Thepeer returns $350K investment post-shutdown after missing product-market fit.

Despite having a substantial runway of up to 20 months and raising $2.3 million in funding so far, the founders of Thepeer, a Nigerian API startup, have made the difficult decision to shut down, citing an inability to achieve product-market fit after 3 years of operations since launching in April 2021.

The startup also plans to return approximately $350,000 to investors after facing compliance issues, slow market adoption, and the need to either pivot, pursue an acquisition, or return capital to investors. However, the decision has raised eyebrows and sparked hot conversations within the African tech ecosystem, particularly because it is a move seen as unconventional in a sector where perseverance is often celebrated.

Thepeer is the second startup to return remaining capital to investors in 2024 after Cova, a wealthtech startup, closed down in a similar way.

Thepeer’s story comes in the midst of the harsh realities of the startup economy on the African continent, where even well-funded and promising ventures can fail if they fail to resonate with their target market. According to industry experts, the startup’s offering, which aimed to facilitate wallet-to-wallet transactions, may have been well ahead of its time in African markets. Despite processing over $500,000 in transactions, Thepeer struggled to generate substantial revenue, with less than $1,000 in earnings during the first three quarters of 2023.

One of the key challenges Thepeer faced was the lengthy integration process required to onboard businesses onto its platform. Convincing multiple companies to adopt a new payment solution can be hard to crack, particularly in a difficult operating environment where established players dominate the market. Also, the lack of consistent support from fintech partners and compliance hurdles further compounded the startup’s struggles.

While some industry observers argue that Thepeer’s product held promise, others question whether the African market was truly ready for wallet-to-wallet transactions at scale. This disconnect between the startup’s vision and market readiness ultimately led to the decision to shut down operations.

Thepeer’s founders, Chike Ononye and Michael Okoh, acknowledged the challenges they faced, stating in a blog post that “the overall acceptance of wallets as a viable payment option didn’t grow as rapidly as we had hoped.” This honest admission highlights the importance of aligning products with market needs, a lesson that many startups learn the hard way.

“We could not align our product with the market’s needs at our current size and scale,” they wrote.

While the shutdown of Thepeer may be seen as a setback, the decision to return funds to investors is a commendable move that demonstrates integrity and responsibility. By acknowledging their inability to achieve product-market fit and choosing not to pivot with investor money, the founders have set an example of transparency and accountability within the African startup ecosystem.

Furthermore, the shutdown has reignited the debate surrounding the merits of perseverance versus strategic pivoting or graceful exits. While the allure of persisting in the face of adversity is undeniable, Thepeer’s case underscores the importance of objectively evaluating market conditions and making difficult decisions when necessary.As the African tech ecosystem continues to mature, startup stories like Thepeer’s serve as valuable lessons for entrepreneurs, investors, and industry stakeholders alike on navigating the challenges of entrepreneurship. It raises the importance of continuous market validation, adaptability, and the courage to pivot or exit when the circumstances demand it as difficult choices that founders have to make in pursuit of their vision.