2019 recorded one of the best years for tech in Nigeria. Funding rounds were impressive. Many startups sprung up or expanded into the country. Foreign interest in the tech sector spiked exponentially. But beyond these positives, there were also several negatives that can be learnt from.
No startup launches expecting to fail, but difficult condition like lack of funding or slow growth often forces companies to shut down. Studies show that at least 90% of all startups fail, with most failing due to the fact that they made mistakes that could have been prevented.
However, cues can be taken from those that failed to find solutions to the major problems affecting the lifespan of startups in the country.
Based on Technext’s research, here are the top 5 startups that shut down in 2019 despite the significant amount of funding raised, the level of market traction gained and strength of the founding team.
Kwesé Satellite TV (2015-2019)
Founded by Strive Masiyiwa, founder and group chairman of Econet, in 2015, the Kwese brand was a pan-African TV service, video streaming and free-to-air TV that shut down operations in August.
By 2017, Kwese had gathered tens of thousands of subscribers across 12 African countries including Nigeria and become a major competitor of Multichoice’s DStv.
Unfortunately, late 2018 the company hit a rough patch as it reportedly missed multiple payments on broadcast deals which made it close its pay-TV service, focusing on its free-to-air TV services. However, after months of struggling, Econet officially shut down Kwese TV citing the critical economic crisis of Zimbabwe as a major cause.
Blackberry Messenger (2005 – 2019)
After dominating the instant messaging world for years, BlackBerry Messenger (BBM) was finally shut down in May due to low usage. Initially debuted by Research in Motion (RIM) in 2005, BBM was the premier IM service that relegated SMS messaging. As it was only available on BlackBerry devices, BBM became one of the chief reasons to own a Blackberry device.
However, BBM’s reluctance to go cross-platform in 2009 when other operating systems like iPhone and Android gained popularity cost it a great deal. BBM’s lack of support for cross-platforms allowed new competitors like WhatsApp and Telegram to take over the IM market.
Although BBM finally debuted on Android a few years ago, their market in the IM industry had been taken over by nearly every social media app, which affected their appeal and ultimately dropped the usage of the messenger.
Founded by Olumide Olusanya in 2012, Gloo.ng was one of the earliest and well-known e-commerce companies in Nigeria before it shut down operations in January. According to the Olusanya, the economic recession of 2016 was the major reason they closed shop.
He added that one of the biggest challenges they had in the e-commerce business was fundraising. He explained that although demand was strong, the Total Addressable Market (TAM) available was not big enough and service delivery frictions were too high to find a profitable model.
Gloo.ng re-emerged later in March as Gloopro, an e-procurement website for large and medium scale businesses. However, the shutdown of its business to consumer model after its big market traction does not look good for the Nigerian tech sector, as they join the likes of e-commerce companies Efritin, old Konga, OLX and DealDey who failed in Nigeria.
Careers24 Nigeria (2014 – 2019)
Founded by Media24 in 2014, Careers24 Nigeria was one of the biggest online job portals in Nigeria before it shut down in March. The platform was discontinued by Naspers, multinational internet and media group, top technology investor and owners of Media24.
Careers24 Nigeria was one of the biggest rivals to market leader, Jobberman. Unfortunately, after reviewing the platform, Nasper decided to pull the plug citing that the company’s growth rate was slower than expected.
Bounce News Nigeria (2017-2019)
Naspers in April announced that it was shutting down Bounce Nigeria, it’s popular news aggregator that was launched in 2017.
Just seven months after launch, Bounce News’ huge marketing strategy made it the most downloaded app in the country, in close competition with Google News and other leading Nigerian news apps.
However, Naspers decided to shut down the company despite the impressive growth. The company claimed it had 2 million Android and iPhone users as of March 2019, but it wasn’t enough to save the company.
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