Those refunds were possible because the founders, Michael Okoh and Chike Ononye, decided there was no scale-up route for the product and chose to move on. 

After announcing the shutdown in April 2024, at least two angel investors wanted answers on how much money the startup had in the bank. They wanted to know how Thepeer spent the $2.1 million it raised in a June 2022 seed round that valued the company at $5 million. One publication said the company had only $450,000 in the bank when it shutdown.

However, the founders told early investors that despite the July 2022 funding announcement, the company had only received $1.35 million in that round. Two publications reported in April that one investor asked to audit the company’s accounts before the shutdown was finalised. 

A pre-seed investor who asked not to be named told TechCabal that no audit happened. 

Other investors were happy to treat any possible discrepancy in the accounts as a rounding error and simply wanted to move on from the matter, one person with knowledge of the talks said. Venture capital firms, which typically loathe public involvement in spats with portfolio companies, often choose the path of least resistance in these matters. 

Thepeer did not respond to a request for comments.

The return of capital comes four months after the company’s surprise shutdown, despite having twenty months of runway left. That runway could have given the founders more time to experiment and find product market fit, a common occurrence among struggling startups. 

Startups like Target Global-backed Kippa pivoted from fintech to edtech after shutting its agent banking business. 

“Despite what seemed like a significant runway, we forecasted that we would not be able to onboard and drive integration of our services with customers at a fast enough rate to achieve scale and sufficient revenue,” Ononye told TechCabal in April. 

Thepeer’s shutdown was not for lack of effort. The startup explored a buyout by larger companies to boost returns but could not align investor interests with those of the larger firms, Ononye said. 

The startup also considered pivoting to at least four verticals, including fraud detection, the creator economy, and financial reporting but decided against using investor funds for the pivot, one person familiar with direct knowledge told TechCabal. 

Thepeer’s lack of market fit was a “chicken and egg” problem. Its solution, which enabled customers to move money across different business wallets, required many businesses to integrate with its payment platform to succeed.

It struggled to convince businesses, spoilt with options like Paystack and Flutterwave, to integrate its payment gateway. When it managed to onboard businesses, they were hardly active. The startup onboarded 82 businesses in its three-year lifetime but only a quarter were active, highlighting its struggle with adoption. 

With limited businesses on its platform, it failed to achieve the transaction scale needed for profitability. The startup struggled to generate meaningful revenue, making less than $1,000 from the over $500,000 it processed in the first three quarters of 2023. 

The unlicensed startup also struggled with regulatory compliance when it tried to onboard enterprise businesses like banks, which could have provided the scale needed for survival. “Compliance was tricky… and their well-regulated fintech partners didn’t help them consistently,” one person familiar with the matter told TechCabal. 

“We are open to getting acquired by a licensed business that will allow us fully execute and accelerate onboarding of enterprise businesses including banks,” read Thepeer documents from October 2023 seen by TechCabal. 

“When you are selling a niche payment method in the market, it is always going to be an uphill battle,” Ononye told TechCabal. 

Thepeer’s payment gateway, which required customers to hold deposits across multiple wallets, competed with popular payment methods like cards, transfers, and cash, which dominate Nigeria’s payments market.  

“There’s a huge education gap in what they are doing, and they just weren’t prepared for that,” one person close to the business told TechCabal. 

Thepeer needed to change customer behaviour and drive wallet-to-wallet transactions before achieving market fit, a costly venture the business could not afford. Fintechs like OPay and Moniepoint succeeded in changing behaviour only after significant investment. 

“We were pioneering a completely new method of payment that did not exist in the market before, and from the get-go, it was a bet on whether it was going to work out or not. Building the tech was not going to be enough. (We) required more time and capital than we had anticipated,” Ononye said. 

Another stressor the business had was the time required to integrate with each business as the startup, which employed 10 people, struggled to onboard businesses quickly enough. 

“Integrations required hands-on engineering from us for each wallet, one after the other, as no two businesses functioned the same way. We also needed to ensure that the experience for customers of the businesses was as consistent as possible,” Ononye said.

