Why do Nigerian startups have to close their businesses ?

Why do Nigerian startups have to close their businesses ? 〜Learning from failure〜

GoMyWay” is a Nigerian ridesharing platform.
This time, they has announced its closure at the end of October.
What kind of services are provided by them?
The owner of the car utilizes vacant seats and links people on the same destination on the application.
A person without a car can reach the destination inexpensively.
Since the car owner and fellow passengers are being evaluated, both the driver and the passengers can select the opponent by checking the number of stars in the evaluation.
Speaking of “taxi” in Africa, vans riding in crowded people heading to the same destination are common, but what is the difference?
In general, vans are making many round-trips to certain suburbs and downtown like a shuttle bus.
Therefore, the destination is limited.
If you head to a different location than usual, you have to use a taxi that specifies the destination, which is expensive from common African people.
Here, if there is a driver to the same destination, it can be reached by using this service.
Moreover, it does not become crammed like so called “taxi”.
It also had the social significance of preventing the absolute number of cars from increasing too much and also contributing to the elimination of traffic congestion.
GoMyWay launched its ridesharing platform in 2015.
The startup received backing from a number of well-known investors, including former Amazon executive Bill Paladino.
GoMyWay’s initial business plan focused on customer onboarding, rather than pushing for revenues.
And all seemed to be going to plan.
In fact, on its second birthday, in June this year, the startup announced a 150 per cent increase in registered members.
However, CEO Damilola Teidi this week announced the startup is to close, ceasing operations at the end of October, saying funding has run out and its investors do not wish to continue backing the company with further funds.
“It does take a lot of resources to run this business and the initial plan was no longer sustainable. The shareholders/investors came to the conclusion to shut down operations and close the business as there were no funds to invest further.”
Similar cases have occurred not only in Nigeria but also in Kenya where start-up entrepreneurs are active.
Why are these startups rich in topics and failing in the middle of the road despite receiving assistance from prominent investors?
On the other hand, there are three major considerations.
Firstly, the reason for the fact that the accuracy of the business plan including the future cash flow plan is remarkably low.
In this case also, much more cash was needed than originally assumed.
Next, although related to the above, it is a case where we procure funds and start a business without paying attention to pictures that can be drawn by monetizing and going through business with only operating revenue.
Finally, a case where you can not pivot quickly in a scene where conversion of a business model or strategy is required on the way.
Investor side factors that investors’ investment is not made on a long-term perspective and can not wait peacefully when patience is needed is also conceivable.
However, this is determined by dialogue between investors and entrepreneurs.
If investors can not explain the neat recovery plan or turnaround plan, it is impossible for any investor to make investment decisions.
In high-attention area, Africa, there are many cases where launching services without a precise cash flow plan.
In addition, there are cases where it is not possible to deal with the necessity of strategy or business model change with instant power, which is known after actually starting the business.
However, every business need Plan-Do-Check-Action.
If one of them is missing, the strain will surface somewhere.
As a my opinion, The four points below are necessary for Africa’s startup to scale and succeed like its in US.
1. To prepare precise cash flow plans with emphasis
2. Drawing a picture that can be continued only by operating cash flow, not financing from a third party, in future
3. It is necessary to constantly set up an antenna and respond with instantaneous power to the necessity of strategy or business model change, which is found after actually starting the business
4. Have the above 3 items and explain with enthusiasm to the investor, as “reasons for future upwards” when they are facing with difficulties


Related post

Return Top