If you’ve ever read a headline like “Tanzanian startup raises $5 million in Series A funding” or “Kenyan tech company now valued at $10 million,” you might think that startup is crushing it—rolling in cash, hiring like crazy, and growing fast. On paper, it might even have a high net worth, but here’s the thing: net worth doesn’t always tell the full story.

In fact, a company can appear valuable, maybe even rich—but still be in deep trouble behind the scenes. That’s especially true for startups in Africa, where tough economic and structural conditions can bring even the best-funded companies to their knees. 

Remember, investors can always withdraw their money.

To understand how and why that happens, we need to break down what net worth really is, how it compares to revenue and profit, and why it can sometimes be misleading.

So, What Exactly Is Net Worth?

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At its core, a company’s net worth is the difference between what it owns and what it owes. The formula is simple:

Net Worth = Assets – Liabilities

Assets are the valuable stuff: cash in the bank, equipment, intellectual property, real estate, even unpaid money the company expects to collect. Liabilities are debts and obligations—like bank loans, rent owed, unpaid salaries, or tax bills.

If a company has more assets than liabilities, it has a positive net worth. That’s generally a good sign. If the opposite is true, and the debts are bigger than the assets, then it has a negative net worth, which usually signals financial trouble.

In other words, net worth is a snapshot of a company’s overall value at a specific point in time. However, and this is important—it doesn’t show how much money the company is making day-to-day, or how long it can actually survive.

How Net Worth Is Different from Revenue and Profit

This is where people often get confused. Net worth isn’t the same as revenue or profit, which are more focused on how a company operates in the real world.

Revenue is the total money a company earns from selling its products or services. If you run a bakery and sell 1,000 loaves of bread for $3 each, your revenue is $3,000. Simple enough, right?

No. Just because you brought in $3,000 doesn’t mean you get to keep it. You have to pay for flour, sugar, rent, electricity, staff wages, packaging, delivery—the list goes on. After all those costs are subtracted, what’s left is your profit.

Profit is what really shows whether a business is sustainable. It answers the question: are you actually making money, or just spinning your wheels?

So, to recap in a human way: revenue is your total income, profit is what’s left after paying the bills, and net worth is your financial position after subtracting all your debts from everything you own.

Why This Matters in the African Startup Scene

Now, let’s zoom out and look at Africa’s fast-growing tech ecosystem. Over the last few years, hundreds of startups across Nigeria, Kenya, South Africa, Ghana, and beyond have raised impressive amounts of money. On paper, their net worth looked great. They had strong funding rounds, shiny valuations, and exciting media coverage.

Sadly, many of those same startups either struggled badly or shut down completely.

Recent research has explored this topic, and the results reveal a far more complex and human story. High net worth alone isn’t enough to protect these companies from deep structural challenges. 

Dwindling Investment and Growth Mistakes

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There’s also the problem of declining investment. According to Startup Graveyard’s 2024 report, startup funding in Africa dropped 57% in early 2024 compared to the previous year. This sudden dip in capital hit young companies hard, especially those that weren’t yet profitable.

Some startups made things worse by expanding too quickly without finding product-market fit—meaning they hadn’t yet proven that their product met a real need in the market or had strong demand from their target customers.

They tried to grow into new markets or launch new products without fully proving their core business. 

Companies like JumiaFood and BuyCoins Pro ended up shutting down in some countries for these reasons, even though they’d once seemed unstoppable.

Techpoint Africa reported on Dash, a Ghanaian fintech firm that raised $86 million but never achieved product-market fit before shutting down in 2023.

That story isn’t unique. Reports from The PUNCH and African Business describe startup ecosystems where many businesses launch based on exciting ideas, but without real validation or deep understanding of local markets. In those cases, no amount of funding or high net worth can compensate for a weak foundation.

The Impact of Economic Instability

Let’s start with one big factor: currency risk. According to a 2025 analysis by Okereke Innocent Chinweokwu on HackerNoon, startups in places like Nigeria faced huge financial losses simply due to exchange rate problems. The Nigerian naira lost 70% of its value between 2020 and 2025.

Think about that for a moment. If a startup raised $5 million in 2020, but kept the money in naira, that funding might only be worth $1.5 million in real terms today. That’s devastating. It means less money for hiring, marketing, R&D, or even just staying afloat. As Chinweokwu points out, currency devaluation can silently erode a startup’s real financial power, even while it still looks strong on paper.

Regulatory Whiplash and Legal Uncertainty

In a 2025 interview with Techpoint Africa, investor Justin Stanford explained that inconsistent laws and fragmented regulations discourage investors. It becomes harder to plan, harder to scale, and much harder to survive.

This is what is known as regulatory instability. In countries where the rules can change overnight, startups face unexpected costs, delays, or even shutdowns.

For example, tightened KYC (Know Your Customer) rules for fintech companies in 2024, and  Kenya passing a Data Protection Act in 2023 that introduced heavy compliance requirements. These regulations, though laudable, often arrive suddenly, forcing startups to scramble.

Infrastructure Challenges That Increase Costs

Now imagine trying to run a tech company in an environment where you can’t count on the power staying on.

Most Nigerian businesses rely on private generators because the national grid is unreliable. That alone can add 25 to 30 percent to operating costs. And then there’s internet access—often slow, expensive, or unstable—which severely limits digital services and customer experience.

Losing Talent to Brain Drain

Finally, we can’t ignore the talent drain. Startups need smart, capable people to grow, but a lot of African tech talent is leaving for better opportunities abroad.

According to LinkedIn data analyzed by HackerNoon, there was a 30% increase in Nigerian tech professionals emigrating starting in 2024. That’s a huge hit to startups trying to build stable, experienced teams. Without the right people, even the best ideas and biggest funding rounds won’t go far.

The Bigger Picture

So what do we take away from all this?

A company’s net worth might look impressive. A startup might raise millions. But net worth alone doesn’t tell you whether the business is sustainable, profitable, or resilient. You have to dig deeper.

In the case of many African startups, economic volatility, regulatory unpredictability, poor infrastructure, tightening capital, internal mismanagement, and loss of talent all combine to create an extremely tough environment. Even startups with strong balance sheets can fail if they aren’t ready to handle these pressures.

Final Thoughts

At the end of the day, net worth is just one piece of the puzzle. It’s a snapshot—a number. But business isn’t just about numbers. It’s about navigating uncertainty, building strong teams, solving real problems, and adapting to change.

For anyone watching or working within the African tech ecosystem, the lesson is clear: success takes more than funding. It takes strategy, execution, resilience—and a lot of local understanding.