The Nigerian tech ecosystem witnessed an unprecedented wave of closures in 2023, with seven startups announcing their shutdowns, leaving investors with a staggering loss of $79.15 million in funding deals, BusinessDay has learned.
Among the notable startups ceasing operations are Lazerpay, which secured $1.1 million; 54Gene with a funding of $45 million; Pillow, accumulating $21 million; Vibra, having raised $6 million; Bundle, acquiring $450,000; PayDay, gathering $3 million; and Pivo Africa, amassing $2.6 million.
This trend isn’t isolated to Nigeria alone. Similar shutdowns rocked other African nations throughout the year.
In August, Sendy, a Kenyan logistics startup, explored selling its assets after ceasing operations. South African mobility startup WhereIsMyTransport also closed due to funding difficulties, as did Dash, a Ghanaian fintech company connecting mobile wallets and bank accounts across Africa.
Experts view these shutdowns as reflective of broader market sentiments within the global tech industry, indicating challenging times.
Kola Aina, General Partner at Ventures Platform Fund, criticized the tendency to dwell publicly on startup failures, emphasizing the importance of understanding the challenges faced by entrepreneurs and refraining from dismissing their sincere efforts.
His words: “The rush to publicly borderline celebrate or even just pontificate over the demise of startups or the failure of specific efforts by others we do not know is perhaps the most unproductive use of human capacity.
“Most times, people who exhibit this behaviour have never actually built. When you have built and maybe blessed yourself with failure, you will reconsider before you make light of an honest effort.”
While some startups attributed their closures to their inability to secure additional funding, others had different reasons. For instance, Bundle, a cryptocurrency exchange, decided to close as part of a shareholder-led restructuring to focus on Cashlink, which had a substantial transaction volume.
Vibra, a pan-African crypto startup, cited pivoting to another business but provided minimal details. Pivo, a digital bank for trade, reportedly shut down due to unresolved founder conflicts.
However, the lack of transparency surrounding the reasons for closures has drawn criticism. Some experts argue for more candidness about the factors driving shutdowns, believing it could serve as valuable lessons for other startups and aid investors in making informed decisions.
While PayDay was acquired, reports suggest potential mismanagement of the $3 million funding it secured, raising concerns about financial stewardship in the startup landscape.
