One Year On: IROKOtv, Wakanow and other Tech Startups that Suffered Major Losses During the Lockdown
..with Iyanu Adebowale
We have crossed the 1-year landmark since the COVID-19 pandemic forced Nigeria into lockdown. Offices, schools and other establishments were closed because every individual, except essential workers, had to stay at home in order to not contract or spread the virus.
In that time, businesses in every sector felt the impact of the pandemic either on revenue, operations, product development or others. In the tech sector, here are the 6 startups that were worst-hit within the one year of lockdown.
Some months after the first lockdown, people who had invested in Thrive Agric took to social media to report that they were not being paid the returns on their investment.
Following the allegations on social media, the agritech startup clarified the challenges and explained that the payouts had not been made because the lockdown was limiting off-takers from purchasing farm produce.
A Thrive Agric spokesperson told Technext that the challenge arose because business started to slow down for their partners who produce frozen chicken. “This was because supermarkets in Lagos, Abuja and Portharcourt were shut down and they were not getting the same sales volumes as they normally got.”
The rough ride culminated in Uka Eje, the startup’s CEO and Co-founder, stepping down from his position and assuming the role of COO. Adia Sowho, former Vice-President for Growth at Migo, was appointed the interim CEO since then.
Ride-hailing company, Uber bore the brunt of the lockdown necessitated by the global outbreak of COVID-19. In Nigeria, the lockdowns imposed on Lagos and Abuja stalled the company’s ride-hailing activities, forcing Uber to suspend operations.
Uber lost a whopping $2.9 billion in Q1 2020 and then recorded another $1.8 billion loss in the second quarter, after ride bookings fell by 73% year-on-year due to the COVID-19-induced mobility restrictions.
For context, the company’s mobility revenue declined by over 67% to $790 million and it reported consecutive losses in all four quarters of 2020, summing up to a net loss of $6.7 billion throughout the year.
What resulted was the permanent closure of about 180 Uber driver centres and the retrenchment of 3,700 employees worldwide.
Wakanow, a Nigerian online travel-booking startup, suffered greatly from the COVID-19 lockdown and travel restrictions. With international flights suspended in late March to curb the spread of the virus, Wakanow bookings first dropped by over 50% in March and then plummeted by a massive 98% in April.
It’s a tough time and like every other travel agency, we’ve had to take some drastic actions to reduce our cash burn.Adebayo Adedeji, Wakanow CEO
“We’ve done a couple of job reductions but they were going to happen because of automation anyway,” Adedeji said.
Following a steep revenue decline brought about by almost zero business activity, Wakanow laid off a number of employees and closed down its head office as well as other physical outlets to keep the company afloat.
As soon as movements ceased in Lagos and Abuja on March 20, 2020, Bolt announced that it was suspending its operations in the country. Like other businesses, the ride-hailing company suffered some revenue loss as a result of the clampdown on operations.
Bolt only resumed operations on May 4 after the government announced eased phases of the lockdown in the country.
Coming back into business, however, Nigerians trolled Bolt drivers on social media. Different allegations surfaced at different times, some being about how the drivers believe that the virus is faux and that no one is infected in Nigeria.
This, of course, meant that such drivers did not see the importance of keeping to covid-19 protocols for their safety and that of the passengers.
Nigerian video-on-demand (VoD) company, IROKOtv was another startup hit hard in the wake of the COVID-19 lockdown. Despite a stay-home order which should have kept viewers glued to the streaming service, IROKOtv saw dwindling revenues from its Nigerian market.
If we only had the Africa market, then this post would have been RIP IROKOtv.iROKOtv CEO, Jason Njoku in a blog post
On the back of economic woes post-COVID-19 plus the naira devaluation, the Jason Njoku-led company recorded a collapse in subscriptions between April and July, losing about 70% of its subscribers.
All this culminated in the company slashing the salaries of 49 employees and laying off 83 others in May. Months later, IROKO fired 150 more employees and shut down its Nigerian office as it turned its focus away from the African market.
On the whole, it is quite apparent that startups playing in the e-hailing, agritech and travel-booking spaces were the biggest casualties in the past one year post-COVID-19 lockdown.
Mobility and social gathering restrictions which shot down revenues triggered cost-cutting measures on the part of these companies, leading to job losses, office closures and even market exits.
But it’s not just Nigerian startups that have been impacted. A KPMG report on the business implications of COVID-19 estimated that 94% of the Fortune 1,000 saw their operations disrupted by the pandemic.
Some companies were more affected than others but while the likes of Uber and Bolt have steadily bounced back in Nigeria, Iroko tv has abandoned the country’s VoD market altogether.
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