Thepeer, a Nigerian fintech startup that shut down in April 2024, has returned $357,960 to its investors, completing the process of winding down the company. The startup, founded in 2021, had raised $2.1 million in a seed round in June 2022, but struggled to achieve product-market fit and scale its business.
The founders, Michael Okoh and Chike Ononye, decided to return the remaining capital to investors rather than pursue a risky pivot or acquisition. This decision contrasts with the common practice of “hustling” to survive, even when the business model is not viable.
Thepeer’s struggles stemmed from several factors, including compliance issues, slow adoption of wallet-to-wallet transactions, and competition from established payment platforms like Paystack and Flutterwave. The startup onboarded 82 businesses in its three-year lifespan, but only a quarter were active, highlighting the challenges in driving adoption of its unique payment method.
Despite having 20 months of runway left, the founders forecasted that they would not be able to onboard and integrate customers at a fast enough rate to achieve scale and sufficient revenue. The startup explored options like pivoting to fraud detection, the creator economy, or financial reporting, but ultimately decided against using investor funds for these experiments.
Thepeer’s shutdown underscores the importance of finding product-market fit and the challenges faced by startups in the African fintech space. The startup’s solution, which enabled customers to move money across different business wallets, required widespread adoption by businesses to succeed, but it struggled to convince businesses to integrate its payment gateway.
The refund to investors suggests that an angel investor who invested $10,000 would have received a $2,280 refund. While some investors wanted answers on how the startup spent its funds, others were willing to treat any discrepancies as rounding errors and move on.
The shutdown of Thepeer is not an isolated incident, as other startups like Cova, a wealthtech startup, have also returned remaining capital to investors in 2024. This trend highlights the challenges in building fintech businesses in Africa and the need for startups to carefully consider their market fit and growth prospects before pursuing funding.
Despite the setback, Thepeer’s founders remain optimistic about the future of fintech in Africa. They believe that the market for wallet-to-wallet transactions holds potential, but factors like market readiness and competition from established players must be carefully considered.
