Nigeria is a country full of innovative and creative people, many of whom are starting up or willing to start businesses. Every day, founders dream up solutions, build products, and create companies with the potential to transform lives. But the path is not easy. Without guidance, startups often struggle with governance, compliance, and understanding what the law requires.
Recognizing these challenges, the government introduced the Nigeria Startup Act 2022 to ensure easier navigation for startups. The law came into force in 2022, with the National Information Technology Development Agency (NITDA) appointed to oversee implementation. NITDA is responsible for granting the official Startup Label, coordinating seed funds, managing the Startup Portal, and ensuring that startups meet the criteria necessary to benefit from the incentives provided.
The Startup Act was created to professionalize startup operations, simplify compliance, and provide structured support to founders. It encourages innovation, investment, and sustainable growth while reducing bureaucratic hurdles. However, despite its importance, many startups and founders remain unaware of the Act, missing out on funding, mentorship, and investor visibility. Understanding its provisions is essential for any emerging business aiming to thrive in Nigeria’s entrepreneurial ecosystem.
Key Provisions Every Founder Should Know
Here are a few key provisions of the Startup Act which every founder should know:
1. Startup Labeling and Recognition
The heart of the Act lies in Startup Labeling, a formal recognition granted to startups that meet the eligibility criteria under Section 3. To qualify, a company must be a registered limited liability company not older than ten years, focused on innovation, technology, or digital solutions.
Once approved, the Startup Label signals credibility and compliance. It opens access to a range of benefits, including participation in government-backed accelerators, funding programs, and increased visibility among investors. The labeling process happens through the Startup Portal, which serves as the central platform for registration and ongoing compliance.
2. Tax Incentives and Reliefs
Taxes can be a major challenge for new businesses, especially when resources are limited. To ease this burden, the Act provides several tax incentives for labeled startups and their investors. Under Sections 25 to 30, startups enjoy exemptions from certain corporate taxes and deductions for expenses related to research and development.
Investors, including venture capitalists and angel investors, also benefit from tax credits for investing in labeled startups. These provisions are designed to stimulate private-sector participation and give founders the breathing space needed to reinvest in growth and innovation.
3. Access to Funding and Investment Opportunities
Funding is the lifeblood of any startup, and the Act directly addresses this through the Startup Investment Seed Fund established under Section 19. The fund, managed by NITDA, supports labeled startups in their early stages and encourages co-investment from private sector partners.
This seed fund not only provides capital but also fosters investor confidence by signaling government backing. Startups can also benefit from structured funding programs and partnerships facilitated through the Startup Portal, ensuring more equitable access to financial resources.
4. Mentorship, Capacity Building, and Institutional Support
Beyond funding, the Act recognizes that guidance is key to survival. Through the National Council for Digital Innovation and Entrepreneurship (NCDIE), startups gain access to structured mentorship, capacity-building programs, and training opportunities.
These initiatives equip founders with tools to strengthen governance, financial management, and operational efficiency, addressing some of the most common reasons startups fail. This mentorship pipeline bridges the gap between innovation and sustainability.
5. Regulatory Clarity and Legal Protection
The Startup Act also provides regulatory clarity by harmonizing existing laws that affect startups. It simplifies compliance obligations in areas like intellectual property, data protection, and contractual agreements.
Importantly, it introduces the Regulatory Sandbox Framework (under Section 36), allowing startups to test innovative products or business models in a controlled environment without facing immediate penalties for non-compliance. This ensures that innovation is encouraged, not stifled by bureaucracy.
6. Protection of Intellectual Property Rights
Startups thrive on ideas, and protecting those ideas is non-negotiable. The Act emphasizes intellectual property (IP) registration and protection for labeled startups. With the Trademarks, Patents, and Designs Registries collaborating with NITDA, founders can now enjoy faster IP registration and legal support.
This protection strengthens investor confidence and ensures that creators maintain ownership and control over their innovations.
7. Startup Visa and Talent Mobility
To attract global collaboration, the Act introduces the concept of a Startup Visa (under Section 43), designed to ease entry for foreign talents, investors, and technical experts who want to contribute to Nigeria’s innovation ecosystem.
This not only boosts local capacity but also fosters knowledge exchange and skill transfer, positioning Nigeria as a competitive tech hub in Africa.
8. Visibility, Ecosystem Integration, and Best Practices
Labeled startups gain access to networking events, pitch platforms, and innovation showcases coordinated through NITDA and partner organizations. This visibility enhances investor reach and partnership opportunities.
The Act also encourages startups to adopt strong governance and accountability frameworks, promoting professionalism and long-term sustainability.
Why Every Founder Should Understand the Startup Act
The Startup Act is not just another policy. It is a roadmap for innovation in Nigeria. Understanding its provisions helps founders access benefits, avoid regulatory mistakes, and position their startups for growth. Ignorance could mean missing out on tax reliefs, funding, and mentorship programs that are already available.
At Nedellum Partners, we help startups and founders navigate the requirements of the Startup Act, from securing the Startup Label and structuring compliance documents to protecting intellectual property and accessing funding opportunities.
We work with emerging businesses to ensure they are legally positioned to grow, scale, and compete, turning bright ideas into thriving ventures under the full protection and support of the law.
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