In 2016, Mahmoud Nouh abandoned his ship building venture barely a year into it, and even after raising $300k in just two months of operations. He was headed for SWVL, a bus-booking startup his friend Mostafa Kandil had just started. At that time, SWVL had industry giants, Careem and Uber to confront. Uber alone had more than 40,000 Egyptian drivers working on the platform every month, and new drivers joining up at the rate of 2,000 a week. Somewhere else far away, Ahmed Sabbah, owner of Goyastores, which he had tilled hard at for more than two years, was also about leaving, to join SWVL as Chief Technology Officer.
Yet, four years after taking the risk to join SWVL, both men still have one strong thing in common: quitting even SWVL and moving on.
“Mahmoud has been a major pillar in the company since day one,” SWVL noted in a farewell statement on Nouh in October, 2019. “His contributions to building SWVL from being a small startup in a tiny room to a major player in the transportation scene are countless. He is the mastermind behind building SWVL’s bus fleet and its operations.”
For Sabbah, it was such an emotional moment to leave.
“Yet.. everything in life has a beginning and an end and after four thrilling years, my SWVL ride is ending,” Sabbah wrote in a social media post.
“The SWVL journey has pushed me, and many of us, to be better than we ever thought possible — from challenging us with intense hard work and executing at breakneck speed to tapping into our grit and resilience,” he said.
Even though it is arguably expected that founders would, one day, seek exit from the startups they founded, it is important to comprehensively understand how most African founders, of both existing and non-existing startups, have handled this point in their lives.
Finding A Space On The Board
One recurring thing most African startup founders have done when it comes to exiting startups they founded is to find a space on the startups’ boards of directors.
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This is usually the case where moving away from a startup entirely may be counterproductive, especially if the exiting founder previously oversaw the technical or other key departments of the startup, and there have not been adequate succession plans in place to absorb the impact of any exit.
Also, where there is uncertainty as to how the remaining percentage of the shares held by the founder may vest, especially if the founder quits before his or her shares in the company become fully vested, moving to the board may become an option.
Migrating to the board gives founders the chance to assist startups in absorbing the impact of their exit as well as re-negotiate their unvested shares.
Being part of the board, whether in an executive or non-executive director capacity, will also give founders the time to explore other opportunities as there is no limit to the number of companies they can be part of as directors, provided the multi-roles would not hamper the performance of their roles for the startups and that they have negotiated good deals in their contracts of directorship with the startups.
Notable African CEOs have taken the route of board membership upon exit from the startups they founded.
One founder whose exit via the board is worthy of mention is Grant Brooke, former CEO of Twiga Foods, who ran the Nairobi-based agritech startup for 6 years before handing over to Peter Njonjo, who has years of corporate experience, including a 21 year stint at Coca Cola Company where he led the multinational’s West and Central Africa business unit as President.
Upon resignation as CEO of Twiga Foods in 2020, Brooke moved to the board of the startup, and has remained there since then.
The board membership has allowed him to found, in 2020, another startup, Shara, which is building tools for SMEs in Kenya, Nigeria, and Zimbabwe.
This, he would not have been able to do if he were still the CEO of Twiga Foods.
“If my leadership was the period in which Twiga was proving a point that there’s a better way to build food safe and secure markets, Peter’s leadership will be about institutionalizing this way of doing business and scaling it. Peter’s experience in building efficient supply chains and last-mile distribution in over 33 African countries makes him uniquely suited to lead us,” said Grant Brooke at the time he left.
In essence, exiting as a founder via the board may also be a way of giving way for more experienced hands to drive a startup to the next stage.
Falling Back To A Whole New Venture
The best thing Marie Lora-Mungai, former CEO of Buni.tv could do when her startup was acquired by Trace Tv in 2016 was to fall back to Restless Global, a strategic advisory and content development company specialized in the African entertainment space, which she had founded a year before Buni.tv’s acquisition, in 2015.
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Similar strategy was used by former Chief Operating Officer of Nigeria’s Jobberman, Olalekan Olude, when he resigned his position with the startup in 2017.
