In a surprising turn of events, the Nigerian tech ecosystem experienced a series of closures in 2023, with seven startups announcing the cessation of their operations.
This development has left investors reeling, facing a collective loss of $79.15 million in funding deals, according to information obtained by BusinessDay.
Prominent among the startups shuttering their doors are Lazerpay, which secured $1.1 million; 54Gene, with a substantial 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.
Interestingly, this trend is not confined to Nigeria alone, as similar shutdowns reverberated across other African nations throughout the year.
In August, Kenyan logistics startup, Sendy explored selling its assets after halting operations. South African mobility startup WhereIsMyTransport faced closure due to funding difficulties, as did Dash, a Ghanaian fintech company connecting mobile wallets and bank accounts across the continent.
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Experts in the industry view these shutdowns as indicative of broader market sentiments within the global tech sphere, signaling challenging times.
Kola Aina, General Partner at Ventures Platform Fund, criticized the tendency to publicly dwell on startup failures, emphasizing the importance of understanding the challenges faced by entrepreneurs and refraining from dismissing their sincere efforts.
Aina stated, “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,” he added.
While some startups attributed their closures to an inability to secure additional funding, others cited different reasons. For instance, Bundle, a cryptocurrency exchange, decided to close as part of a shareholder-led restructuring to focus on Cashlink, which boasted a substantial transaction volume.
Vibra, a pan-African crypto startup, mentioned pivoting to another business but provided minimal details. Pivo, a digital bank for trade, reportedly shut down due to unresolved founder conflicts.
Criticism has emerged regarding the lack of transparency surrounding the reasons for closures. 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.
In a related development, PayDay, which faced closure, was reportedly acquired. However, reports suggest potential mismanagement of the $3 million funding it secured, raising concerns about financial stewardship in the startup landscape. #Investor