Why this struggling YC-backed startup is not giving up

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June 6, 2024
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3 min read
The founders YC-backed Flux standing side by side. L to R: Osezele Orukpe and Ben Eluan

News of startup shutdowns has become frequent in the African tech ecosystem, as news of their funding reduces. From the funding winter to economic woes, startups on the continent are having a hard time staying alive.

According to reports, between 10 and 15 startups shut down in 2023. Most of these companies raised millions of dollars in funding before deciding to close up shop.

However, Co-founder and CEO of YC-backed Flux, Ben Eluan, has said that although the startup is struggling due to regulatory challenges, it is not giving up.

On a call with Techpoint Africa, the founder of the cross-border payment startup said building has become exponentially more difficult, primarily because of the stiff stance against crypto in Nigeria, which is a big part of the company's business.

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The Flux dream

Eluan founded Flux alongside Osezele Orukpe, in 2020 with a mission to make cross-border transactions safer and cheaper.

Both founders were undergraduates at Obafemi Awolowo University, Ile-Ife, Osun State, Nigeria, who decided to pursue their dream of making digital transactions borderless after experiencing trouble receiving payment from foreign clients as freelancers.

“The experience made us think of cross-border payments,” they told TechCrunch in 2021.

The founders also said it was a huge market and they were dedicating their lives to building payments for Africa.

Crypto was going to be the powerhouse for Flux's cross-border transaction play; one of the biggest use cases for cryptocurrencies.

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Unlike fiat currencies, crypto can be sent and received anywhere in the world as long as there is an Internet connection. According to Chainalysis, Nigeria transacted almost $69 billion in crypto between June 2022 and July 2023, a long way from the $20 billion remittance it received in 2022.

Flux's dream of powering cross-border transactions in Africa sat well with investors as it got into an accelerator called Pioneer, in 2020 and Y Combinator in 2021. At this time the startup had 5,000 users and completed over $750,000 in transactions.

However, Flux's dream of becoming a $1 billion cross-border payments company has one obstacle in its way — regulation.

The issues

"Nobody wants to work with you anymore if you deal with crypto. So we've had to rethink our approach." Eluan told Techpoint.

Flux's issues with cryptocurrency regulation started when the Central Bank of Nigeria (CBN), implemented the crypto ban, restricting banks from facilitating crypto-related transactions.

While it seemed that the country's stance on crypto was softening, especially after the lift of the crypto ban in December 2023, a massive clampdown on crypto platforms and crypto P2P began in February 2024.

Nigeria's problems with crypto have forced Flux to rethink powering cross-border transactions with crypto.

Flux now focuses more on banking services rather than crypto, but Eluan says the dream of building a cross-border payments startup for Africa is still very much alive.

The decision to offer banking services while it figures out how to facilitate cross-border payments with fiat has been a tough one for the company.

"Crypto is the original way we thought we could solve this problem. We've had very steady growth before the crypto problems started."

These crypto problems have also caused the company's revenues to take a hit, as crypto services are also the company's biggest revenue generator.

Survival mode

While the company has been quiet in the last few years, Eluan said the company is very much alive despite the problems. "I don't think difficulties should make a company close down."

To stay alive, he said the company operates with a lean workforce of about 15 people including both founders. The two have a strong technical background, which reduces the company's engineering spend.

Although Flux might be getting investment soon, he said increasing revenue is a bigger priority for the company.  

It is also working on partnerships with banks and other companies that will help it offer better cross-border payment services and improve its revenue.

However, building cross-border payments through fiat or traditional financial railings puts Flux in direct competition with startups like LemFi with considerably deeper pockets.

"In the current harsh regulatory climate, it’s hard to build both fiat and crypto in one place."

Interestingly, Eluan also said that crypto cross-border payments will come back to Flux as the company will creatively find a way to make it work.

While Flux figures out a plan to embed the crypto side of its business in line with regulation, its dream of "scaling it into a $1 billion company" might take a little longer than planned.


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He's a geek, a sucker for Blockchain and an all-round tech lover. Find me on Twitter @BoluAbiodun1.
He's a geek, a sucker for Blockchain and an all-round tech lover. Find me on Twitter @BoluAbiodun1.
He's a geek, a sucker for Blockchain and an all-round tech lover. Find me on Twitter @BoluAbiodun1.

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