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Inside the shutdown of Lazerpay, the Web3 startup that was high on hope but short on capital

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2 years ago

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A year and a half after its incorporation, Lazerpay ceased operations. Here’s the story of how the lauded startup was unable to secure funding and its eventual shutdown.

Two months after sponsoring Blocathon, a hackathon for Web3 designers, crypto payment platform Lazerpay shared that it was shutting down its business. It was bittersweet, considering the fact that a blockchain hackathon is also where the company’s founder, Njoku Emmanuel, reportedly built his first smart contract. He would eventually get to the final stage of the hackathon, and he credits his success to a lot of Udemy courses and hours of coding practice during the pandemic. By 2020, the decentralisation bug had bitten Njoku and in 2021, he launched Lazerpay.

The ideation of Lazerpay
In 2021, crypto was having a high-water moment in Africa. Every conversation was about decentralisation, the blockchain, and the big changes crypto would make. While crypto-optimism elsewhere was driven by a distrust of banks and the idea that the current monetary system is obsolete, the premise in Africa was simple. For Africans, crypto was a way to make and preserve wealth and a way to simplify payments. On a continent where international payments can be complex, it was a compelling promise.

It explains why Njoku said he rejected a $300,000 job offer at Avarta. Instead, he, Abdulfatai Suleiman, and his cousin Prosper Ubi founded Lazerpay in October 2021. The newly formed company provided APIs that let platforms integrate and collect crypto payments. It also provided links that anyone could use to collect payments directly into their wallets or banks. This was a sensible play, with crypto-acceptance on the rise. Investors were also falling over themselves to fund African blockchain startups. Every blockchain engineer with gumption was partnering with trusted and skilled friends or work colleagues to solve Africa’s payments problem. The thinking was that taking away the banks and issuing partners as middlemen could be profitable businesses. In the end, the marketing spiel was simple: Lazerpay was gunning to be the Stripe for crypto.

“We only deal in [stablecoins] BUSD, DAI, USDC, and USDT. We focus on only these because they are backed by the US dollar, and it is important for us to provide a stable, secure, and relatively risk-free financial solution for our users,” Njoku told Disrupt Africa in an interview. This quote doesn’t tell the whole story of how audacious the idea for Lazerpay was.

According to Ohalewe Richmond, the designer who came up with Lazerpay’s first logo, “I thought the idea was crazy. We know Paystack and Flutterwave, but the idea of getting businesses to process payments in crypto seemed crazy to me, and I think that was the general vibe about crypto payment in Nigeria then.”

The early days
In several interviews, Njoku stated that he and his CTO, Abdulfatai Suleiman, often worked overnight to build Lazerpay’s infrastructure. “We had our toothbrushes in the office, and only went home if we needed a bath,” he said in a Founders Connect interview.

Richmond Ohalewe, the designer, says it took him three weeks to develop the initial Lazerpay logo—an infinity sign that took the shape of an L. “If you look at the logo, you can see a bridge. Lazerpay wanted to connect people by giving them and their businesses fast crypto payments anywhere in the world,” he explained. “At the time, they were looking to raise money to get started, and I was there to help them produce a compelling brand identity,” Ohalewe added.

The company stuck with Ohalewe’s vision and went on to announce an angel round of $100,000 in November 2021 after incorporating it in October. The round came from investors like Paystack’s CEO, Shola Akinlade, Xend Finance’s CEO, Ugochukwu Aronu, and several other angel investors.

Four months later, the company redesigned the logo to a solid blue image that sits like the quadrant of a pie but with rectangles shooting out from the sturdy L- shaped base, like lasers. However, it became apparent that the most prominent identity of the brand was in fact the young founder, Njoku.

An instant darling
Nearly every major piece of publicity that the company mentioned centered on how incredible it was that a 19-year-old was running his own tech startup and getting investors to put their money behind it. It was a captivating story. Njoku started learning to code at 15, dropped out of the university to take a tech internship, landed a $3000 per-week job, and eventually rejected a $300,000 job offer from Avarta.

According to Joyce Imiegha, an associate producer of Founders Connect, a show that Njoku appeared on and that spotlights African founders, “He was 19 but didn’t talk or act like a teenager. He was confident, very assertive, and obviously intelligent. He articulated his thoughts and opinions about the problems that he was solving so well.” Joyce later went on to be his personal brand manager and do some PR work for Lazerpay.

At the time of the Founder’s Connect interview in the first quarter of 2022, the startup had grown to a team of 15 people. Popular opinion about his leadership was that he was empathetic, considerate, and inspiring. A former employee told TechCabal, “We had a flat organisational structure so he was a very accessible leader. You could go into his DMs to recommend ideas or make complaints.” However, some employees maintain that he was rather too friendly and sometimes allowed his personal relationship with his workers to interfere with the hierarchy at work. “There was a clique at work. While cliques are not uncommon, this was uncomfortable because our CEO was in it. It was as though more people had access to him than others,” the source told TechCabal.

Another emphasized, however, that “Even though he has expressed that next time he would not sacrifice performance for the sake of relationships, I thought he was very professional. He took action against apparently bad behaviour and rewarded exceptional attitude and work.”

Life at Lazerpay
While the company still operated, the social media posts of the team members show that they were excited about their work at the company. Even some who left before the shutdown look back fondly on their time there, as their work at the company opened doors to bigger and better-paying jobs in other startups. “It was the first time I worked at a web3 startup, and it really set me up for the success I have experienced since,” an ex-employee told TechCabal.

“My friends were not forthcoming about how much they earned, but I know they were one of the best-paying startups then [in Nigeria],” Ohalewa said on a call with TechCabal. An anonymous source told TechCabal that some members of the engineering team were earning as much as $1,500, a lot of money in Nigeria, where all, if not most, of its employees lived. A non-technical staff said he was earning about N300,000 before he left the startup. Even though the CEO, Njoku, was reportedly personally in charge of remuneration, several sources told TechCabal that he did not take a salary. “He made a lot of money before working at Lazerpay, and that kept him going,” an anonymous source said to TechCabal in an interview.

Improving the product
While the team grew in combined experience and number, the product did too. It underwent some evolution to provide more value to its targeted users—businesses and organisations. In February 2022, they announced a donation link feature for NGOs, which the popular Nigerian NGO ChessinSlums used in a campaign to raise $1 million. The fundraising got international attention, attracting donations from celebrities like Paris Hilton. Beyond facilitating fundraising with its new donation feature, Lazerpay also promised to match every dollar donated using the feature.

In the weeks that followed, the company partnered with and integrated its crypto payment infrastructure on betting platform BetDemand, fintech startups PayDay, Direcharge, and Risevest, and health-tech startup NguvuHealth. In addition to announcing these partnerships, it also invited more businesses to use its payment link or integrate its LazerPay button into their apps or websites. The startup often offered giveaways of up to $100 to incentivize users to join its Telegram community or use its technology.

In March, six months after the business was founded, it announced that over 800 businesses had been onboarded on its platform. They had also reportedly processed over $100,000 in transactions. Before the end of 2022, LazerPay had evolved from enabling payment in stablecoins to allowing users to swap stablecoins and receive payment in fiat (currencies of countries such as Nigeria, Kenya, Rwanda, Ghana, the US, and the UAE). The team also included a feature that allowed vendors to display pictures of their goods to buyers. It also enabled the integration into global e-commerce stores like Shopify and WooCommerce. The startup called this version of itself Lazerpay V2.0.

“Getting businesses to use the platform was challenging at first,” Barakat Olatinwo, growth lead at Lazerpay, said on a call. She attributed it to the relative unfamiliarity of the technology but added that “we usually get positive responses when we explain how it works.”

Finding product-market fit
Sources close to the startup note that Lazerpay was not able to achieve product-market fit (PMF), and while some blame the marketing strategies of the startup, others say it was just a matter of timing. “It is one thing to facilitate crypto payment for individuals, and it is another to do the same for businesses. It is novel, hard, and expensive to do because of the level of education about crypto in the country,” a source told TechCabal.

A source who blames the marketing strategy said, ”It was just weird to see a B2B crypto startup doing most of its marketing on Twitter instead of Instagram or LinkedIn, where most businesses are.” TechCabal asked the growth lead, Barakat, if she would do anything differently if they had the chance again. She said she wouldn’t and that she remains optimistic about the potential of B2B crypto payments.