Olude moved that same year to Rovedana, a staffing and payroll financing services platform for SMEs in Nigeria which he had previously founded, and later to CicoServe Payments, a grassroots bank in Nigeria.
Most former CEOs and founders of African startups have equally explored the route of venture capital and angel investing, immediately after quitting their startups.
This is the case of Mark Forrester, former co-founder of WooCommerce, a South African startup that was sold in 2015 to web development company Automattic (WordPress) in a deal estimated to be worth over $30 million.
Forrester has since moved on to become an investor, investing in startups such as IoT security and automation platform Sentian; mobile creativity app Over; community-based security solution Jonga; and online grocery delivery service Yebo Fresh.
No matter what route exiting African founders took, one thread almost always runs through: they already have wall chests of resources and well-drawn-out plans about their next moves.
A majority of them ended up proceeding to found new companies as they had promised in their farewell speeches; with some moving on to entirely different endeavours.
However, it is not often easy for co-founders whose exits were forced, such as in cases of outright dismissal or resignation on the ground of gross misconduct, to move on from their exits.
A year after Kennedy Nganga — the technical person once in charge at Safi Analytics (a Kenya-based smart metering startup) — was asked to go, by foreign co-founders Lauren DunfordandWeston McBride, all appears not be well for the young man, even though he has since moved on to Techpreneur School, a platform that facilitates training and mentoring of upcoming entrepreneurs by experienced ones.
Similar fate seems to have also touched African founders asked to go on grounds of fraud or sexual misconduct.
Ever since Anthony Kariuki, former CEO of the Nairobi-based fintech startup Alternative Circle was asked to leave the startup in 2017 — after barely a one-year stint as CEO— on grounds of sexual misconduct allegations, he has disappeared completely from limelight.
This is also the case for Daudi Were of another Kenyan startup, Ushahidi, who was asked to go in 2017 after nearly a ten-year stint as CEO.
The best way of explaining the after-effects of such disappearances forced by dismissal or crime allegations is that the affected founders were literally caught off-guard and had never, maybe, thought of leaving their startups soon.
In light of that, it is therefore imperative for startup founders to design solid personal succession plans from the outset of their participation in startups.
A good succession plan should cover all the possible permutations of their lives on the startups.
But then, a well-intentioned approach, aimed at first assisting the startup to fulfil its vision and mission should always be preferred, as most times beginning with ulterior motives in mind has, almost always, killed so many startup teams — and startups themselves — around the globe.
Moving In-House Under A Holding Company Structure
This is the second option — apart from moving to the board — often explored by African founders whose startups were acquired.
In most cases, this is enabled by a provision in the acquisition agreement that allows the founder to become automatically employed in a new role at the acquiring company upon acquisition.
The agreement may allow the founder to exit after some time, usually after the acquired startup has properly settled into the acquiring company.
This path has been hugely explored by most South African founders.
Hannes Van Rensburg, former CEO of South African startup, Fundamo City — which was bought by credit card company Visa in 2011 for $110 million — moved over to become Senior Vice President, Visa from 2011 to 2014.
Same for Chris Pinkham, former CEO of Nimbula — which was acquired in 2013 by software titan, Oracle for $110 million. Pinkham went on to Oracle as Senior Vice President, Cloud Product Development from 2013 to 2014.
