Lidya’s closure after nine years should be an alarm bell for every founder, investor and policymaker working in African tech. The email to customers that announced “severe financial distress” and the end of operations is the final line on a recurring and avoidable story: startups raise money, chase foreign markets, burn cash, then collapse, often leaving the very customers they started to serve stranded.
This isn’t just one company’s misfortune. The last 36 months have yielded a worrying pattern of heavily funded startups shutting down after ill-advised expansion or a distracted strategy. London-based remittance marketplace Zazuu folded after raising over $2 million. Okra, once lauded as Africa’s promising open-banking success story, also collapsed in 2025 after raising large rounds and stretching into new areas. Kenyan logistics unicorn Sendy, too, ran an unsustainable burn and entered administration after trying to scale too fast.
These are not isolated anecdotes. Independent trackers and regional coverage show dozens of otherwise promising African startups failing after major fundraises and premature expansion moves in recent years. Analysts point to a string of high-profile failures from venture studios to fintechs and logistics platforms that together form an instructive pattern for the ecosystem.
So, why do African fintechs repeatedly feel the need to scale overseas too soon, often at the expense of the markets they were built to serve? Here are some possible reasons:
The prestige bias
There’s a stubborn prestige bias in the startup world where being “international” is shorthand for success. Founders and boards are seduced by the idea that a footprint in Europe or North America confers credibility. Investors, particularly foreign or global investors, sometimes reinforce this by rewarding scale narratives over deep local traction. The result is often that strategy shifts from solving local friction to chasing a checkbox that looks good on a pitch deck.
This chase can look rational on paper: diversified revenue, FX receipts, credibility. In practice, it often becomes vanity expansion. You move into a heavily regulated market you don’t deeply understand, hire expensive local staff, and spend months (or years) burning runway to test whether a product that made sense in Lagos will behave the same in Prague or London or in the case of Lidya, the Czech Republic.
Misreading product–market fit across borders
Markets differ. Consumer behaviour, regulatory regimes, payment rails, risk tolerance and unit economics vary dramatically across countries. A digital lender or payments product built for cross-border, informal-economy realities in West Africa will not necessarily translate to Europe or the US without major re-engineering — and major costs.
Zazuu’s collapse is instructive: an Africa-facing product that couldn’t close a follow-on round after trying to scale and aggregate cross-border market liquidity. Sendy’s reported $1m monthly burn at peak showed how logistics complexity and cash flow sensitivity can quickly overwhelm even well-funded winners when they expand too broadly.
“Scale without strategy is vanity; growth without grounding is fatal.”
“If we keep equating ‘global’ with ‘good,’ we will keep burning through brilliant ideas.”
“Start local. Scale responsibly. Measure sustainability.”
Pressure from investors and the “growth at all costs” mindset
Many founders describe an investor pressure that equates size with safety. The message is subtle but persistent: show me you can be global and you’ll earn the next check. Boards and some investors see geographic expansion as the fastest path to the headline growth metrics VCs prize.
But “growth at all costs” bypasses the hard, less glamorous work of building margins, reliable operations, and regulatory resilience. When funding conditions tighten, as they have with higher global interest rates and a pullback from risk capital, the growth-first firms find themselves without a runway and with operations that can’t survive a cash shock. Multiple shutdowns in 2023–2025 point directly to that dynamic.
Regulatory and operational complexity
Entering regulated markets often looks like a loss for the first years and requires deep pockets and patience. Not every startup has either.
The reality of these expansion moves is often that investing a lot of cash in the move, these startups realise that operating in a new jurisdiction requires capital, time and local expertise. Regulatory approvals, compliance infrastructure, banking partnerships and local KYC/AML processes aren’t cheap. Lidya’s expansion and subsequent retreat showed how costly cross-border ambitions can be when compliance, partnerships and product modifications are not fully planned.
Moniepoint’s early reported losses in the UK, which its team describes as expected set-up costs, also prove how costly these cross-border expansion moves can be.
Ego, optics and the “not-in-Africa” problem
There’s also a simpler human factor, and it is the ego. For some founders, building something that “travels” feels like the ultimate vindication. For others, the optics of a foreign HQ or a European office signal success to press, peers and global investors. But ambition unmoored from market reality becomes blind ambition. The result is often a product that no longer serves the customer it set out to serve from the onset.
The cost of this pattern
The costs are real and measurable; these include but are not limited to stranded customers, frozen funds, lost jobs, reputational damage and capital wasted on distractions. When a lender like Lidya shuts down and can’t settle claims, the downstream pain lands on SMEs that used the platform for working capital. Zazuu’s collapse left remittance corridors and partners searching for replacement infrastructure. Sendy’s collapse disrupted merchants and supply chains. These are not abstractions; they are broken trust and lost livelihoods.
Practical prescriptions
If we want fewer Lidyas and more sustainable fintechs built for Africans, the playbook must change. Here’s what I’d urge founders, investors and policymakers to do now.
Design for local profitability before expansion
Proof of unit economics at scale in a core market matters far more than headline user growth. Show sustainable margins domestically, then expand. Funders should reward profitability and retention, not just scale in unfamiliar markets.
Demand patient, context-aware capital
Investors need to reframe what “exit” and “scale” mean in Africa. Patient capital that values durability over spectacle will let founders refine products for local realities instead of chasing foreign markets for optics.
Prioritise regulatory roadmaps, not speed-to-press releases
Before announcing expansions, map the regulatory cost, time and talent requirements in the target market. The absence of such roadmaps has sunk many otherwise promising businesses.
Governments: make serving local markets attractive
State and regional governments can help by buying local software, subsidising pilots, easing right-of-way for digital infrastructure and providing matched funding for founders who commit to local impact. Public procurement and anchor tenancy can create the scale startups need without vanity expansion.
Build local capital markets and exits
The urge to go “to the West” is partly an effect of immature local exit markets and limited late-stage capital. Developing VC ecosystems, local IPO pathways, and strong corporate venture participation will give founders a reason to grow at home.
Tell better stories about local success
Media, awards and investor narratives must celebrate deep local wins, firms that sustainably serve millions of Africans, not just those with foreign addresses.
A closing charge
Lidya’s shutdown is painful because it was avoidable. It’s painful because the playbook that sent it abroad is the same one now being followed by other promising teams. If we founders, investors, journalists, policymakers keep equating “global” with “good,” we will keep burning through brilliant ideas and leaving the continent’s problems unsolved.
We need a new operating principle for African innovation: start local, scale responsibly, measure sustainability. When that idea becomes the norm, not the exception, we will see fewer expensive retreats and more durable companies that actually serve Africans where they live and work.
If you’re a founder reading this piece, ask yourself who your product truly serves today, and whether foreign expansion is necessary or just desirable. If you’re an investor, ask whether the metrics you reward encourage durable businesses or vain headlines. If you’re a policymaker, do remember that the best industrial policy sometimes looks like a local procurement contract or a small grant for an incubator.
The continent doesn’t need validation on foreign soil; we need solutions that work at home.
