Nigerian API startup The Peer, founded in 2021 by Chike Ononye and Michael Okoh, has closed its doors despite having a significant financial runway remaining. The company, which aimed to simplify money movement between digital wallets, opted to return roughly $350,000 of its $2.3 million in funding to investors. This decision reflects a growing trend of responsible financial management among struggling startups in Africa's tech scene.
The Peer secured $220,000 in a pre-seed round and an additional $2.1 million in a June 2022 seed round, valuing the company at $5 million. While their burn rate was low at under $20,000 monthly, the founders cited an inability to achieve product-market fit as the primary reason for closure.
The Peer's core service allowed users to seamlessly transfer funds between various digital wallets. Imagine a customer using a food delivery app like Foodcourt. With The Peer's API integrated, they could directly transfer funds from their Foodcourt wallet to a Paga (fintech) wallet or pay online using their Foodcourt balance.
However, widespread adoption proved elusive. The company struggled to convince businesses to integrate their payment gateway. Market research suggested African markets weren't yet prepared for large-scale wallet-to-wallet transactions. Regulatory hurdles and a lack of consistent support from potential fintech partners further hampered progress. Established players like Paystack and Flutterwave offered strong competition, making it difficult for The Peer to gain traction.
Before shutting down, The Peer explored pivoting to fraud prevention but ultimately decided against using investor funds for a significant strategic shift. They also held talks with other startups for a possible acquisition, though no deal materialized. The founders acknowledged the challenges in a blog post, highlighting the slow adoption of digital wallets as a key factor.
The Peer's story offers valuable insights for startups operating in emerging markets. While innovative ideas hold promise, careful consideration of market readiness and a realistic assessment of the competitive landscape are crucial for long-term success. Early-stage shutdowns, coupled with responsible use of investor funds, may become a more common strategy in Africa's evolving tech ecosystem.
Play audio
No comments