In a move considered rare for the African tech startup scene, Nigerian fintech company, Thepeer, has announced it is shutting down operations and returning its remaining capital to investors nearly two years after raising $2.1 million in a seed funding round.
The three-year-old startup, which developed an API-based payment layer to enable seamless money transfers between digital wallets, cited compliance issues and slower-than-expected market adoption of wallets as key reasons behind its closure.
“Our unique service had its challenges, the first being compliance issues that hindered us from launching key wallet providers or maintaining their services,” Thepeer co-founders, Kosisochukwu Chike Ononye and Michael Okoh, stated. “Additionally, the overall acceptance of wallets as a viable payment option didn’t grow as rapidly as we had hoped.”
Thepeer had aimed to revolutionize digital payments by allowing users to directly transfer funds between fintech platforms and wallets without going through traditional banks. However, the founders admitted that despite their innovative technology, they struggled to align their product with market needs at their current scale.
After weighing options like a pivot or merger and acquisition, Thepeer’s leadership decided returning the remaining funds to investors was the most prudent course of action. The startup has transitioned into maintenance mode while exploring potential new homes for its platform.
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The closure comes as a setback for Thepeer, which had raised its $2.1 million seed round led by Raba Partnership in June 2022. At the time, the company reported processing millions in monthly transaction volumes with 161% month-on-month growth and had ambitious expansion plans for Kenya, South Africa, and Egypt.
While startup failures are common, Thepeer’s decision to return unspent capital to backers like Raba Partnership, Byld Ventures, and angel investors is an uncommon gesture that underscores the challenges of building a sustainable fintech business on the continent.
As Africa’s tech ecosystem continues to evolve, Thepeer’s experience highlights the need for robust regulatory frameworks and consumer education to foster wider adoption of innovative financial solutions.