Sometimes in losing a battle, you find a new way to win the war.
Donald Trump
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 or performed poorly. 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.
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Note: A previous version of this article listed Konga and ChopUp. Things to note:
- Konga: While the old Konga is dead, the brand “KONGA” is still in use by the company—Zinox— that bought it over, dissolving their own online mall—Yudala—into the new KONGA.
- ChopUp: While it is true that key personnel of the firm like the two founders and a senior executive are now employees of PagaTech Limited, the company ChopUp is reportedly still making revenue. Also, they claim that their games are still in distribution in Nigeria and beyond, thanks to their partnership with some Nigerian Telcos and the American gaming company—GameMine Inc, respectively.
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Now all that is out of the way, let’s get right to it.
1. 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
2. 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
Clickthrough for Part 2 featuring two fintechs and a ride-hailing company.
Updates:
—9:53 AM, Dec. 28, 2018: Changed the footer of Konga to “sold to Zinox” and “time till acquisition” to better reflect the status of things with the Nigerian e-commerce giant. Also added “…or performed poorly” to the first sentence in paragraph 4.
—4:50 PM, Dec. 28, 2018: We added a NOTE section after the fourth paragraph.
Daniel Iyanda co-authored this report.