In a twist of fate, Pivo, the Nigerian fintech sensation, has abruptly shuttered its doors just one year after clinching an impressive $2 million in seed funding. The backdrop to this unexpected closure? A tumultuous economic landscape in Nigeria, rife with currency overhauls and policy upheavals. Among Pivo’s high-profile backers were Mercy Corps, Precursor Ventures, Vested World, FoundersX, and the prestigious Y Combinator.
What adds a layer of intrigue to this narrative is the remarkable achievement of Pivo’s co-founders, Amadi-Emina and Ijeoma Akwiwu, who in 2022 etched their names in history as the first all-female-founded team in Nigeria to secure Y Combinator’s coveted support. This landmark follows a similar trail blazed by the now-defunct Ghanaian startup Tress, marking the second instance in Africa where Y Combinator threw its weight behind an all-female-founded team.
As the curtains fall on Pivo’s venture, we delve into potential catalysts for its demise below:
Market Conditions and Economic Challenges:
- The startup operated in Nigeria, where there were challenges related to imported products, broken transport infrastructure, and a tough business environment.
- The decision by the Central Bank of Nigeria to redesign the currency notes and the subsequent cash crunch in the market affected businesses, including Pivo. This created difficulties for businesses to access cash and impacted their operations.
Currency Depreciation and Economic Policy Changes
- The floating of the naira by the newly elected president negatively impacted the value of the currency against the dollar. This resulted in increased production costs for many businesses, including Pivo, affecting their financial stability.
Business Model Challenges
- Pivo’s business model may have faced challenges, particularly in dealing with irregular payment cycles of supply chain businesses. The lending service, Pivo Capital, aimed at providing loans to businesses in the supply chain sector, might have struggled due to the difficulty in obtaining capital and potential high-interest rates.
Customer Acquisition and Trust Issues
- Pivo may have faced difficulties in convincing users to see it as their primary banking provider. Despite the growth of digital banks in Nigeria, some people remained wary of using them as their main financial service provider. Building trust and acquiring a substantial customer base could have been challenging.
Competitive Landscape
- While Pivo had a first-mover advantage in the freight carrier-focused digital banking space, potential competition from other startups in related sectors could have posed a threat. The presence of similar startups like Duplo and the possibility of e-logistics companies developing similar platforms all point to stiff competition concerns.
Capital Dependency
- Pivo’s lending service relied on external sources of capital for loans. If obtaining capital became challenging due to increased interest rates or other financial market conditions, it could have strained the startup’s ability to provide loans to its customers.
In light of these multifaceted challenges, Pivo’s closure serves as a cautionary tale for the broader fintech sector, highlighting the intricate interplay of economic dynamics, regulatory decisions, and market competition in shaping the fate of innovative startups in emerging markets like Nigeria.
Pivo fintech
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard.