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Why Startups Fail in Africa [Story of 13 Failed Startups]

April 8, 2025

Why Startups Fail in Africa [Story of 13 Failed Startups]

The African startup ecosystem has witnessed impressive growth over the years, with numerous entrepreneurs building innovative solutions to solve pressing local problems.

Yet, the road to success is never linear. Between 2023 and 2024, several high-profile startups across the continent unexpectedly closed their doors despite raising significant funding and showing early promise.

These shutdowns shed light on the broader challenges African startups face—from financial mismanagement and regulatory pressure to talent shortages and unsustainable business models.

In this article, we discuss why startups fail in Africa and 13 notable African startups that shut down in the last two years (2023 – 2024), and analyze the recurring factors contributing to startup failures on the continent.

Notable African Startups that Shut Down (2023 – 2024)

1. 54Gene

Founded in 2019 by Abasi Ene-Obong, Damilola Oni, Gatumi Aliyu, and Francis Osifo, 54Gene was a health-tech company committed to African genomics.

Despite raising $45 million from investors like the Bill & Melinda Gates Foundation and Y Combinator, the startup shut its doors due to financial mismanagement.

While the funds supported the development of solid infrastructure, 54Gene struggled to compete with established global pharmaceutical companies such as Pfizer and GlaxoSmithKline (GSK).

2. LazerPay

LazerPay was a blockchain-based payment platform co-founded in 2021 by Njoku Emmanuel, Abdulfatai Suleiman, and Prosper Ubi. It enabled businesses to receive cryptocurrency payments and reportedly helped around 3,000 businesses.

Although the company raised $1.1 million, it suffered a huge setback when a key investor withdrew. The team used their personal funds to sustain operations, but that wasn’t sustainable. Eventually, the closure was announced via Twitter in April 2023.

3. Dash

Founded in 2019 by Prince Boakye Boampong, Dash was a Ghanaian fintech company that simplified large money transfers using mobile wallets. With over $85 million in funding and a $200 million valuation, the startup processed $1 billion in transactions for 5 million users.

However, in 2022, the Bank of Ghana halted its operations due to missing documentation. Coupled with rumors of financial mismanagement and a CEO replacement, the company fell silent after internal audits revealed more issues.

4. Sendy

Sendy, a logistics startup launched in 2021 by Meshack Alloys, Evanson Biwott, and Don Okoth, provided delivery services through registered motorcycles and autorickshaws. Though it expanded with new verticals like Sendy Ride, Sendy Transport, and Sendy Supply, the business started declining in 2022.

A lack of funding, high lending rates, and a pivot from B2C to B2B strained the company. Despite efforts to raise $100 million, only $26.5 million was secured. After layoffs and a failed acquisition, Sendy went into administration by 2023.

5. Vibra

Co-founded by Allen Ng and Vincent Li in 2021, Vibra was a cryptocurrency platform offering trade and investment tools to foster crypto adoption in Africa. Initially based in Lagos, the startup also hosted virtual training and promotions.

But with high customer acquisition costs and a volatile market, the company’s revenue model struggled. A “strategic pivot” was mentioned by co-founder Vincent Li, but no clear explanation was given as Vibra shut down.

6. Pivo

Pivo, co-founded by Ijeoma Akwiku and Nkiru Amadai-Emima, was a Nigerian fintech offering loans, banking, and insurance for SMEs. It raised $2.6 million in seed funding. Regulatory actions like Nigeria’s currency redesign affected liquidity.

Even with strengthened loan protocols and a 98% repayment rate, a dispute between co-founders led to its closure in December 2023. Attempts to restructure the company by investors were unsuccessful.

7. Zazuu

Founded in 2018 by Kay Akinwunmi, Korede Fanilola, Tosin Ekolie, and Tola Alade, Zazuu was a UK-based fintech that enabled users to compare exchange and remittance rates. Despite raising $2 million, the company couldn’t attract additional investment and faced licensing difficulties. A promising platform for the diaspora, Zazuu ended operations in November 2023 due to an unsuccessful funding round

8. Thepeer

Thepeer, an API-based fintech solution founded in 2021 by Kosisochukwu Chike Onoye and Micheal Okoh, enabled seamless digital transactions for businesses. Although it had the necessary licenses and a $2.1 million seed round, compliance challenges hampered service delivery.

A partnership with Flutterwave offered temporary stability, but low user engagement ultimately led to the shutdown. In April 2024, the founders announced the decision to return unused funds to investors and wind down operations.

9. Gro Intelligence

Gro Intelligence was a Kenyan agri-tech venture launched by Sara Menker in 2012. It used AI to provide agricultural insights and boasted clients like Unilever. In 2021, it raised $85 million and earned global recognition. Yet, by March 2024, the startup laid off 60% of its workforce—including leadership—before closing down due to ongoing financial troubles.

10. Copia

Copia Global, founded by Jonathan Lewis and Tracey Turner in 2013, was a Kenyan e-commerce platform that operated in Uganda and employed a widespread agent network. With $123 million in funding, the company grew rapidly but couldn’t sustain its burn rate. After exiting Uganda and letting go of over 1,000 staff, Copia entered administration in May 2024.

11. RejaReja

Launched in 2018 by Mesongo Sibuti and Tesh Mbaabu, RejaReja was a B2B platform offering wholesale goods and credit to retailers across five African countries. With $160 million in transaction volume, the company still faced low margins and cash flow constraints from unpaid loans. In April 2024, MarketForce decided to pivot toward a virtual shopping experience via its new platform, Chpter, resulting in RejaReja’s closure.