Based on that audit, investors alleged Adesanmi misrepresented the company’s financial position, mismanaged and misappropriated $1.5 million, said two people who asked not to be named so they could speak freely. The matter was reported to law enforcement in March, those people said, as the company began recovering funds.

Investors were surprised by Spleet’s decision to lay off employees in February 2024, said one person with direct knowledge of the matter. That person suggested investors were misled about Spleet’s finances in monthly status reports.

“We’re letting go of some team members because when prices went up, landlords began renewing at 0.8 to 2.2x last year’s rent,” Adesanmi told TechCabal in February. “Many of our tenants can’t afford that, and the best way to continue as a business is to lay off people.”

Investors weren’t the only ones the layoffs took by surprise. At least three former employees said they were blindsided by the decision because the company had only concluded a new round of hiring in December 2023.

Co-founded in 2018 by Adetola Adesanmi, Spleet provided an alternative to paying rent annually in Lagos. It connected tenants with properties they could rent monthly but soon found that that business model was difficult to scale.

“Growth was slow on the landlords’ side. We just couldn’t add as many landlords as we wanted to on time,” Adesanmi told TechCabal in 2022. It moved from being a marketplace for landlords and tenants to building infrastructure.

According to Crunchbase, the company raised $260,000 in a family and friends round in 2019. It raised $625,000 in a 2021 pre-seed round from investors like MaC Venture, Ajim Capital, and Daba Finance and $2.6 million in a 2022 seed round led by MaC Venture.

MaC Venture did not immediately respond to a request for comments.

Daniela Ajala, who joined the business as business development lead in 2019 before becoming Chief Operating Officer (COO) in 2020 now leads Spleet and has also been named cofounder.

Adesanmi declined to comment on any part of this story, citing confidential legal processes.

Spleet has remained the last one standing in the early class of proptech startups that sprung up from 2015. Pioneered by Fibre.ng, those startups believed they could disrupt the Lagos real estate market by offering monthly payment options.

Their assumptions soon ran into a hard reality: without fixing the massive housing shortage, landlords—and the agents who play a big role in the rental process—have no incentive to change the model. This left businesses at the mercy of landlords, and many of them soon shut down.

Yet, Spleet outlasted the pack by quickly realising that the juice was not in trying to change the hearts and minds of landlords who saw nothing wrong with the status quo. People close to the company believe this leadership change is just a pebble in the road; for Spleet, the road itself extends ceaselessly into the horizon with promise.

*MaC Venture is an investor in Big Cabal Media, TechCabal’s parent company.

“Eneke the bird says that since men have learned to shoot without missing, he has learned to fly without perching,” Nigerian literary giant Chinua Achebe writes in “Things Fall Apart.”

He might have as well been talking about how financial institutions must adapt as bad actors continue to follow the money. In the first quarter of 2024, financial institutions reported 11,472 fraud cases in Nigeria. 

When fraud occurs, banks and fintechs help their customers recover funds by working with the police and the courts. Court orders help banks and fintechs to compel the receiving banks to freeze accounts or reverse questionable transactions. 

Commercial banks receive those refunds through bank drafts, while fintechs use partner banks. The funds are held in fraud recovery accounts before they are returned to customers. However, these recovery accounts can also be hacked. 

In May 2023, one African fintech lost ₦146,188,208 ($317,200) it helped customers recover from fraudsters. 

The fintech, which held the recovered funds with a tier-2 Nigerian commercial bank, said the account was “fraudulently hacked into,” according to court documents. The stolen funds were sent to accounts in 26 banks and fintechs, a standard method used by fraudsters to widen the trail and complicate recovery efforts. 

“The petitioner as (a) fraud recovery agent is helpless as these monies are some of the monies recovered on behalf of clients, which they supposed to be remitted by the petitioner to the owners,” said an excerpt of a court document seen by TechCabal. 