A source told TechCabal, however, that they wish Lazerpay had pivoted earlier. “I wish that they were more agile and made necessary changes to product features when they saw that things were not going as planned. It is expensive to be the one breaking ground in a market. But some founders have successfully stuck it out with a novel product and made it work, so it is understandable that they kept trying to make it work,” they added.

The sunset of a crypto darling
In November, Nestcoin, one of the investors in Lazerpay, shared that it had lost significant operating capital when FTX, the exchange it held monies, crashed. Nestcoin laid off staff last year, and its CEO stopped taking a salary. This began the public struggles of crypto startups in Africa.

In the same month, after stopping the salaries of the management team and slashing the salaries of other employees, Lazerpay also began layoffs. The founders had reportedly tried to keep the startup afloat with their own savings, but that was not enough.

On Twitter, Njoku shared a letter announcing that the lead investor in its seed round had pulled out due to “market conditions and disagreement on terms”. A source close to the matter told TechCabal that the layoffs happened after the founder rejected an unfavourable acquisition offer from an existing investor. According to the source, the founders and one more employee remained working at the startup with no pay until the shutdown.

A disagreement on terms
Considering the good faith Njoku seems to have enjoyed in the ecosystem, one cannot help but wonder why said investor pulled out or why another or others did not step up to keep the apparently promising startup afloat.

An anonymous source close to the matter tried to explain why. “[In Lazerpay’s first funding round] Nestcoin and 4DX Ventures invested.” They added that “in three months, Lazerpay returned to the market looking to raise money at a $15 million valuation”. They also shared that at that point, Lazerpay had yet to gain the type of adoption that would make it worth a $15 million valuation. “Not a lot of people were really using it; the payment volume was super low at $80,000”.

According to the source, Lazerpay’s fundraising process fell apart because the startup refused to budge on its valuation. “They got the interest of Thunes (a B2B cross-border payment network with a presence in 100 countries and headquartered in Singapore), but somewhere along the line, Thunes grew uncomfortable with the valuation and wanted to revise the terms. Lazerpay resisted.” TechCabal was not able to independently verify these claims.

“Unfortunately, that period coincided with the period when crypto enthusiasm fell because of FTX”, they added.

The founder took to social media to announce the shutdown, and the news was welcomed with unanimous sympathy and applause for Njoku, people, in many words, called him daring and inspirational for attempting to build in such tough economic conditions.

The news was also accompanied by an announcement that the startup’s IP was up for sale. It has not been confirmed if anyone has bought it yet. Njoku was not able to provide any comment on the events and opinions reported in this story as he is still processing the shutdown of his startup.

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Christmas, Cash Scarcity and Attacks against CBN’s Proactive Stance – Toni Kan

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1 day ago

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December 20, 2024

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Let us look at a few figures……..

Nigeria’s population is put at a little over 200 million people while the UK population is about 68 million. This means that the Nigerian population is about three (3) times that of the UK.

As at June 2023, the UK banking system had about 49,421 Automatic Teller Machines and almost 2.3 million Point of Sales Terminals.

By contrast, the Nigerian banking system had a little over 22,600 ATMS according to TechCabal and is projected to reach 29,000 by 2029 according to Statista. Conversely, Nigeria boasted 1,665,664 POS terminals as at December 2022. Meanwhile, figures attributed to Inlaks, which is described as Nigeria’s biggest ATM operator, suggest that Nigeria needs at least 60,000 ATM machines to serve its population of over 200 million.

Where is all this going? Well to borrow a phrase from the comedian, Jeff Foxworthy; hold my beer, sir!

Those who know me well know what my favourite Igbo proverb is. It goes something like this in translation – “the disease that gives you warning, does not kill you!” It is a proverb that underlines the imperative of proactivity, what the Igbo people might call igba mbo.

So, I was really pleased when I read that the Central Bank of Nigeria (CBN) was taking a proactive step to ensure that there is no cash scarcity this Christmas.

Nigerians love cash and that love can become obsessive and reach fever pitch at festive periods. Have you been to Abeokuta during Ojude Oba? Or to Kano during the Durbar? Or Onitsha during Ofala? Those are regional festivities. So, you can imagine what happens at Christmas!

All efforts at driving a cashless policy and economy seem to collapse when festivities come around the corner and this year, the CBN was quick to take proactive action weeks before the festivities reach fever pitch. But the apex bank’s interventions seem to be having unintended consequences even though as at the time of writing this, the apex bank had put out three (3) different circulars and one press release around the issue.

