Behind all the glamour, humongous fundraising figures and flamboyant founder personalities is the reality that running a startup is hard.
Especially so in a business environment like Nigeria where official internet usage figures don’t match user habits and rent-seeking regulatory obstacles are the norm. So it goes without saying that many startups do not survive beyond their first one to five years.
Internet startups that officially shut down in 2019 alone probably numbered in the hundreds. We are certain of these ones.
OyaPay (Dec. 2017 – Feb. 2019)
What it was: A platform for offline businesses to accept payments and take forward orders from their customers with or without a smartphone.
Why it was shut down: Very early on, founder and CEO, Abdulhamid Hassan accepted a small seed round from a senior family member.
But when the need for additional investors kicked in, the said family member pushed back on the idea of diluting their investment. This went unresolved for months, leading Hassan to shut down the startup. He has since moved on to co-found another startup.
What we can learn: There are neither friends nor family in business. If you must go into business with friends or family, put everything into legally-bound writing.
- 5 things to consider before going into business with your friend
- A Shareholders’ Agreement is no proof that you own shares in a company
CakeTunes (Sept. 2017 – Jan. 2019)
What it was: An online marketplace where music producers can sell beats to musicians and video firms.
Why it was shut down: Founder and CEO, Ability Elijah published a brutally honest account of why CakeTunes failed.
In summary, “It was all fun until we began to discover hundreds of sites and blogs that were offering quality beats for free. Most of these were even as good as the beats we sold for $100.”
What we can learn: You could have the best startup idea but if there is no demand/product-market fit, you might struggle. Do your research.
- Inadequate market research may be the silent killer of African startups
- How to validate if your startup idea is a viable business
These startups don’t quite make the list but they are noteworthy.
DealDey (Mar. 2011 – Dec/Jan 2018/2019)
In January 2019, Techpoint officially confirmed that popular daily deals eCommerce site, DealDey had closed shop.
Turns out it had actually shut down in the first week of December, 2018. Which explains why they stopped fulfilling orders in mid-December. What’s more, a follow-up story revealed that DealDey officially died in 2015.
DealDey raised no less than $5m in total funding, over the course of 7 years.
MyPadi (Aug 2016 – May 2019 ???)
Techpoint Build 2018 alumnus, EchoVC and Ventures Platform backed hostel booking platform, myPadi held a lot of promise.
But since May 2019, operations appear to have been suspended. Social media activity stopped, phone line switched off and the website is still down, even though founder Joel Amawhe told Techpoint, in September, that it was a database issue that his developer team would look into.
We can’t say for a fact that myPadi has closed shop. But things aren’t looking good for the startup which, in 2018, was estimated to generate annual revenue in excess of $1m.
- Metrics that Matter: Focusing on healthy business milestones is key to longevity of startups
- Why pitch competitions do not determine the best startups
- Why funding can kill your business fast
Have you had to shut down your startup? Do you have insights to share? Email us at [email protected].
Jan. 25: New Built in Africa episode – Selar: End-to-end eCommerce platform for Africa’s passion economy
On March 25, 2021, Techpoint Africa will be hosting the brightest minds in decentralised finance/crypto at the Digital Currency Summit tagged “Building the money of the future” Click here for more details, registration and sponsorship. Location: Fourpoint by Sheraton, V.I. Lagos.