How funding drought forced Lazerpay to shut down

Nigerian crypto payment startup, Lazerpay, has shut down its business because it was unable to raise funds to sustain its operations.

Lazerpay, which laid off some of its staff last November last year to extend its runway, said it has now come to the end of the road as the expected funding was not coming.

With this, Lazerpay became the second Nigerian startup to close shop this year due to a lack of funding. Earlier in February, Nigerian logistics startup, Hytch, also shut down barely nine months after it commenced operations as it was unable to raise funds.

Lazerpay, which facilitates payments with cryptocurrencies for businesses, has now given all merchants on its platform until April 30 to withdraw their money. The company is also seeking buyers for its IP.

Difficult decision

Announcing the shutdown on Thursday, Lazerpay’s CEO, Emmanuel Njoku said:

“Today, we announce the difficult decision to cease operations at Lazerpay. Despite our team’s tireless efforts to secure the necessary funding to keep Lazerpay going, we were unable to close a successful fundraising round. We fought hard to keep the lights on as long as possible, but unfortunately, we are now at a point where we need to shut down.

“As we sunset Lazerpay, we remain committed to helping our users transition smoothly and to ensuring that any outstanding matters are resolved. Merchants are advised to withdraw their funds from the platform before the 30th of April 2023 using the Bank or Crypto payout option.

“We encourage our community to stay in touch and reach out to us as the team will be available to answer any questions or concerns.

“We welcome offers from companies who are interested in purchasing Lazerpay’s IP, and who would like to continue building the future of crypto payments. We are more than happy to talk further about how our technology works, and how we can help set you up to build or integrate with it.”
Botched seed round.

The company’s journey to winding down began last year as its attempt to raise a seed fund failed with its lead investor pulling out of the deal. According to the company, the proposed lead investor for the seed round pulled out abruptly due to market conditions and disagreement on terms.

And in a bid to extend its runway as it re-strategized to attract new investors, the company said its management team stopped taking a salary, while its employees stayed onboard with a pay cut over the past few months.

Lazerpay commenced operations in 2021 and was committed to driving crypto adoption globally. Before its shutdown, the company said it had enabled over 3000 businesses to accept payments in stablecoins all over the world.

Is funding drying up for startups?

With the tough global economic situation forcing many big tech companies to lay off thousands of workers since last year, experts have predicted tougher periods for startups in terms of funding. Venture Capitals are now more circumspect about what they invest in even as they tread cautiously to maximize returns.

The situation became worsened with the recent t collapse of the tech-focused Silicon Valley Bank (SVB), which has been projected to result in less funding for African startups this year.

With SVB’s collapse, Venture Capitals now have less funds to throw around because most investments into startups are financed by Silicon Valley Bank and its peers, and with the recent developments, VCs now face uncertainties that will make them withdraw and become less adventurous in investing.

Last year, Nigerian startups raised about $1.2 billion in total, which was a 29% decline compared with what they raised in 2021.