First, is a not-so-surprising pushback from the banks and then a seeming lack of understanding by the general public no thanks to rampant mis-information.

The issue of cash scarcity around the Christmas period worsened under the sway of Godwin Emefiele at the CBN. The fall-out from the disastrous naira redesign he superintended over at the apex bank continues to haunt our banking vaults but Olayemi Cardoso and team are focused on making sure we turn that dark corner.

Let us begin with the first circular dated November 29, 2024: “Cash Availability Over the Counter in Deposit Money Banks (DMBs) and Automated Teller Machines (ATMs).” The circular had two sections: DMBs were directed to ensure efficient cash disbursement to customers Over the Counter (OTC) with the CBN insisting that it will enforce the directive and ensure compliance.

Secondly, members of the general public were encouraged to report instances where they are unable to get cash Over the Counter or through ATMs. The CBN ended with a list of 37 email addresses and phone numbers across the 36 states and FCT for reporting issues.

On paper, it looked like Nigerians and the cash worries were all sorted this Christmas but it didn’t take time for the expected pushback to occur. News reports began to circulate of long queues at banks and of ATMs struggling to dispense more than N10,000. “NAN reports that long queues have emerged at ATM stands around the city as residents struggle to have access to cash…Meanwhile POS operators are currently taking advantage of the situation to demand exorbitant charges on transactions.”

While Nigerians were still trying to make sense of the reason behind the long queues, another report had an official of the Association of Senior Staff of Banks, Insurance, and Financial Institutions (ASBIFI) pointing fingers. According to the report, “ASSBIFI President, Olusoji Oluwole, told the Punch that “Banks have only two sources of cash: the CBN and retailers. The CBN has not met banks’ demands, and retailers often sell cash for profit, making it harder for banks to access funds.”

As if in response to the charge, the apex bank responded “with their full chest” as we say on social media with a December 13, 2024 circular – Updated Penalty on Inappropriate Cash Disbursement Practices by Deposit Money Banks (DMBs) in which it condemned the “illicit flow of mint banknotes to currency hawkers and other unscrupulous economic agents that commodify naira bank notes thus impeding efficient and effective cash distribution to banks’ customers and general public.”

Giving bite to the circular the CBN said any bank found culpable of “facilitating, aiding or abetting, by direct actions or inactions, illicit flow of mint banknotes” would be fined N150m and then hit with the full weight of the relevant provisions of BOFIA 2020.

This time no pointing fingers were seen but the CBN was not done. Eager to completely squelch rumours around “the validity or lack thereof of the old ₦1000, ₦500, and ₦200 banknotes” the refusal of which was contributing to the long queues, the CBN issued a press release shutting it down: “The Central Bank of Nigeria (CBN) has observed the misinformation regarding the validity of the old ₦1000, ₦500, and ₦200 banknotes currently in circulation….the CBN wishes to reiterate that the subsisting Supreme Court ruling granted on November 29, 2023, permits the concurrent circulation of all versions of the ₦1000, ₦500, and ₦200 denominations of the Naira indefinitely.”

The third circular from the CBN which it said was in line with its “ongoing efforts to advance a cash-less economy” seems to have hit a raw nerve among Nigerians who, as we have already noted, love their cash even though it is now an offence to spray the naira.

News outlets also seemed to also get it wrong. The CBN circular of December 17, 2024 did not put a limit on how much cash you and I can withdraw from banks. The limits imposed in the circular titled – CIRCULAR ON CASH-OUT LIMITS FOR AGENT BANKING TRANSACTIONS – are “for agency banking operations” and as reported by TheCable is among interventions intended to address “identified challenges, combat fraud and establish uniform operational standards across the industry.”

Now, can I have my beer back as I attempt to outline how easily well-intentioned policies are rubbished by that euphemistically named malady known as the “Nigerian factor”.

The ASBIFI official was quick to point fingers even though simple logic can show that Over the Counter cash scarcity and at ATMs has little to do with the CBN or its cash distribution operations but with our Nigerian any-how-ness.

Let’s consider this. How is it that banks cannot fill up 22,600 ATMS, most of which are within or in close proximity to their branches but can afford to give cash to 1.6m PS operators? Doesn’t this seem to suggest that someone is out to make sure that the ATMs don’t have cash while the PoS operators continue to make a killing?