| S/N | NAME OF STARTUP FOUNDER/ BASE COUNTRY OF OPERATIONS | STARTUP/ROLE AT STARTUP | YEAR JOINED STARTUP | YEAR OF EXIT | NATURE AND REASONS FOR EXIT | MAJOR ACTION AFTER EXIT |
|---|---|---|---|---|---|---|
| 1 | Mahmoud Nouh (Egypt) | SWVL/Chief Operating Officer | 2017 | 2019 | Resignation. Reasons: For personal reasons. | Founded in 2020 Capiter, a B2B marketplace that brings together FMCGs, wholesalers, and merchants on one platform. |
| 2 | Ahmed Sabbah (Egypt) | SWVL/Chief Technology Officer | 2017 | 2020 | Resignation. Reasons: To start a consumer fintech. | Left to start a consumer fintech, which is yet to be launched. |
| 3 | Iyinoluwa Aboyeji (Nigeria) | Flutterwave/CEO | 2016 | 2018 | Resignation. Reasons: Personal and family reasons. | Moved on to found a community investment firm Future Africa, |
| 4 | Tonjé Bakang (Cameroon) | Afrostream/CEO | 2014 | 2017 | Termination due to liquidation. Reasons: Startup failure. | Proceeded to become a university lecturer at France’s Sciences Po. Seed investor in SpaceFill, Shipfix, among many others. |
| 5 | Barrett Nash (Rwanda) | CanGo(CEO) | 2014 | 2020 | Termination due to liquidation. Reasons: Startup failure. | Co-founder/CEO since March 2020 at InfiniteUp, a startup that is digitizing MSMEs across sub-Saharan Africa. |
| 6 | Tricia Martinez (South Africa) | Wala/CEO | 2014 | 2020 | Termination due to liquidation Reasons: Startup failure. | Proceeded to work for the U.S. Department of Energy’s Artificial Intelligence and Technology Office as a policy fellow since 2020. |
| 7 | Etop Ikpe (Nigeria) | Cars45/CEO | 2016 | 2020 | Resignation. Reasons: Dispute over startup’s equity structure. | Proceeded to found Autochek, a car listing platform in 2020 as the CEO. |
| 8 | Abdulhamid Hassan (Nigeria) | OyaPay/CEO | 2017 | 2019 | Termination due to liquidation. Reasons: Startup failure. | Proceeded to Paystack as Product Manager. Left Paystack to found Voyance and later to co-found a Y Combinator-backed fintech API startup, Mono in 2020. |
| 9 | Adewale Yusuf (Nigeria) | Techpoint/CEO | 2015 | 2020 | Resignation. Reasons: To launch a new venture. | Proceeded to co-found TalentQL, a tech talent-hiring platform. |
| 10 | Sim Shagaya (Nigeria) | Konga/CEO | 2012 | 2016 | Resignation. Reasons: Became Chairman of Konga’s Board of Directors. | Proceeded to found uLesson, an edtech startup in 2019. |
| 11 | Bolaji Akinboro (Nigeria) | Cellulant/Co-CEO | 2004 | 2020 | Resignation. Reasons: Allegations for financial impropriety. | No major move announced, but already a Chairman of the Board of Directors at Voriancorelli, a B2B marketplace company since 2020. |
| 12 | Ayodeji Adewunmi (Nigeria) | Jobberman/CEO | 2009 | 2019 | Resignation Reasons: to pursue a new career in venture investing. | Proceeded to GOKADA as co-CEO; Left Gokada in 2019 for Kudy Financials, Luxembourg as COO since 2020. |
| 13 | Kola Aina (Nigeria) | Ventures Platform Hub/Managing Partner | 2016 | 2019 | Resignation. Reasons: Moved to the Board. | Proceeded to get on the board of other companies, including that of Ventures Platform. |
| 14 | Deji Oduntan (Nigeria) | Gokada/CEO | 2018 | 2019 | Resignation. Reasons: Reported internal squabbles. | Proceeded for further studies. |
| 15 | Olalekan Olude (Nigeria) | Jobberman/COO | 2009 | 2017 | Resignation. Reasons: To pursue other projects. | Proceeded to found Rovedana, staffing and payroll financing services platform for SMEs in Nigeria in 2017; and CicoServe Payments, a grassroots bank for in Nigeria. |
| 16 | Nico Stern (South Africa) | IoT.nxt | 2015 | 2021 | Resignation. Reasons: There were some suggestions in IoT.nxt’s statement that IoT.nxt’s closer integration with its parents had had at least a partial role in Steyn’s resignation. | No major move reported yet. Stern will however remain a shareholder and board director. |
| 17 | Manuel Koser (South Africa) | Zando/CEO | 2012 | 2013 | Resignation. Reasons: to co-found Silvertree Capital, a “company builder and venture investor” in African startups. | Co-Founder & Managing Director at Silvertree Holdings, an investment company since 2013 |
