New details have emerged suggesting that co-founders of Thepeer made the decision to cease operations just two weeks after a shareholder called for an audit.
The Nigerian startup , which specialised in API technology, launched with a vision to drive wallets as a payment option in Nigeria. Before its shut down, the startup raised $2.3 million across two rounds from investors including Rallycap, Sunu, Timon Capital, and BYLD Ventures. Flutterwave, Chipper Cash, and Stitch and some angel investors, including Ezra Olubi and Prosper Otemuyiwa, also provided funds for the startup.
Co-founders, Michael Okoh and Chike Ononye announced the shut down on the 1st of April 2024, pointing to struggles with onboarding users and regulatory challenges, and said they would be returning a portion of the funds raised to investors.
Reflecting on Thepeer”s inability to achieve scale, Ononye acknowledged the difficulty with providing a new payment method. They needed to onboard a good number of wallets to make their offering appealing to merchants but failed to do so. Moreover, integrations required individual configurations for each wallet.
“Our money could last us more than 2 years but our calculation to sunset Thepeer was informed by our experience onboarding customers,” he told Techpoint Africa, “It was a complex and time-consuming process that cost us a lot of resources. 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.”
Regulatory compliance also proved challenging. They had initially planned to use a partner’s licence but new product features meant the partner’s licence could not provide adequate cover.
Certain investors and shareholders are, however, displeased with some details around Thepeer’s financial status and have called for an audit of the company’s accounts.
“Before it shut down, Thepeer had a monthly burn rate of about $17,000 while it made less than $650 between January and October”, a source close to the matter revealed to Techpoint Africa.
“Assuming an operational period of 30 months — it launched in 2021 — the startup’s expenses amount to roughly $510,000. This should leave about $1.6 million in the account. Yet, they are returning less than $500,000 to investors. “
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Documents seen by Techpoint Africa show an email dated March 5, 2024, requesting the founders to provide an account of funds raised by the startup. Although it had raised more than $2 million, it reportedly had only $450,000 in its accounts as at November 2023.
Two weeks later, on March 18, CEO Chike Ononye sent an email informing investors that Thepeer would be closing its doors and returning remaining capital. He asked them to keep the information confidential until it was publicly announced.
The founders in response to the audit requests reportedly claimed they only received $1.35 million of the $2.1 million seed round announced, but did not provide proof of this. Some shareholders had reportedly also not received updates for months leading up to the shut down, keeping them in the dark about the startup’s operations.
After the shutdown was publicly announced on April 1, three of its investors sent an audit and cap table request which they are yet to receive as of press time.
An extract from the audit request reads thus:
“We believe an audit is most appropriate under the circumstances and a transparent close of engagement after the company’s shuttering will not only enable all parties to move on in good faith but also prove helpful in future projects.”
Techpoint Africa reached out with questions about the audit but got no response as at press time.