And why does it seem right that Nigerians should continue to pay between N250 and N400 per N10,000 withdrawals to PoS operators when ATM charges are far lower at N35 and only after you have made multiple withdrawals from other bank ATMs?

Oh, bankers have said ATMs are difficult to maintain on account of several factors and this takes us back to the figures we shared from the UK. Of the 49,421 ATMs in the UK, “78% were free to use” during the period under reference. So, why do we always talk about maintenance when it comes to Nigeria? Imagine if we paid N10 per ATM transaction, wouldn’t that be better than paying N250 to a PoS operator for every N10,000 withdrawn?

And for context, in 2014, data on various e-payment channels indicated that Automated Teller Machines (ATMs) remained the most patronised payment mode in Nigeria accounting for 89.7% of all electronic transactions with PoS transactions accounting for just 4.58 per cent. Today, the reverse is the case and the question to ask remains; what changed? The answer has something to do with financial inclusion but that is a topic for another day.

As you ponder that poser, ask yourself why is it always difficult to get mint bank notes over the counter in the banks meanwhile, step into any event center and you will see some hawker waving bright new notes in your face. Surely, they don’t get those notes from the CBN.

When the CBN referenced the Supreme Court ruling granted on November 29, 2023 to the effect that the old notes are still legal tender, their X Formerly Twitter page was filled with bile. But what many are failing to contend with is that the current leadership is only trying to make sure the mess they inherited doesn’t get worse.

As we prepare for Christmas and the New Year the advice is simple; go to your bank and ask for your money or withdraw from the ATMs and if you suspect any funny business, email or call the hotlines provided by the CBN.

Say no to any-how-ness this yuletide.

 

Toni Kan is a PR expret and financial analyst.

 

 

 

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Aviation Minister Leads Delta APC Leadership To National Chairman, Advocates Unity Ahead of 2027 Elections

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2 days ago

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December 19, 2024

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The Honourable Minister of Aviation and Aerospace Development, Olorogun Festus Keyamo SAN, today, led the leadership of the All Progressives Congress (APC) in Delta State, to the National Chairman of the APC, His Excellency Dr. Abdullahi Ganduje, at the APC National Headquarters in Abuja.

 

During the meeting, the Delta APC leaders briefed the National Chairman on the current state of the party in the state and the ongoing efforts to reconcile party members. They presented the report of the Reconciliation Committee, which has been approved by the Delta State APC State Working Committee (SWC) and earlier submitted to the National Chairman.

The delegation emphasized the importance of collaboration, stating that the era of a one-man leadership style in Delta APC is over. They reaffirmed their collective commitment to working as a united team to reposition the party and strengthen its prospects ahead of the 2027 general elections. This new direction was evident in the composition of the high-powered delegation that visited the National Chairman.

 

In his response, the National Chairman, Dr. Abdullahi Ganduje, commended the Delta APC leadership for their efforts to foster unity and ensure the party’s victory in future elections. He assured them of his commitment to work with Delta APC leaders, including those absent from the meeting, to build a united and formidable front. During the meeting, Dr. Ganduje also spoke with Delta State APC Chairman, Elder Omeni Sobotie, who was unavoidably absent due to health reasons, and wished him a swift recovery following his recent surgery.

 

The delegation to the meeting comprised prominent leaders of the Delta APC, including: Olorogun O’tega Emerhor, OON-Founding Leader of APC in Delta State,

Elder Godsday Orubebe- Former Minister,

Senator Ede Dafinone,

Senator Joel Thomas-Onowakpo,

Rev. Francis Waive- Member, House of Representatives and

Hon. Victor Ochei-former Speaker, Delta State House of Assembly.

The meeting was concluded with a renewed sense of purpose among the Delta APC leaders and a shared commitment to repositioning the party for electoral success in 2027.

 

 

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Just In: Alleged N110.4billion Money Laundering: Yahaya Bello Begs Court: Spare me Landed Property in Maitama for Bail.

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2 days ago

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December 19, 2024

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A former governor of Kogi State, Mr. Yahaya Bello has pleaded with Justice Maryann Anenih of the Federal High Court sitting in Abuja to spare him the possession of a landed property in the Maitama district of Abuja as one of the conditions for bail.

 

Details later…

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