While the fintech has begun the recovery process, customers are growing impatient. “The [fintech’s] clients are disturbing the petitioner to collect their money recovered by the petitioner on their behalf and the petitioner cannot explain to their clients what exactly happened to their money.” 

The fintech has asked the court to compel the 26 banks and fintechs to share their customers’ KYC records and block their accounts from making transactions, highlighting the importance of KYC records. The fintech has also asked the court to issue arrest warrants for three suspected perpetrators.  

In Indonesia, the company will not immediately pursue a banking license but will offer its lending product, Merchant Cash Advance, to Small and Medium Enterprises (SMEs). It used a similar strategy in Vietnam.

“We see a massive opportunity with good profit potential in the small business lending space in Indonesia and the region,” Tyme Group chair Coen Jonker told TechCabal. 

“We can also build our brand faster because it takes a lot more time and money to get a full banking license and infrastructure up and running.”

Founded in  2018 by Coenraad Jonker and Tjaart van der Walt, TymeBank focuses on low-income earners and SMEs.

Backed by Tencent, British International Investment, and Patrice Motsepe’s Africa Rainbow Capital (ARC), TymeBank has raised $316 million. It is currently raising a $150 million Series D round and plans to list on the New York Stock Exchange by 2028.

With over 60 million SMEs and limited access to traditional financing, Indonesia presents a market opportunity for TymeBank to grow its merchant lending business. It has disbursed $100 million to over 60,000 small businesses in South Africa.

The company’s Phillipines operations reported a 2.47 billion Philippine pesos ($42 million) loss in 2023, its first full year of operations. According to Jonker, the company aims to break even in 2025 and achieve full-year profitability in South Africa in 2024.

TymeBank will reach 10 million customers in South Africa and 5 million in the Philippines by October 2024. “In the Philippines, we have achieved half in two years of the total customer base that we achieved in South Africa over six years, so that is an amazing growth story,” Jonker said.

In the meantime, the Southeast Asia market’s combination of a friendly regulatory environment and expansive potential market has TymeBank focused on the region. In the future, the bank will not rule out an African expansion, with Jonker saying the move is a question of “when and not if.”

“These changes are crucial as Twiga accelerates towards profitability and continues its mission of revolutionising food distribution in Africa through innovative digital solutions,” the company said in a statement confirming the layoffs.

Twiga Foods will also open 25 new roles in the growth and innovation departments.

In a dramatic year for Twiga, cloud provider Incentro dragged it to court in 2024 for failing to pay a $261,000 cloud bill. It provided a glimpse into the startup’s struggles to pay vendors and staff, exposing cash flow issues. In March, founder and CEO Peter Njonjo left the business after it secured new funding, prompting speculation that he may have been pushed out. 

Njonjo was replaced by Charles Ballard, an ex-Jumia executive, in May 2024. 

“These adjustments will allow us to improve our service offering and lay a stronger foundation for sustainable growth in the years to come,” said Ballard.

In November 2023, Twiga raised $35 million in convertible bonds from new and existing investors like Creadev and Juven. Njonjo invested $1 million of his personal funds in that round. 

Have you got your early-bird tickets to the Moonshot Conference? Click this link to grab ’em and check out our fast-growing list of speakers coming to the conference!

Most of the affected senior employees have spent a decade at IHS Towers and received “significant” severance packages, the same person said. “[The company said] it was not because of underperformance but because of the economy,” they added. 

IHS Towers did not immediately respond to requests for comments.

Since 2022, IHS Towers has faced pressure from investors over its poor financial performance. The company lost $409 million in the fourth quarter of 2023 after a currency devaluation in Nigeria shrunk revenues and caused FX losses from USD loans.

The company, which currently employs 1,600 people, reported a $1.9 billion loss in 2023, a 304% increase from the previous year’s losses. Its market capitalisation is $1.3 billion, a $6 billion decline since 2021.

While its share price has slightly rebounded in August to $3.56 after trading at $2.98 in July, it is still a far cry from the highs of 2021, when it sold for $21.