| 18 | Robert Paddock (South Africa) | GetSmarter/CEO | 2007 | 2018 | Exit by acquisition. Reason: GetSmarter was sold to US edtech company 2U in 2017 (announced in May) for $103-million plus $20-million in cash. Paddock | Proceeded to found Valenture Institute, an e-learning platform in 2019. |
| 19 | Paul McEwan (South Africa) | Kapa Biosystems/Chief Scientific Officer | 2006 | 2016 | Exit by acquisition. Reason: The startup was sold to Swiss medical company Roche in 2015 for $445-million. | Proceeded to Roche as the Vice President, Life Cycle Leader, Sample Preparation from 2016 to 2018. Left Roche in 2018. Became an angel investor in Life Science Angels since 2019. |
| 20 | Hannes Van Rensburg (South Africa) | Fundamo City/CEO | 1999 | 2011 | Exit by acquisition. Reason: Fundamo was bought by credit card company Visa in 2011 for $110 million. | Proceeded to become Senior Vice President, Visa from 2011 to 2014. Left Visa to SVP New Business Development; and later in 2019 to Florida-based Clickatell as Chief Commercial Officer. |
| 21 | Chris Pinkham (South Africa) | Nimbula/CEO | 2008 | 2013 | Exit by acquisition. Reasons: Nimbula was acquired in 2013 by software titan, Oracle for $110 million. | Proceeded to Oracle as Senior Vice President, Cloud Product Development from 2013 to 2014; Worked at Twitter as VP Engineering from 2015 to 2017. Co-founded Sailing Umoya since 2020. |
| 22 | Vinny Lingham (South Africa) | Gyft | 2012 | 2015 | Exit by acquisition. Reasons: Gyft was sold in 2014 to global payment technology solution company FirstData for “above $54-million” according to Lingham. | Proceeded to First Data Corporation as Senior Vice President Product Development from 2014 to 2015. Proceeded to host Shark Tank South Africa from 2016 to 2016. Co-founded Civic Technologies, a blockchain based identity management since 2016. |
| 23 | Mark Forrester (South Africa) | WooCommerce | 2008 | 2015 | Exit by acquisition. Reasons: WooCommerce sold in 2015 to web development company Automattic (WordPress) in a deal estimated to be worth over $30-million | Proceeded to become investor, investing in startups such as IoT security and automation platform Sentian, mobile creativity app Over, community-based security solution Jonga, and online grocery delivery service Yebo Fresh, |
| 24 | Adii Pienaar (South Africa) | WooCommerce/CEO | 2008 | 2013 | Resignation. Reasons: Sold his shares in the company to other co-founders, Magnus Jepson, and Mark Forrester to build another company. | Proceeded to found Conversio in 2014, which was acquired by acquisition by CM Group in August 2019. Adii became VP Commerce Product Strategy of CM Group, but left in September, 2020 to found Cogsy, a startup helping Ecommerce brands to optimise their inventory and increase their return on working capital, since October 2020. |
| 25 | Rob Stokes (South Africa) | Quirk (CEO) | 1999 | 2016 | Exit by acquisition. Reason: Quirk was acquired by advertising giant WPP in 2014 for a reported R350 million to R400-million ($35million to $39 million) at the time of the sale. | Proceeded to assume board chairmanship and directorships positions in several companies –BrandsEye; The Open Knowledge Trust –he founded |
| 26 | Grant Brooke (Kenya) | Twiga Foods/CEO | 2014 | 2020 | Resignation. Reasons: To assume board role at Twiga Foods. | Proceeded to assume a board position on Twiga Foods, but co-founded Shara, a startup where building tools for SMEs in Kenya, Nigeria, and Zimbabwe since 2020. |
| 27 | Anthony Kariuki (Kenya) | Alternative Circle/CEO | 2016 | 2017 | Resignation. Reasons: Sexual misconduct allegations | – |
| 28 | Daudi Were (Kenya) | Ushahidi (Co-founder) | 2008 | 2017 | Resignation. Reasons: Sexual misconduct allegations. | Proceeded to found a company a little known company Mikakati since 2018 |
| 29 | Kennedy Nganga (Kenya) | Safi Analytics (CTO) | 2017 | 2020 | Dismissal. Reason: Allegations of being pushed out of the company by foreign co-founders Lauren Dunford and Weston McBride | Proceeded to found Techpreneur School, a platform that facilitates training and mentoring of upcoming entrepreneurs by experienced ones. |
