Inspite of the encouraging level of funds start-ups attracted across the continent in the last two years, many start-ups are facing funding challenges leading to the closure of many of them in recent times. In 2019, the African tech startup space with about 311 companies attracted a combined US$491.6 million as investment increased by more than 50 per cent on 2018, while total funding grew 47 per cent.

While the fintech sector remained the most popular among investors, with 77 fintech startups raising a combined US$107 million, though fintech’s share of total funding fell to 21.8 per cent from 39.7 per cent as other sectors, notably logistics, transport, e-commerce, agri-tech and e-health, enjoyed bumper years.

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Inspite of this seeming rosy picture, some tech start-ups went through rough patches through the period in question while some have closed shop. Among some of the most promising examples of companies that went under is the on-demand moto taxi app CanGo Africa, formerly known as SafeMotos with operations in Rwanda and the Democratic Republic of Congo (DRC) which closed shop after failing to raise sufficient funding to give it enough runway.

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Founded in Kigali in 2014, SafeMotos used on-demand and vehicle telematics technology to connect users with vetted motorcycle taxi drivers through its mobile app. After more than 500,000 trips completed in Kigali, SafeMotos has expanded to Kinshasa, the capital of the DRC, and rebranded as CanGo Africa last year after it secured US$1.1 million in funding.

At the time it said more funding was on the horizon, with the goal being to close a US$1 million SAFE round by the end of 2019 to give it runway for a larger Series A round in 2020. This has failed to materialise, however, and CanGo Africa has decided to close its doors as a result. While investor enthusiasm and interest has been high, it has not translated to checks being written laments co-founders Barrett Nash and Peter Kariuki.

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The founders of the firm decided that the funds it has committed to the SAFE as of now, US$180,000, are not sufficient to bring us to a healthy Series A without an “irresponsible risk the investors willing to put that money in” thus the need to change strategy. Kariuki said that they had a choice to change strategy: fire everyone and bootstrap with a brand new pivot, or close. “We tried the bootstrap strategy in Rwanda: while we achieved positive unit economics, we weren’t able to tell a story of traction to leverage more funds.” He warned that Kinshasa is among the most hostile environments on earth, it needs proper capital to make a company successful here. This is not a shoestring environment. “We’ve decided to make the challenging decision to stop while there is still enough money in the bank to pay our employees what we owe them.”

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry