After spending millions of investors’ money, startups with high hopes have collapsed in the continent leaving a contingent of young ambitious investors in limbo, as others struggle to maintain themselves in the market. Herein is a list of top firms that hit headwinds.
BRCK
Internet connectivity is a rare commodity in many rural parts of Africa. BRCK, is among Kenyan startups that fell big time. It was in the business of making specialized hardware routers that can supply Wi-Fi even without a steady power supply.
Their hardware router which supplies Wi-Fi even without a steady power source was helping connect remote regions to the internet – via a reliable connection.
However, about three years ago, the noble startup folded due to financial challenges occasioned mainly by COVID-19 shocks that disrupted business. After outside funding amounting to $4.2 million (Sh677,422,000.00) led by founders then-Erik Hersman, Jon Shuler, Philip Walton, Reg Orton (US) came a cropper, the decision was made for a shutdown and with that job cuts as well.
Wefarm Shop
Formed in 2014 by by Kenny Ewan as a mission-driven tech start-up building platform for the billions of small-scale farmers globally, the agritech startup was developed as a platform for buying agricultural products at competitive prices.
The company had good growth in the period under operation but later on external factors like competition, the company began to struggle.
As a result, in 2022, the startup shut down after only a year with scalability no longer in sight thus the decision. At some point it had raised more than $1.6 million in seed funding in a round led by venture capital firm LocalGlobe, it also reached a milestone of over 100,000 farmers on its platform.
Sendy
The Logistics company start-up was a big hit when it was set up in the country and managed as of last October to raise Sh3.9 billion from investors.
However, in the same month, the company got into administrative problems after shutting down its retail and supply chain known platform as Sendy Supply, the logistics firm Sendy Group has been placed under administration after defaulting on its debt.
Notify
The logistics firm that managed to raise $370,000 (Sh57,394,992) in funding was a key enabler in the SME space whereby it catered for business people who wanted space for trade at affordable rates.
Founded in 2018, the startup came up with the concept of a better and more convenient way of cost-sharing among traders. The business environment proved unreliable and unsustainable despite investing tons of money to the project. As such in August 2022, the decision was made that Notify shut its operations in Kenya.
Kune Food
The food delivery start-up started in 2020 but hit headwinds after two years and closed shop. The idea behind the company was to offer customers affordability and reliability in terms of quality food provision. The global challenges like rising inflation affected food costs ultimately caught up with the company and after a while it had to go under because profit margins were minimal. Investors also tightened the lid on more funding hence the collapse.
Sky Garden
The startup allowed third-party merchants to sell their wares through their website, especially home appliances. However, a cash crunch was to be its Waterloo after five years of existence thus shutting its doors with funding becoming hard to come by. investors were hesitant to make new investments due to increased interest rates. Sky Garden had raised $1 billion (Sh155,121,600) over its lifetime.
Zumi
This e-commerce platform that sold non-food items on its site shut down after six years. This is after an initial investment of $920,000 (Sh120 million) for the apparel online retailer. The company had over 5,000 customers then and made more than Sh2.6 billion in sales during that time. Zumi started as a digital magazine for women, however, when it could not make the anticipated returns from digital ads, it left the media sector and went into e-commerce before it closed shop.
Lazerpay
In April 2023, Lazerpay announced that it would be shutting its doors in April of 2023, one year and a half after its incorporation. The startup, which was founded at the height of the crypto bull market in 2021, and to much fanfare Njoku who was just 19 years old at the time, promised to bring seamless crypto payments to Africa.
The rain started beating them when Nestcoin, one of the investors in Lazerpay, shared that it had lost significant operating capital when FTX, the exchange it held monies, crashed. Nestcoin laid off staff last year, and its CEO stopped taking a salary. This began the struggles of crypto startups such as Lazerpay.
54 Gene
54Gene, a Nigerian precision medicine biotech startup on a mission to transform racial disparity in genomics research globally, shut down as it “could not continue to operate financially,” according to Ron Chiarello, one of the company’s replacement CEOs.
Its lifespan was four years (2019-23) as it had raised $45 million (Sh7,177,500,000.00) during that phase. Analysts told of the product’s difficult market receptivity in the West African country.
Dash
The Ghanaian platform for payments interoperability, shut down after internal audits revealed that the company’s CEO and founder Prince Boakye Boampong, exaggerated user numbers, misappropriated company funds, and engaged in other fraudulent practices. By the time of going under, the ambitious Startup management had raised $86 million (Sh13.7 billion). It ran its time of four years in operation (2019-2023) before it faced its Waterloo.
Source: Africa Digest & Disrupt Africa and other internet sources