| 30 | Munyaradzi Chiura (Zimbabwe) | Hypercube/Cofounder | 2013 | 2017 | Exit by dissolution. Reasons: Hypercube Dissolved by founders. | Proceeded to Flywire Corporation as Payments Consultant Africa since 2017. Currently Head, Rest of Africa Growth at Flutterwave since 2021. |
| 31 | Marie Lora-Mungai (Kenya) | Buni.tv/CEO | 2009 | 2016 | Exit by acquisition. Reasons: Buni.tv was acquired by Trace Tv. | Proceeded to the board of Buni.tv as a board member since 2016. Also, an angel investor. CEO since 2015 of Restless Global, a Strategic Advisory & Content Development company specialized in the African Entertainment space, which encompasses the Cultural and Creative Industries (CCI) , Sports Business, and Technology, Media, and Telecommunications (TMT) sectors. |
When Every Other Thing Fails
African startup founders faced with exit dilemma have also explored different paths, apart from those stated above.
Former CEO of Nigerian ecommerce company Konga, Sim Shagaya, saw a cool-off period — during which he was still sitting on Konga’s board as chairman — of almost three years, returning only in 2019 to launch uLesson, an edtech startup.
Tonjé Bakang, CEO of failed music streaming startup Afrostreams, has since assumed a lecturing role at Sciences Po, a research-based university based in Paris, France. Tonjé is, today, also a serial seed investor.
Tricia Martinez, of failed crypto startup Wala, has equally moved on to work for the U.S. Department of Energy’s Artificial Intelligence and Technology Office as a policy fellow.
However, it is worthy of note that not all founders of failed African startups shunned entrepreneurship entirely, afterwards.
Barrett Nash, whose startup CanGo (formerly SafeMotos) folded up in 2020, has found a new life since March 2020 at InfiniteUp, a startup that is digitizing MSMEs across sub-Saharan Africa.
This is also the case with Abdulhamid Hassan, who ran two failed startups — OyaPay and Voyance.
After refreshing at Paystack as Product Manager, Hassan came back to co-found a Y Combinator-backed fintech API startup, Mono in 2020.
“…I just took another risk leaving one of the leading companies in the AI space in Europe to move back home for no salary but I love every minute of this new hustle!” Wrote Hassan in 2018, on the occasion of the death of one of his first startups.
What Happens To The Unvested Shares?
There are no hard and fast rules about vesting shares, but standard practice is that once the founder has exhausted the period of such vesting and the ownership of the shares have fully accrued to him or her, then no further rules apply except, of course, that the founder is at liberty to dispose of the shares in any manner he or her desires.
Problems however arise where the founder exits before the shares become fully vested in him or her.
The general rule in all cases is, however, that a company has an option to repurchase unvested shares if a co-founder ceases to work for the company for any reason or fails to make the expected contributions he or she has agreed to make.
In any case, the agreement between the founder and the startup may also make room for accelerated vesting, in which case the shares held by the founder go against the natural course of time earlier agreed between the founder and the startup, allowing the founder to be entitled to all the shares due to him or her in a shorter time period.
But this mostly happens if the startup is going through Initial Public Offering (IPO), take-over, mergers and acquisitions, sale of more than half of the company’s assets, among unlimited possibilities.
At the end of the day, what matters in vesting shares is always the agreement between the founder and the startup; and it is important that the founder’s agreement covers this; and at the same time, leaving rooms for future amendments.
This is one way to take care of uncertainties arising out of a founder’s exit.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer
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