Click to watchTop venture capitalists are sounding a cautionary alarm on the “grow-at-all-costs” expansion playbook for African startups, signalling a significant shift in investor sentiment amid high-profile missteps and tightening capital markets. The consensus from a panel at the recent Raenest Exchange 2025 conference is clear: a premature cross-border jump is a high-risk that founders can no longer afford.
The debate strikes at the heart of venture strategy in Africa. While investors have historically rewarded pan-African ambitions with richer valuations, the operational realities are forcing a recalibration of expectations. The recent collapse of Reliance Health’s international expansion, which resulted in over 100 layoffs following a costly 2022 push beyond Nigeria, serves as a stark case study now haunting boardroom discussions.
“This is the most controversial topic in venture capital,” Kola Aina, Founding Partner at Ventures Platform, stated during the panel, framing the central conflict facing founders.
On one side of the ledger is the clear market signal that scale matters. “Investors see single markets as riskier. They put discounts on them,” said Lexi Novitske, General Partner of Norrsken22, articulating the pressure founders feel to plant flags across the continent. A single-country focus, particularly in a volatile economy like Nigeria’s, exposes a portfolio to concentrated macroeconomic and regulatory risk.
However, the execution risk of multi-country operations is proving to be a far greater and more immediate threat to survival. Gbenga Ajayi, a Partner at fintech-focused QED Investors, stressed that founders must grasp the severe trade-offs. “If they go to other markets, they will start from zero,” he warned, highlighting the immense capital and talent required to rebuild operations, product-market fit, and distribution channels from scratch.
This has given rise to a more sober, data-driven approach championed by operators like Seye Bandele, CEO of Paid HR. “It is getting more popular to think about market expansion,” Bandele noted. “However, it is not the way to go, especially if the data is not telling you: You don’t have to be there yet.”
The emerging consensus points toward a capital-efficient alternative: product-led, cross-border expansion rather than a physical one. Bandele’s own firm, PaidHR, exemplifies this strategy. It launched a cross-border payroll feature that services clients continent-wide, allowing employees to receive salaries in 49 currencies without establishing costly physical offices in each market. This digital-first approach allows companies to test and validate foreign markets with minimal upfront investment.
This tough conversation is forcing a re-evaluation of Nigeria’s standalone potential. Despite its challenges, the sheer size of the market presents a compelling case for deeper penetration over wider, thinner expansion. “If any entrepreneur can figure it out, it is very possible to build a venture-backable business inside Nigeria,” Bandele said.
Aina of Ventures Platform echoed this sentiment, arguing for a more nuanced definition of growth. “Expansion doesn’t have to be country-wise,” he stated. “It can be product-wise. There are very few places that will be as big as Nigeria.” For investors and founders alike, the new calculus is clear: mastering a core market and leveraging technology for cross-border reach is rapidly replacing the land-grab strategy of a bygone era.
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