’s acquisition of wellvis and Helium health’s roll up of EHR providers Medicplus and smartdoctor. In each of these transactions, the smaller entity got ingested by the bigger one to improve offerings and extend reach. Importantly for the ecosystem, the entities that emerge are stronger and more able to survive over a longer term. When startups struggle, our innovation ecosystem has a duty to ensure that the customer base cultivated by the company aren’t left in a lurch to germinate mistrust for innovation in the future. The Paystack and Piggyvest led consortium’s acquisition of struggling business neobank, Brass is an instructive example that healthtech should adopt. Beyond ecosystem benefits, a well executed M&A strategy can provide opportunity for consolidation, growth and a valuable exit for founders and investors.
A lack of major exits is increasingly being referenced as a sticking point for the African venture ecosystem. In the case of healthtech, extra patience is required as companies generally take longer to mature. Data from a Salient advisory report on innovations in health product in Africa reveals that most leading companies in the space are from the 2015 - 2017 cohort yet have a median income of $3 million 9 years later.
In comparison, my analysis of (the Nigerian subset of) FT’s fastest growing African companies, revealed a median income of $78 million from companies started since 2015. There’s no other way to say it, growth in healthcare just simply takes time. M&A can help startups survive in the interim and provide limited returns, however, significant returns for stakeholders will ultimately require significant patience.
A renewed public sector
A new government came to power in mid-2023 and appointed an illustrious global health personality, Dr Pate as minister of health. Alongside him were other high profile appointments from the healthcare consulting world. Dr Ohiri at the National Health Insurance Authority and, Dr Aina at National Primary Healthcare Development Agency. The new minister and his team have initiated a number of initiatives. Two that are worthy of note are one for healthcare value chain transformation, the other, a digital health focused initiative that has placed digitization as a clear focus of the ministry of health. Per the minister:
Creating a health data system that is digitized, interoperable, and provides accurate reports for real-time decision-making is a fundamental enabler for the implementation of the National Health Act and the aspirations we have set.
A similarly remarkable state level initiative is Interswitch’s SPV with the Lagos state government to create a smart health information platform (SHIP) for data movement and management across its healthcare facilities.
“The platform will allow data to flow freely between health institutions and would also provide seamless payment options for patients".
- Mitchell Elegbe, Group Managing Director of Interswitch
Lagos state also collaborated with mdoc to launch an A.I tool to improve maternal health outcomes. These efforts from Lagos state are welcome, they show ambition, however, the state has its digital health work cut out. A Salient advisory assessment of the digital health landscape in the state revealed severe gaps in digital health readiness and adoption across all its facilities.
Other public sector partnerships dotted the year. EHA clinics signed an agreement to improve primary care in Edo state while Emergency Response Africa signed a landmark deal with the same state to manage the state's emergency medical service. Wellahealth, a health financing startup, worked with several state health insurance agencies to improve insurance adoption. Anecdotally, other pharma startups have tied up with states especially around inventory supply and financing. A trend that’s been pushed by the advent of state drug management agencies and brokered by ARC-ESM, a supply chain support initiative. This increased activity suggests that Nigerian governments are finally ready to take digital health and startup partnerships seriously. Whether this pans out is yet to be seen but it does bode well for the future of the industry. We will see more of this sort of activity in 2025.
Accelerators and Grants
Healthtech has always been a popular destination for programs and grants seeking impact and the period under review was no different. One of the most anticipated was UNDP Africa’s timbuktoo healthtech program, a subset of its larger billion dollar initiative to catalyse startup investments on the continent. The initiative was launched to much fanfare, raising lots of hope in the process. In september ‘24, I attended an info session at a UN general assembly side event in New York where the program’s ambassador, popular Afrobeats artiste, Patoranking spoke about his work with the initiative.
The program selected 40 healthtech startups with the promise of up to $100,000 in funding following a bootcamp. As of writing this, the 15 startups selected as eventual winners were offered $25,000 to ‘scale’ alongside support from an acceleration program. Uproar has followed this apparent head fake with several founders highlighting the flawed process.
