Capital Exodus: How Top Nigerian Venture Capitalists are Stealthily Withdrawing from Their Domestic Sector
In the dynamic world of African startups, a significant shift is underway. Nigerian venture capitalists (VCs) are increasingly investing in other African countries, a trend driven by economic difficulties, currency depreciation, and reduced startup viability at home.
This strategic pivot is a response to the tough economic conditions in Nigeria, where inflation has reached unprecedented levels, severely impacting startups' viability and causing founders to struggle with survival. The naira has lost over 110% of its value in just two years, leading to significant currency volatility. Such economic instability reduces the attractiveness of Nigeria as an investment destination for VCs seeking stable returns.
Moreover, Nigerian startups face rising costs and limited exit options, making local investments riskier and less profitable for VCs. This environment discourages continued focus on the home market and encourages looking elsewhere for growth and returns.
Countries like Egypt and Senegal are becoming hotspots for venture funding, with Egypt currently being the most funded African market in 2025. Nigerian VCs are increasingly investing in these markets to capitalize on better growth prospects and startup ecosystems less affected by economic turmoil.
Startups like Egypt’s Nowlun, which address regional logistics challenges, attract attention from Nigerian funds looking to extend their geographic footprint and diversify their portfolio beyond Nigeria’s borders. Nowlun offers a solution for moving breakbulk cargo with real-time tracking, and is increasingly regional in its ambition.
This trend is evident in the recent moves of Nigerian VCs. Ingressive Capital, for instance, has made a move into Egypt, leading a $600,000 extension round for Nowlun, a digital freight startup. Meanwhile, Ventures Platform, another key player in Nigeria's early-stage scene, is expanding its footprint outside Nigeria, with a recent hire representing its Francophone Africa expansion. Ventures Platform has led or co-led deals with startups outside Nigeria, such as Senegalese trucking company Chargel and Maad, a logistics-tech startup.
However, the situation on the ground in Nigeria remains complex and challenging for the startup ecosystem. Founders are finding ways to keep going, but the early-stage market in Nigeria is quietly starving, with many local VCs shifting focus offshore or stopping to write cheques altogether. The naira has fallen dramatically, now trading past ₦1,600 to the dollar, more than double what it was two years ago.
Y Combinator, once a guaranteed source of validation and global capital for Nigerian startups, has effectively closed its doors. This departure leaves a gap in the Nigerian startup ecosystem that other international and local investors are stepping in to fill. Breakthrough Energy (US), BII (UK), Norfund (Norway), Norrsken22 (Sweden), QED (US), P1 Ventures (Egypt) are among those involved in funding Nigerian startups.
The regional ambition of startups and investors, combined with the rising availability of robust investment opportunities across Africa, is driving this strategic shift. As Nigerian VCs look beyond their home market, they are entering a new phase, navigating the challenges of a complex and evolving startup ecosystem while seeking opportunities for growth and stability on the African continent.
- Nigerian venture capitalists (VCs) are shifting their focus beyond their home market to invest in other African countries due to economic difficulties, currency depreciation, and reduced startup viability in Nigeria.
- Egyptian and Senegal are becoming hotspots for venture funding as Nigerian VCs are attracted to better growth prospects and startup ecosystems less affected by economic turmoil, such as Egypt's Nowlun, a digital freight startup.
- As the naira's value has dramatically fallen against the dollar and Y Combinator has departed, other international and local investors, like Breakthrough Energy (US), BII (UK), Norfund (Norway), Norrsken22 (Sweden), QED (US), and P1 Ventures (Egypt), are stepping in to fill the gap in the Nigerian startup ecosystem.
