Sometimes in losing a battle, you find a new way to win the war.
The moment we begin to look at the startup scene in Nigeria more holistically, the closer we are to understanding that we are in a war. So, when one startup dies, that’s a battle lost. But as Donald Trump said, it’s in losing a battle that you learn to win the war. There is a lot to learn, even if, tacitly from stories of losing.
For the Nigerian startup ecosystem, 2018 is a mix of thrusts and drops. For thrusts, in the first half of 2018, 41 startups raised total funding of $82,926,199 (₦30.1 billion), that’s huge when you consider that in the whole of 2017 we raised $114.6 million. However, per drops, though less recorded, we have been able to count about seven startups that ceased operations or died quietly. For one or two of them, they might have died before 2018, but because it has not been recorded before now, we decided to include it in this year’s stats.
Because of how much context we wanted to provide, we decided to divide this post into two. This first part would consist; Konga, OLX Nigeria, Lands.ng and ChopUp.
Type: E-commerce Founder (year): Sim Shagaya (July 2012)
On February 3, 2018, we heard the news that one of Nigeria’s leading e-commerce companies—Konga.com—went under and was being sold by Naspers—holders of a majority stake in Konga—to Zinox Group—an ICT solutions provider and IT equipment manufacturer who also owns Yudala—a lesser known e-commerce company. After the acquisition Zinox decided to dissolve Yudala into Konga, retaining the latter’s name for obvious brand equity reasons.
Effective from May 1st (2018), Yudala will now operate under the name KONGA, with dual CEOs in the persons of Nick Imudia who will be in charge of online among others and Prince Nnamdi Ekeh who will be responsible for offline.
Olusiji Ijogun—Chairman, Konga
It came as a shocker to the tech community, as Konga was one of the most capitalised tech startups in Nigeria, getting up to $79.5 million in total funding raising up to a Series C round.
Considering that Nigeria has barely 1% of its population buying online despite reportedly growing internet penetration and smartphone adoption. Konga’s task was to get the small percentage of online shopping Nigerians buying from them as opposed to its biggest rival—Jumia and the likes.
The tale of Konga goes to show how difficult it is to drive an internet-based behavioural movement (e-commerce) in Nigeria, dangers of over-reported numbers and difficulty faced by dwindling naira valuation against the global market. Even Jumia is struggling.
Pronounced dead: February 2018 Business life span: 6 years
2. OLX Nigeria
Type: Online classifieds site Founder (year): OLX (2012)
Similar to Konga, OLX whose full meaning is Online exchange struggled to make headway in Nigeria. Online classifieds sites are like e-commerce’s but without the burden of delivery or fulfilment. OLX sold things from household items to real estate.
Olx.com.ng reportedly closed its physical offices in Nigeria and has since scaled back its investment in the country.
We made a difficult but important decision in Nigeria to consolidate our operations between some of our offices internationally. Our marketplace will continue to operate here, uninterrupted, as it has since 2010, and we remain committed to the many people here who use our platform to buy and sell every month.
Sjoerd Nikkelen—General Manager of OLX Asia, Middle East & Africa
The parent, OLX group was founded in 2006. It currently has physical operations in over 40 countries and since 2015, Naspers—a South-African media and technology group, and Africa’s most valuable company—owned 95% of the OLX group.
Since OLX pulled out of Nigeria (and Ghana and Kenya)its office in South Africa has been the one coordinating its African operations.
Similar to the Efritin story, which shut down in 2017, OLX pulled out of Nigeria because they “were not getting the desired return on their investment”. While we can say e-commerce companies die from poor logistical infrastructure like good road networks, what shall we say about online exchanges?
Whether e-commerce would actually take-off in Nigeria, remains to be seen, till then, it is a time of burning cash on operational spend, and expecting the ever-changing regulations in the country favour investors. How long can these investors wait for a positive RoI, if at all?
Shut down date: February 2018 Effective life span: 6 years
Godwin Ani—Founder, Lands.ng
Type: Real Estate Founder (year): Godwin Ani (March 2016)
Godwin was an Oil and Gas consultant who had worked at Schlumberger—a well-paying oilfield services firm—for 13 years before officially founding Lands.ng in March 2016 (after being in beta phase for near six months). Lands.ng aimed to use technology to revolutionise the way Nigerians thought about real estate activities as well as provide a long-term solution to the home ownership challenges and the living standards across the country.
As at the time of filing this report, the website of the company was not available and the last activity on its Twitter page is a quoted tweet dated September 28, 2017.
At some point in Lands.ng evolution, they partnered with ADE (Acquiring Digital Assets) Digital Media. Thus, the Founder and CEO of ADE Digital Media—Michael Ebia, became the Director of Strategy at Lands.ng.
Daniel reached out to both Michael and Godwin but none of them was ready to talk about Lands.ng.
It’s been a herculean task for technology to disrupt the land and housing industry in Nigeria. Last year, ToLet.com.ng acquired Jumia House Nigeria (and became PropertyPro) to consolidate their efforts in serving the growing real estate market in Nigeria.
Going by industry trends, the skepticism of buyers and the “greed” of agents are responsible for the death of Lands.ng. In Nigeria, particularly Lagos, with its notorious “ọmọ onilẹ́” (translated “children of the land”) troubles, an additional intermediary to the already convoluted land value chain is not a welcomed.
Suspected shutdown date: before 2018 Effective life span: about 2 years
One of ChopUp’s games—Table Soccer
Type: Mobile gaming Founders (year): Zubair Abubakar and Bayo Puddicombe (August, 2012)
When the CEO of a company becomes the Head of Developers’ Community at another firm, what becomes of the company he founded? That’s the case with ChopUp and the rest of its management team.
ChopUp, a division of Pledge51 Limited—company founded by Zubair and Bayo, is a gaming startup that develops games with African themes. Before ChopUp, Zubair had developed the Nigerian constitution app.
During their heydays, Pledge51 and ChopUp achieved some great feats. In 2013, Pledge51 won the Institute of Safety Professionals of Nigeria (ISPON) “Best Software Startup of the Year” award with prize-money from Jim Ovia ICT Foundation. In 2017, ChopUp partnered with Paga, Nigeria’s largest mobile payment platform, to launch Nigeria’s first e-sports platform which allows gamers to compete with each other and win daily cash prizes. Prior, in 2014, Paga’s founder Tayo Oviosu and others had invested in ChopUp.
Also, in March 2018, the Nigerian gaming company reportedly signed a distribution and partnership agreement with GameMine Inc., an American gaming company.
The GameMine partnership puts our company on the international and distributes our games to millions of people around the world.
Zubair Abubakar—Co-founder of ChopUp.
Unfortunately, there has been no update on the two partnership deals – Paga and GameMine. As at the time writing of this report, the last activity on its social media pages was on May 16.
The “A-Team” of ChopUp—the co-founders and the Senior Game Programmer (Daniel Micah)—has also been absolved into Pagatech Limited—makers of Paga. In August 2018, Zubair joined Pagatech Limited as Head of Developers’ Community, while Bayo joined as Senior Code Wrangler. Daniel Micah, on the other hand, joined Pagatech Ltd in May as a Software Engineer.
Could the 2014 Paga investment have been an acquisition?
Suspected death date: July, 2018 Life span: about 6 years
We would have to draw the curtain here. Watch out for Part 2 featuring two fintechs and a ride-hailing company.
Daniel Iyanda co-authored this report.