Nigerian fintech startup Thepeer, which shut down in April 2024, will return roughly $350,000 to investors despite having runway remaining.
The shutdown, which its founders blamed on an inability to
find product-market fit, means investors will get some of their money back.
The startup's shutdown came almost two years after it raised
$2.1 million in a seed round led by Raba Partnership, an early investor in
Flutterwave and Stitch
According to one investor familiar with their finances, the
startup is expected to return about $350,000 of the $2.3 million it raised to
investors. The company’s burn rate was less than $20,000 monthly, the same
person said.
The Peer’s decision to shut down early— a counterintuitive
idea in a world where startups are encouraged to hang in there—may sometimes
lead to better outcomes. At least fifteen high-profile African startups closed
their doors in 2023 as macroeconomic conditions worsened and VC funding
declined. Those shutdowns often meant investors’ funds went to zero.
Before shutting down, the startup experimented with other
products and business lines, such as fraud prevention, but it was not convinced
that any pivot should be made with investor money, one person with direct
knowledge of the matter said.
Some of The Peer’s investors include Chipper Cash,
Flutterwave, Sunu Ventures, Byld Ventures, Timon Capital, Raba Partnership,
Musha Ventures, RaliCap, Uncovered Fund, and angel investors like Ezra Olubi
and Prosper Otemuyiwa.
Founded in 2021 by Chike Ononye and Michael Okoh to connect
business wallets, The Peer raised $220,000 in a pre-seed round and an
additional $2.1 million in a June 2022 seed round that valued the company at $5
million.
Investors were told they would receive 20% of their funds
back (around $460,000), but one person said The Peer’s seed round was less than
the $2.1 million announced, implying a lower refund.
The Peer’s cofounders did not respond to multiple requests
for comments.
Although the product held promise—an investor in its seed
round likened it to Flutterwave—it failed to find scale and generate meaningful
revenue.
The Peer generated less than $1,000 in revenue after
processing more than $500,000 in the first three quarters of 2023, according to
someone familiar with the startup’s finances.
The Peer’s APIs allowed customers to move money between
wallets. For example, a Foodcourt (food delivery business) customer could move
money from their wallet to fund a Paga (fintech) wallet or make payments online
with funds from their Foodcourt wallet with The Peer’s payment gateway.
To deliver the product, The Peer had to convince several
businesses to integrate its payment product. An industry veteran who asked not
to be named told TechCabal that those conversations and subsequent integrations
could take months.
African markets aren’t ready for wallet-to-wallet
transactions at scale, said one person familiar with The Peer’s business. That
person also cited challenges with compliance and an absence of consistent
support from the startup’s fintech partners.
Meanwhile, the businesses they hoped to sell to often had
many options, including more established payment companies like Paystack and
Flutterwave.
In a blog post, The Peer’s co-founders said they “could not
align the startup’s product with the market’s needs.” “The overall acceptance
of wallets as a viable payment option didn’t grow as rapidly as we had hoped,”
they wrote.
Before the startup shut down, it held talks with several
startups for a possible acquisition, but an acquisition never materialised.
“I think their product came too early for the market,” an
industry expert said.
0 comments:
Post a Comment