IHS Towers operates over 40,000 towers in Africa, roughly 25% of the continent’s entire tower infrastructure, which it leases to telcos like MTN and Airtel. This service is crucial for Africa’s digital economy plans, as towers provide the backbone for internet connectivity. 

However, rising fuel prices, maintenance costs, inflation, and FX volatility in Nigeria—which accounts for over half of IHS’s sales and revenue—have threatened the business. 

In the first quarter of 2024, the business spent $88.8 million on power, its largest operating cost.

“The company used more than $1.5 billion in cash last year for investing activities, but the line items on the company’s published statement of cash flows for such investing activities are not explained in any meaningful way,” a shareholder said in a June 2023 letter. 

Gimba Mohammed, the director of government and external relations at IHS Towers, said at a conference in August that it cost the business more than ₦14 billion to fix fibre cuts between 2022 and 2023. 

Have you got your early-bird tickets to the Moonshot Conference? Click this link to grab ’em and check out our fast-growing list of speakers coming to the conference!

Two people with direct knowledge of the matter claimed that at least 120 employees, including full-time and contract staff of First Bank’s large operations department, were given termination letters in July. The head of transactions at the time was also fired. 

Those employees were accused of laxity in carrying out their duties and were told they should have spotted the fraud earlier. First Bank’s management team believed it was impossible for a fraud of that scale and timeline to have been executed without the knowledge of Adeyinka’s superiors.

“The CEO said there will be zero tolerance for supervisory negligence,” said one First Bank employee who asked not to be named so they could speak freely. 

TechCabal first reported the alleged fraud in May, showing how Adeyinka, who was the final line of authorisation on his team, carried on his scheme unnoticed for two years. When the incident was discovered in March, the bank tried to keep the matter under wraps, suspending several operations team members indefinitely. However, First Bank became more aggressive after the fraud became public.

Several employees were questioned by the Nigerian Police Force (NPF) and detained at the Lion’s Building for at least six hours, one person with direct knowledge of the incident said. Those employees needed to post bail before they were released. Restrictions have been placed on all their personal accounts except their First Bank accounts. 

First Bank did not immediately respond to a request for comments.

The blast radius may have extended farther. First Bank’s CEO at the time, Dr Adesola Adeduntan, abruptly resigned in April, eight months before the end of his tenure and less than a month after the fraud was uncovered. Adeduntan, who led First Bank for nine years and “left to pursue other interests,” was initially replaced as CEO by First Bank’s board in April 2021. 

The Central Bank blocked that move, claiming First Bank’s board acted without regulatory approval. It paved the way for Dr Adeduntan to serve an unprecedented third term. One publication claimed concerns over his tenure led to his resignation in April.

Have you got your early-bird tickets to the Moonshot Conference? Click this link to grab ’em and check out our fast-growing list of speakers coming to the conference!

Raenest, Leatherback, and Vesti are pitching to several founders seeking new banking partners to park millions of dollars in operating capital, several executives at those companies told TechCabal. Some founders have proactively contacted those fintechs.

“My LinkedIn has been blowing up since the announcement, even without any moves from my marketing team,” said Ibitade Ibrahim, CEO and founder of Leatherback, who said they are already engaging 50 startups looking to create U.S banking accounts.

Raenest and Graph have pushed marketing campaigns on social media and prominent tech publications. 

“We also offer perks like same-day onboarding with two free USD cards and no charge on international transfers within the first two months,” Victor Alade, CEO of Raenest, told TechCabal on a call.

While some of these perks are compelling, some startups have switched to Brex, another US-based banking provider, over reliability concerns.

These African startups must deposit funding from investors and draw on those deposits to settle operational expenses. Other startups make frequent international payments and must stay connected to platforms like Stripe and PayPal.

“It is more of an access issue for us. I chose a bank that can keep the lights on,” said an e-commerce founder who switched to Brex when Mercury initially halted transactions on the company’s account ahead of the offboarding.  “We cannot afford to abruptly lose access to our accounts.”

