At Disrupt Africa, we’re all about showcasing high-growth, innovative African startups with bright futures. Unfortunately it isn’t always plain sailing in startupland, and some ideas, for whatever reason, just don’t work out. Here are five startups that bit the dust in 2015.
Perhaps inevitably, this year saw the final, sad end of South African social network Mxit. The company announced in October it was shutting down commercial operations after a significant fall in user numbers in recent years, donating its intellectual property and technology assets to mobile-based public benefit organisation The Reach Trust.
Launched in 2005, Mxit had close to 100 million registered users globally, recorded more than 17 million unique app downloads in 2014 alone, and has also expanded to Nigeria and India, but it lost ground in recent years. Users are still be able to access and use all the services of the mobile social network, but commercial operations have ceased.
At least there are some valuable lessons your startup can learn from the demise of the once great Mxit.
One of the quirkier African startups, having been created on a bus in 2013, mobile learning startup Sterio.me left the scene after failing to find a sufficient product-market fit.
The startup aimed to engage learners outside the classroom via mobile to reinforce in-classroom learning. A “sterio” is a pre-recorded interactive lesson delivered via an SMS-triggered inbound voice call to the learner, which is accessible to learners even with feature or basic phones and does not require internet access.
Having spent some time honing and building its product in Lesotho, with a view to rolling out in other African countries, the startup closed, with founder and co-chief executive officer (CEO) Christopher Pruijsen saying it had been unable to find product-market fit in a way that covered social impact and covered costs.
South African personal financial management tool Moneysmart was closed down in May, with its management saying they are now focusing on a business-to-business model. The startup was launched in beta in 2011 before being revamped in 2012, offering automatic integration with major South African banks. The product also integrated with online banking, with transaction data uploaded and automatically categorised by the startup.
The management team said Moneysmart had been an “ambitious project with the potential to help people manage their spending, pay off their debts faster and find savings”, but it was now moving on and focusing on a different part of the industry. Which means, basically, that they’re working on Bsavi.
This list is getting a bit South Africa-heavy, isn’t? Anyway, video streaming startup Wabona also decided to call it a day this year, with the co-founders putting it down to the failure to raise follow-on funding and uncertainty in the African video-on-demand (VoD) space.
The website website shut down and refunds were issued to customers in the days that followed. The co-founders cited difficulties in developing sustainable business models in the African VoD space. They said African VoD services are still struggling to find the best business model, and in this kind of operating environment it became very hard for them to get long term funding.
It is certainly true that there are significant challenges in the VoD Space. Nigeria’s iROKOtv has also had a tough year, making layoffs in Nigeria and going mobile only. But they live to fight another day.
Another South African startup closure! Tough year indeed. Travel crowdfunding platform Trevolta closed down in August, with the founding team blaming a complicated business structure, shareholding and management, and global trading limitations for the startup’s demise.
Trevolta was a crowdfunding platform dedicated to helping users raise money for worldwide travel. It had successfully funded a number of trips since being launched in 2013, but it was this popularity the founding team say led to the wrong business structures being put in place, and ultimately the failure of the startup.
“It is incredibly difficult to run this global business from South Africa, where the founders are currently based and the company was formed,” the Trevolta founders said.
“From the initial growth in popularity of the platform in late 2013, we needed to take a couple of urgent steps that sadly resulted in a very complicated business structure, shareholding and management, as well as trading limitations globally.”
These challenges could not be sufficiently addressed, the founders said, and as such the startup closed.
A couple of hubs go the same way…
Hubs can fail in just the same way startups can, which is why there is a growing debate around hub sustainability in Africa. Earlier this month, Zimbabwean tech hub Hypercube announced it will be closing its doors at the end of this year having failed to secure the necessary funding to continue operations.
Hypercube said that in spite of its board of trustees “tirelessly working around the clock” for the past 11 months in search of the funding that would enable the hub to continue, it had failed to raise the sufficient capital. It will now close on December 31.
The year also saw Impact Hub cloe its Johannesburg co-working space after five years, saying that the facilities are no longer “good enough”. The organisation said it had received overwhelming feedback from members and partners that the facilities are not good enough to support the teams working there, prompting a period of “introspection”.
The hub closed its doors at the end of June, saying new business incubation and co-working landscape in South Africa had necessitated Impact Hub to identify its role and value in the sector.
A phoenix from the flames!
To end on a positive note, it turns out just because a startup closes down one year does not mean it cannot be resurrected the next. South African startup Zapacab first launched in 2013 with a similar business model to that of Uber, even briefly establishing operations in Nairobi, Kenya, before closing in the middle of 2014 having, well, been beaten by Uber.
But, like a phoenix from the flames, the startup – or should we say “restartup” – was racquired this year by Tourism Radio founder Mark Allewell and relaunched as a white label solution for meter taxis. Allewell departed location-based audio travel app producer Tourism Radio at the beginning of 2014 in order to take a one-year sabbatical, but he’s now back in business and trying to get Zapacab back on its feet (or wheels).
There you go, proof it’s never over, even if Uber says it is.
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