Founders are resource constrained, they need programs to clearly define the ideal fit and value. This helps them decide which programs to opt for. Consider that, all through 2024, founders were faced with many calls for applications. Here are a few that had Nigerian healthtech startups in their cohorts.
and on the female focused front:
Applying to any one program thus has significant opportunity costs. Programs without a clear focus and intangible benefits can be an expensive venture. Worse still, poorly run programs that lack the right expertise and experience can lead startups up a garden path to failure and prove suicidal for the program itself. The misleading signals this generates can limit the growth of other viable programs and startups. A significant challenge as USAID supported research shows that the African healthtech ecosystem isn’t well served by “investment readiness programs”. We need far more programs to overcome the significant barriers to attracting capital, beyond just grants, for scale.
Grants are great and continue to be a significant source of funding for Nigerian healthtech. In 2023 and 2024, it represented the biggest source of funding by volume of publicly announced funding documented by “the big deal”.
Some significant grants awarded recently other than Field intelligence’s $11 million already referenced include, a $5 million USAID grant to Maisha meds to expand its digital approach to malaria treatment to Nigeria and $250k to Helium health from the GSMA innovation fund. Other smaller grants went to various startups from funders such as GIZ (a German development agency), Google’s black founders fund and the African visionary fund. Grants seem to have moved from being catalytic to becoming a lifeline for capital constrained startup. Eventually, commercial capital will be required to ensure that startups can scale and remain a going concern that earns profits from generating value for customers.
A special acknowledgement must go to Techstars, the globally renowned startup accelerator and the leading commercial investor in Nigerian healthtech by volume. Their most recent investment, via their Dallas program, is in Abasi of 54gene fame who returned to the arena with a new startup, Syndicate Bio (He penned an article worth reading on his difficult experience while at 54gene). Abasi’s company is the 8 Nigerian healthtech in their portfolio. They’ve invested around $1 million in total thus far.
Expansion and partnerships
As the Naira tumbled, startups increasingly came under pressure to find non-Naira revenue. MDaaS expanded to Cameroon on the heels of their $3 million pre-series A round. Meanwhile, Wellahealth launched a diaspora product, healthsend that sought to encourage people in the diaspora to pay for healthcare for families back home. Reliance launched alafia to help people pay for healthcare for elderly relatives and also shared plans for an impending launch in Senegal, their 3rd country following an earlier foray into Egypt. Mobihealth, a telemedicine company, signed a $1.5m deal with Afriexim to power its expansion across Africa. They also partnered with Airtel to provide telemedicine consultations to the Telco’s subscribers.
While welcome, expansions are expensive and fraught with multiple risks. Current capital constraints mean startups will need to think wisely about what countries they enter and how they do it. MDaaS and Reliance have chosen Francophone West Africa. With a similar cultural makeup and disease profile to Nigeria it appears a sensible choice. The language barrier and different regulatory regimes will, however, pose a challenge. Anglophone Africa on the other hand is more linguistically accessible. Outside of Ghana, though, most have different healthcare and disease dynamics that require significant adaptation. Ghana’s economy has itself taken a similar beating to Nigeria so appears unattractive to companies seeking macro-economic stability.
This trend of expansion will likely continue through 2025 and beyond to create pan-African companies that are better placed to attract commercial capital. Seeking partnerships with local entities in new markets might prove beneficial in containing potential expansion costs.
Looking Forward
That my good followers of Nigerian healthtech was the state of our industry in 2023 and 2024 as seen through my lens. 2025 is set to be another difficult year that will require significant grit to survive. Investment will be slow but I anticipate at least one growth round for maturing companies in the pharma space. Startups with capital will acquire other companies on the verge of shutting down. The year will be a bellwether for the how government initiatives and partnerships will turn out in this administration. The startups and initiatives that survive this year will be primed for long term sustainable success.
If you’ve persisted till here, well done! I have some goodies for you. Digital health Nigeria is hosting a webinar series on “surviving the funding winter”. It will feature 3 separate hour long sessions on operations, sales, and attracting grants. Anchored by me, I’ve invited different leading experts to share best practice that you can implement instantly to make progress. We will also answer your questions and point you to helpful resources. It promises to be the most impactful way to start your year. To sign up click here
Please share your comments and thoughts on this review. See you at the next review.
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