12. Cova

Cova, founded in 2021 by Oluyomi Ojo and Yomi Osamiluyi, was a fintech app that unified users’ financial assets like crypto, land, and bank accounts under one dashboard, charging a $10 monthly fee. It raised $800,000 from investors led by Olumide Soyombo. Despite having remaining funds, the startup couldn’t maintain operations and was shut down in January 2024.

13. BuyCoins Pro

BuyCoins Pro, originally Bitkoin, was co-founded by Timi Ajiboye and Ire Aderinokun in 2017. It later expanded under Helicarrier and handled over $28 million in trades by 2019.

However, a cybersecurity breach and increasing Central Bank of Nigeria restrictions made survival difficult.

Despite trying to adapt, BuyCoins Pro quietly shut down between December 2023 and March 2024. Helicarrier later confirmed the exit, stating it would focus on other services.

Core Reasons Why Startups Fail in Africa

1. Regulatory hurdles

Navigating Africa’s patchy regulatory landscape remains a major challenge. Governments often introduce sudden changes—like Nigeria’s cryptocurrency ban or cybersecurity levies—that make compliance burdensome. The lack of clear and consistent policies causes uncertainty, delays, and, in some cases, complete shutdowns.

2. Financial mismanagement

Many startups failed not from lack of funding but from poor management of what they had. Burn rates far outpaced revenue, and some founders were accused of mishandling investor funds. Dash and 54Gene are clear examples of companies with abundant capital that ultimately lost direction.

3. Talent drain

A shortage of skilled local professionals continues to hurt African startups. Many qualified individuals leave for opportunities abroad, creating a gap that’s either filled at high costs or not at all. The result? Slow product development, customer service issues, and ultimately, stagnation.

4. Funding shortfalls and investor apathy

Most African startups rely on foreign venture capital, which often comes with expectations that don’t align with local realities. When growth isn’t rapid or margins stay thin, investors pull out. Sectors like fintech receive disproportionate attention, leaving others like logistics or edtech severely underfunded.

5. Ecosystem weaknesses

In countries like South Africa and Kenya, ecosystem challenges range from monopolistic competition and centralized urban tech hubs to cultural issues such as low risk appetite and gender inequality in funding access.

6. Lack of product-market fit

Some startups built products based on global trends without tailoring to African consumers. This led to poor adoption, high marketing costs, and user drop-off. Even well-funded platforms like Thepeer and Vibra failed to scale due to slow traction.

How Can Startups in Africa Survive Economic Downturns

1. Strategic collaboration

Three startup founders highlighted the impact of collaborating with key stakeholders. These partnerships gave them access to critical resources like top talent, funding, and mentorship—resources that are often difficult to secure alone. Collaboration also enabled smarter business decisions, especially in navigating erratic government policies.

2. Stay away from problematic investors

In the Nigerian startup scene, many investors enter with profit-focused expectations, often clashing with the founder’s long-term vision. One founder interviewed on Today Africa described this as a major turning point:

“Some investors want controlling shares in your startup, which can be demoralizing. Once you accept their terms, you begin to feel like an employee in your own business. That loss of control often leads to burnout and eventual failure.”

To avoid this, many founders adopt alternative financing methods such as bootstrapping, crowdfunding, and forming strategic partnerships within the ecosystem. Those who accept external funding are careful to negotiate terms that preserve their ownership and autonomy.

3. Market acceptance

Understanding the market is crucial. Many founders stressed the importance of conducting thorough research before launching. Building a solution that directly addresses a real problem is key to winning over potential users.

Steps to ensure market fit include:

Conducting an opportunity search
Identifying a pressing need
Designing a unique solution
Running surveys to gauge user reception

4. Continuous engagement with customers

Tech startups that succeeded often did so by staying in close contact with their users. They developed Minimum Viable Products (MVPs) and tested them through surveys to gather early feedback. This approach not only reduced development costs but also ensured that final products were shaped by real user needs.

The insights from this user-centric approach guided product iterations, allowing startups to refine and improve features before launch.

5. Adapting to a volatile environment

Nigeria’s economic climate is shaped by inflation, shifting regulations, and currency fluctuations. In such an unpredictable environment, founders must remain agile—constantly adjusting their strategies to new realities.

Startups in regulated industries, such as fintech, face added pressure to obtain licenses and meet compliance requirements. This often requires considerable funding. To cope, many successful startups look beyond local investors and secure international funding, as seen in the case of Flutterwave.

6. Staying ahead of the competition

Disruptive innovation is key. Founders strive to offer products that stand out—delivering value, convenience, and relevance. To maintain momentum, startups consistently track market trends, implement feedback from users, and roll out timely updates.

This proactive approach helps them not just survive, but thrive in competitive spaces.

7. Boosting product visibility

Even the best products need to be seen. Founders invest heavily in digital marketing, particularly on social media platforms. This visibility helps them connect with their ideal audience, even those with minimal digital presence.

Their strategies often include crafting platform-specific content, running targeted ads, and using creative storytelling to highlight the product’s benefits and impact.

Conclusion

The collapse of these startups is not merely a series of failures—it’s a valuable blueprint for what future entrepreneurs should watch out for. While the African startup scene is vibrant and full of promise, it still demands careful navigation of funding, regulation, talent, and local relevance.

Building a scalable, sustainable startup in Africa requires more than innovation—it requires resilience, transparency, and a deep understanding of the continent’s complex environment.

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