Nigeria takes seventh place on the list of top ten African countries with the most startup failures, at a rate of 61.09 percent, according to a report by Weetracker and Green Tea Capital Africa Foundation. While lack of funding, regulatory policies, and poor marketing can be credited for these failures to varying degrees, overlooking product-market fit (PMF) is also a huge contributor.
Product-market fit is a crucial milestone that signifies a startup has market demand with paying customers for their product. Essentially, the startup has a product that meets the wants and needs of a specific market segment. To a large extent, achieving product-market fit is an indicator of a potentially successful startup. After all, for any business to experience growth, there must be a buying market.
Many Nigerian startup founders are tempted to focus on what they prefer to sell rather than what people are willing to pay for because they assume that if they love a product, others will too. This concentration on personal preference often stems from the fact that research is a demanding task. However, it is one of the best ways to identify the market gaps to fill. A creative idea is not enough; the product must address actual market demands.
Achieving product-market fit can take months or years and requires a mix of hypothesis testing, data collection, and validation to ensure the product is worth pursuing. In a bid to rush the process, some Nigerian startups make mistakes that decelerate their journey.
One of such mistakes is building products that entice investors rather than serve real market needs. Focusing on securing funding to support operations pushes many Nigerian founders to launch products without understanding their marketplaces, customers, and competition.
Solving non-existent problems, especially in Nigeria’s present economic climate, is another way to hasten a startup’s demise. An interesting problem and a strong technical team do not guarantee a successful startup. Only a sustainable product that solves a real problem does.
Even in cases where there is a real problem and a startup has a viable solution, ignoring local market dynamics can do a lot of damage. Pursuing an idea that has worked elsewhere, such as in Europe, is not a guarantee it will work in Nigeria. GoMyWay was a victim of this mistake. While the Nigerian startup’s offering solved transportation problems, its ride-sharing approach was not a cultural norm.
Most Nigerian startup founders are also guilty of scaling too soon before ensuring their product is a good fit for the intended market. This was one of the mistakes that Efritin, which aimed to help Nigerians shop safely online, was affected by. Backed by its Swedish parent company Saltside Technologies, Efritin scaled too quickly and eventually discontinued operations due to poor internet penetration and high data costs.
Ideally, the first phase of any Nigerian startup aiming for product-market fit should be customer identification and validation. Startup founders should discover and understand customers’ frustrations and needs. Moreover, the business idea should be supported by quantitative data such as sign-ups and click-through rates and qualitative data such as customer interviews and focus groups that show there’s a high demand for the product or a high volume of an existing problem.
With such data-driven insight, the startup can then build a minimum viable product (MVP) in the form of a beta app or A/B testing to validate the problem and identify viable solutions that connect the customer’s needs with the product. This validation process also helps define the product’s value proposition and continuously tweak the business model until it is sustainable. Piggyvest followed this same process. The fintech startup tested its MVP with customers by launching a simple platform that helps Nigerians save money daily. Then, through customer feedback which the company credits with shaping its product direction, PiggyVest has grown into a successful finance management platform offering diverse investment opportunities.
A startup team should quickly get their MVP in front of their target market for feedback. This feedback helps the startup to test their product hypothesis, gauge reaction, and learn faster. Based on users’ input, the startup can decide to iterate, pivot, or go ahead with the product if the MVP validates the idea. Nigerian startup founders must learn to focus on how customers interact with the product, not just what they say about it—this is the only way to get effective feedback.
Setting a feedback loop to gather users’ feedback regularly and make iterations accordingly is also essential. Achieving product-market fit comes from constantly refining a business idea to reflect customer’s ever-changing preferences accurately.
Perhaps most importantly is developing an agile product development approach, which prioritizes customer value, regular feedback, and continuous improvement. A lean approach will take into consideration the aforementioned strategies and efficiently build market-fit products. Startups that eventually achieve product-market fit see high customer retention, low churn rate, and sustainable unit economics, which implies customer acquisition cost (CAC) is less than lifetime value (LFV). Only then should the startup scale the product by pouring money into marketing based on these metrics’ performance.
Overall, the difference between startups that will thrive and those that will, unfortunately, face eventual shutdown often comes down to product-market fit. Success stories like Piggyvest show what is possible when founders prioritize building user-focused products rather than assuming market needs. Ultimately, product-market fit is a continuous grind that should be considered at every stage of a company’s growth. As Nigerian startup founders navigate the path to creating well-received products, they must understand their target audience, determine their genuine needs, and integrate a customer-first principle. With the rise of artificial intelligence (AI) platforms, Nigerian startups now have AI-driven analytics at their disposal to serve as a compass and find their product’s place in the market.
Felix, Blessing Bukola is a Product Management Professional at a leading startup in the Nigeria
