In a startling turn of events, nine promising Nigerian startups, collectively amassing a staggering $70 million in investments over the past two years, have abruptly shuttered their operations in 2023. The closures not only cast a shadow over the immediate fate of these ventures but also raise serious concerns about the future prospects of other budding innovators seeking funding.
Venture capitalists are pointing fingers at the hurried investment decisions of the past, asserting that many of the failed startups received funding without undergoing sufficient due diligence. This has ignited a fervent debate among investors, emphasizing the pressing need for startups to demonstrate robust viability and meet elevated standards before securing investment in the future.
Amidst a backdrop of dwindling funding, the demise of these nine Nigerian startups, including notable names like Pivo, Lazerpay, 54gene, Bundle Africa, Payday, Zazuu, Vibra, Okadabooks, and Hytch, has sent shockwaves through the entrepreneurial landscape. From questionable leadership decisions to financial mismanagement, each startup met its untimely end under unique circumstances.
This wave of closures is not exclusive to Nigerian startups, as several companies across Africa and globally have faced a similar fate in 2023. However, Nigeria leads the continent in terms of the sheer number of startups succumbing to the challenges this year.
The downfall of well-funded entities like Pivo, which raised $2.6 million, and 54gene, securing a substantial $45 million, highlights the fragility of the startup ecosystem. Shockingly, even after raising substantial funds, these companies faced internal conflicts, financial struggles, and leadership changes that ultimately led to their demise.
The cautionary tales extend beyond Nigeria’s borders, as other African startups like Sendy, Dash, WhereIsMyTransport, Zumi, and Copia have also succumbed to the harsh realities of the current business climate. Allegations of financial impropriety, false reporting, and the inability to secure further investments have become common threads in the narratives of these fallen startups.
Venture capitalists are now sounding the alarm, urging a paradigm shift in investment strategies. Eloho Omame from TLCom Capital emphasizes the need for thorough due diligence, lamenting the rushed deals of the past. Founders are advised to see due diligence as a crucial process in their business interests, fostering a healthier and more sustainable dynamic between investors and startups in the African tech and venture capital landscape.
As the dust settles on the wreckage of these once-prominent startups, the industry faces a pivotal moment of reflection, learning, and adaptation to ensure the longevity and success of future ventures in the ever-evolving startup ecosystem.
Source: Naira Metrics