Fintechs like Leatherback and Vesti tell founders that, just like Mercury, they directly partner with U.S-based banks with whom they have cultivated deep relationships that leave no room for unpredictability.

Ibatide claims Leatherback is regulated in about seven countries and has 60 partnerships with local banks in America and India. “With Community Federal Savings Bank, one of our local partner banks in America, we spent two years demonstrating that we have the  standard KYC and KYB processes and transaction monitoring process, giving them enough comfort.”

While some startups have begun to switch from Mercury, which gave them 30 days to close their accounts, some executives in Mercury alternatives who spoke to TechCabal say it may be too early to determine whether affected founders have favoured local options.

On June 11, the Employment and Labour Relations court gave the employees 21 days to prepare for a pre-trial hearing, but they failed to meet that deadline. The case will now be dismissed. 

The ex-employees will not file a fresh suit, citing financial and time concerns.

“Most of us do not have jobs, so the cost is a hindrance,” one of the ex-employees told TechCabal. “Legal costs and the likelihood of a loss means we may end up paying Wasoko. The average period for a full suit is three years and more.” 

Had the case proceeded and the petitioners won, Wasoko could have been obligated to pay the employees the same exit packages. The petitioners argued it wasn’t fair that employees who worked for Wasoko for a longer time received more money than those who had left “stable” jobs to join the company. 

“We can confirm that we adhered to the judicial process, allowing it to take its course. As of June 11th, the court ruled in our favour and vacated all interim orders that had been issued against the company,” Wasoko told TechCabal.

Another ex-employee claimed the court ignored most of their submissions. In their prayers submitted to Judge Nzioka wa Makau in January 2024, the employees argued that the matter was urgent as they faced irreparable harm if the court did not hear their case promptly. 

They also requested the court to compel Wasoko to address their complaints before replacing their roles.

“The judge ignored most of our submissions and relied on one affidavit signed in duress by one of us who wanted to exit the suit,” one petitioner told TechCabal. “The main suit was to be with the same judge, so it was difficult to prosecute the matter well. This would involve costs if we lost.” 

The employees filed the lawsuit in January after Wasoko announced plans to merge its operations with Egypt’s MaxAB. Initially projected to conclude in April, the merger is still ongoing. The companies plan to rebrand the combined business, but neither party has confirmed a completion date.

Wasoko told TechCabal that it cannot share specific details on the date “due to the sensitive nature of the merger.”

Have you got your early-bird tickets to the Moonshot Conference? Click this link to grab ’em and check out our fast-growing list of speakers coming to the conference!

Hope Payment Service Bank, the self-described “premier digital-first bank in Nigeria,” has begun a legal process to recover ₦6.5 billion fraudulently obtained from its banking platform by unknown persons.

“On about July 15, 2024, there was unauthorised access to the Plaintiff’s banking platform, following which huge sums of money were transferred fraudulently from the plaintiff’s banking platform to certain beneficiaries’ accounts,” said an excerpt from a motion the company filed at a high court in Lagos and seen by TechCabal.

The fraudulently obtained sum was transferred to hundreds of accounts in commercial banks and neobanks. One bank executive said a few of the banks involved had begun to recover some of the money but declined to share exact figures.

Hope PSB declined to comment on any part of this story.

While Hope PSB reported the matter to the police on July 18, it did not disclose the mechanism of the fraud.

However, one person with direct knowledge of the matter told TechCabal the fintech was the target of a cyberattack but did not provide specifics. The company responded to the cyberattack by shutting down its banking infrastructure.

“It is better to have a downtime than to lose money,” that person said.

“This is the first time we have suffered an attack in five years, as we have a robust risk and compliance framework. Customer deposits are safe, and there was no risk transference,” a person close to the company told TechCabal.

As digital payments grow exponentially in Nigeria, bad actors target banks and fintech companies. While these companies invest in security, bad actors are becoming increasingly sophisticated.

Financial institutions lost ₦3.007 billion to fraud in the first quarter of 2024 across 20,638 reported incidents, according to data from the NIBSS fraud industry report.