From Rise to Reset: Startups in the Rearview Mirror
Startup Journeys in Hindsight...
Hello 👋 Dear Innovator,
Welcome back to another edition of our weekly newsletter!
As we embark on this journey together, we're thrilled to bring you a curated collection of insights, updates, and stories that promise to ignite your curiosity and fuel your week ahead.
WAIT! 🤚🏽
Did a robot (Chat GPT maybe 🤷🏽♀️) take over Consonance Club’s newsletter? because what on God’s green earth 🌏was that intro 😂.
ANYHOO!
We are glad to be here again this week bringing you exactly what you need to know on these tech streets, becauseeeeee It’s been a tech year, for real.
This is why we will explore why some innovative startups didn’t make it. Amidst government policies and evolving trends, there's a need for your startups to develop a thick skin. Today, you’ll learn how to help your startup become resilient to some challenges through some stories we’ll share.
You’ll see what to do and what not to do. Remember “A word 👂🏽 they say, is enough for the wise🧏🏽♂️ "
Are You An OG?
Before sharing today’s wonderful updates, I should ask if you're following us on all our social media platforms. You can take a quick pause here and do that right now. Our platforms (IG, LinkedIn, and, oh yeah, Twitter (X) are engaging, and we give you all updates straight from the oven. As we cook, we serve it there.
Also, to show you that this is consonance club and not a robot takeover, have this 🎁…
Let’s go straight into the business of the day…
(CLEARS THROAT 🤧)
In the ever-evolving landscape of innovation, the journey from startup inception to sustained success is a complex and challenging one. Today, we bring you a compelling exploration into the untold stories of pioneering startups that, despite their innovation, couldn't navigate the tumultuous currents to reach the year's end.
You wouldn’t be surprised by some of them.
Fasten your seat belts, for the ride as we unravel the top reasons behind their unexpected paths, offering a unique perspective on the factors that can make or break even the most inventive ventures.
Let's learn from these narratives, uncover the top reasons behind their journeys, unravel valuable lessons that go beyond success, and delve into the untold narratives of resilience, adaptation, and the unpredictable twists that shape the startup landscape.
You can probably tell that the likes of the Silicon Valley Bank are on the chopping board today, however, let’s start with…
The Most Unexpected Flop -FTX
You probably didn’t see this coming too.
FTX was one of the largest digital currency exchange platforms for buying and selling cryptocurrencies. As more people invested in cryptocurrencies, they turned to these platforms because they provided a digital wallet to store cryptocurrencies directly in a personal account. Customers could also store cryptocurrencies on their own by creating a crypto wallet either using software or hardware, which is not part of the platform.
The popularity of cryptocurrency exchange platform FTX rose rapidly after it was launched in 2019. However, FTX came crashing down in November 2022.
On Nov. 8, FTX blocked customers from taking money out of the platform by removing that option online, which meant hundreds of thousands of customers did not have access to their money. When FTX could not pay the $8 billion gap, the company filed for bankruptcy. FTX crashed due to mismanagement of funds, lack of liquidity, and the large volume of withdrawals. Binance announced it would buy FTX to prevent a larger market crash, but quickly bailed out of the deal as more news reports of mishandled customer funds surfaced.
It has been largely reported with evidence that Bankman-Fried used FTX funds to buy personal luxury items, finance elaborate advertising campaigns, and make political donations.
Of course, after all these allegations came the lawsuits and criminal charges, but a great lesson should be learned here by aspiring innovators.
It seems that everything that could possibly go wrong with a startup went wrong with FTX hence the worldwide coverage of the fall from grace.
Whatever Happened To Payday?
Source Tech Cabal - (Tech Cabal is referenced as a major source of some data in this section)
Payday is accused of waving red flags
A wave of bad press may have complicated attempts to sell the company some months after its seed round success.
In August, PayDay acknowledged that it suspended access to customer accounts after it noticed some customers had lost funds to fraudulent activities. While an employee familiar with the matter refused to disclose how much was lost, they admitted that PayDay temporarily disabled access to several accounts to recover funds stolen by people who exploited a loophole in Payday’s infrastructure that enabled currency arbitrage.
This among many others is what went wrong with Payday.
Why do users have to pay for a fraudulent attack against their accounts by having their accounts suspended?
“Current and former employees said PayDay slashed salaries of some Nigerian staff in July—three months after the $3 million raise. While employees expected the Naira equivalent of their salaries to align with their dollar salaries, the actual amounts fell short, amounting to 30-50% reductions. The company said the cut was necessary to adjust the wages of employees in Nigeria to the regular pay for such roles in the country. A highly placed source claimed that less than 10 of the company’s 60 staff were affected and that PayDay planned to assign stock options to the employees as further compensation. PayDay employees told Techcabal that the stock options that were promised had not materialized.”
We said all this to let you know the importance of getting every part of your startup running under the right conditions.
The impulsiveness of the company’s founder was also sometimes costly. Some customers lost money while trying to create virtual cards, while others could not access their accounts.
If you are a payday user, you’ll admit that some decisions are rather abrupt.
Payday can not yet be referred to in the past tense, but the startup had it’s fair share of hot water this year.
Lazerpay’s Lack Of Funding
While we might not have all the specific information about Lazerpay's funding challenges, we are aware of the fundamental reason behind their shutdown and can provide general insights to help upcoming startups avoid experiencing the same things.
Innovators can consider these insights when reflecting on the lack of funding experienced by startups.
Innovators should understand firsthand that relying solely on one source of funding, such as venture capital, can be risky. This means that startup founders should explore diverse funding channels, including angel investors, grants, crowdfunding, or strategic partnerships. This approach can provide a safety net if one source faces challenges.
If you are familiar with Consonance Club’s teardowns and series in our community, then you are no stranger to these concepts 🤷🏽♀️. We preach it 😃!
Effective financial management is also critical. Innovators should prioritize efficient resource allocation, monitor burn rates, and demonstrate a clear roadmap to sustainability. This can instill confidence in investors regarding the startup's ability to manage funds responsibly.
Finally, constantly seek and incorporate feedback from investors, customers, and the market. Adapting the business model and strategy based on constructive feedback can enhance the startup's chances of securing funding and achieving sustained growth.
Innovator Of The Week
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Notable Reads For The Week as seen on Tech Cabal
When all was said and done… Nigeria removes deadline for submission of old notes
Bolt Expels Over 5,000 Drivers in Kenya to Enhance Safety Measures
Opportunities
Telesur Investment Holdings is hiring a UI/UX Designer in South Africa (Hybrid)
Percona is hiring a Software Engineering Manager - EMEA (remote)
Deel is hiring a Senior Product Manager - EMEA (Remote)
Gruve is hiring a Junior Product Manager in Nigeria (Remote)
Duplo is hiring a Senior Frontend Developer in Lagos, Nigeria