Afrigather Eyowo had large desires of changing into a fintech big, and for some time, that dream was inside attain.
Softcom, a well-liked Nigerian startup based in 2007, was as soon as thought of the dream office. The software program improvement company threw vibrant end-of-year events and flew staff to South Africa and Dubai on work retreats. It felt like the instance of a contemporary Silicon Valley startup.
Initially a B2B firm, it had outstanding purchasers like Coca-Cola, MTN, and the Nigerian authorities. Nonetheless, in 2019, it shifted its focus from its client-side enterprise to constructing consumer-facing merchandise.
That strategic shift resulted in Eyowo, one in all Nigeria’s earliest digital banks. Hailed by many former staff as a game-changer, Eyowo scored an early win because the platform of selection for Tradermoni, a controversial collateral-free authorities mortgage to 2 million small enterprise homeowners in 2019.
5 years after that large win, Softcom’s fortunes turned, with three rounds of layoffs, persistent delays in wage fee, and a revocation of Eyowo’s banking licence in 2023.
With out a banking licence, Eyowo, with its promise of “making life higher for everybody,” started scrambling to safe a banking partnership so its prospects may get their deposits. Whereas that concerned many missed timelines, many purchasers started accessing their funds this week.
Eyowo’s cofounders declined to touch upon any a part of this story.
4 ex-Softcom staff blamed Eyowo’s troubles on a scarcity of expertise in core banking and the corporate’s incapability to alter its strategic considering to change into consumer-facing.
A glitchy goodbye for Eyowo
“Eyowo’s licence revocation may have been prevented if the startup had employed professionals to deal with regulatory compliance,” one particular person with data of the enterprise mentioned.
The identical particular person claimed the CBN visited Eyowo to start out a dialog and provides suggestions months earlier than the licence was withdrawn. TechCabal was unable to confirm these claims independently.
“It was an excellent product, nevertheless it was laborious to maintain up with the disappointments,” one other ex-employee shared.
One such disappointment was that the corporate’s founders, Yomi Adedeji and Omoseinde Olubayo, uncared for fee discussions till the final minute.
Because of this, the startup was lower off from its cloud service supplier 4 occasions for defaulting on funds, resulting in service outages. These outages usually despatched the advertising and marketing staff into overdrive. “The frequent disruptions eroded belief,” an ex-employee mentioned.
The corporate’s administration and advertising and marketing staff additionally had completely different development and advertising and marketing methods views. Whereas the founders most popular sponsoring occasions, the advertising and marketing staff argued that these occasions added little worth to the corporate and starved the staff of funds for more practical campaigns.
In 2021, Eyowo sponsored Marlian Fest, a live performance by Nigerian artist Naira Marley and in addition sponsored Ake Pageant, a guide and humanities competition, one yr later.
“They had been ready for virality, for that one large second,” one particular person mentioned of the administration’s advertising and marketing strategy.
Softcom’s golden age
“It was like a household, It was churchlike,” one former worker of Softcom’s work tradition.
Amongst former staff, the consensus was that the management staff was supportive. One-on-one check-ins had been the norm, and a flat organisational construction contributed to the sense that the corporate’s management was accessible.
The corporate shared a few of its yearly earnings with staff and sponsored staff bonding classes to Dubai in 2017 and South Africa in 2018. In 2019, Softcom’s best-performing staff had been handled to an all-expense-paid Dubai trip.
“We felt like we had been going to alter the world,” one former worker mentioned.
Softcom did change the world with its enterprise options.
Its enterprise enterprise—which constructed bespoke web sites and functions for prime firms—was its money cow.
By its Useforms app, a software program with comparable capabilities to Google Kinds, the corporate carried out commerce visibility analysis for MTN. Softcom additionally made studying administration techniques for Covenant College, Nationwide Open College, and Delta State College.
The corporate additionally catered to FMCG firms, providing companies just like the “Eyowo rewards”—a raffle draw system that allow prospects win money prizes by dialing personalized USSD codes. One worker claims a type of contracts with Coca-Cola was value ₦850 million *($578,584), and one other with Honeywell was value ₦65 million. TechCabal was unable to independently confirm these figures.
Softcom’s most profitable offers had been from authorities contracts, two former staff claimed. It constructed an internet site for the Shopper Safety Fee (CPC) and was concerned with Npower, a government-backed empowerment scheme to unravel youth unemployment.
However issues modified shortly when the startup misplaced N-power as a shopper. The lack of that contract might have satisfied Softcom to concentrate on Eyowo as its subsequent profitable enterprise. In 2020 the corporate started a restructuring course of that included a downsizing of its workforce in preparation for Eyowo X, the brand new and consumer-facing iteration of its fintech app.
The complexities of a consumer-focused fintech
This shift from being a software program maker to a B2C fintech startup required a change in technique. Softcom’s earlier enterprise mannequin required much less buyer interplay and concentrate on scaling.
However Eyowo operated in a special panorama that demanded frequent buyer engagement. However each founders approached Eyowo with the Softcom mindset, resulting in a series of questionable selections and unrealistic expectations, two individuals aware of the corporate mentioned.
“They need to have handled Eyowo as a separate product with out shuttering Softcom,” one former worker mentioned.
Alongside Eyowo X, it launched three different merchandise: Kwik Promote, a list and inventory administration software program, Usepass, an occasion administration and ticketing system, and Useforms, a software program with comparable capabilities to Google Kind.
The corporate started conversations to lift $10 million for all 4 merchandise in 2021, mentioned sources immediately concerned. In the end, these fundraising conversations had been unsuccessful.
As Eyowo struggled to lift funds, it was burning by means of monies it had earned from the Softcom period and it quickly bumped into money stream issues.
“Former staff solely started noticing when there have been delays in wage fee in December 2021,” one particular person mentioned.
In the direction of the top of 2022, the corporate laid off about 20% of its 200 staff.
“They didn’t lower prices early sufficient,”the identical particular person mentioned.
Understanding the money burn at Eyowo
One in all Eyowo’s buyer acquisition methods was giving out free debit playing cards to its customers when it launched. The corporate acquired over 17,000 requests for these playing cards within the first month alone, absorbing prices that almost all fintechs and banks usually cross on to prospects. Eyowo’s transfers had been additionally free.
An worker claims it took virtually a yr after pausing their software program enterprise to construct Eyowo and three further merchandise, with every product having a devoted staff constructing it, contributing considerably to money burn.
Eyowo’s struggles culminated with the revocation of its licence in 2023. Whereas the Central Financial institution gave broad-ranging explanation why microfinance financial institution licences may very well be revoked, an individual near the matter claimed Eyowo’s licence was revoked as a result of it stopped providing loans to prospects, contravening a regulatory requirement for microfinance banks.
The licence revocation meant customers couldn’t ship or obtain cash from their accounts. Whereas Eyowo explored a partnership with Providus Financial institution to permit customers to withdraw their funds quickly, some customers had their deposits trapped. One former worker claimed one buyer visited Eyowo’s workplace with a gun demanding his trapped funds.
This week, Eyowo shared that every one prospects can now entry their deposits, and two folks instructed TechCabal that they’ve efficiently withdrawn their deposits.
What stays up within the air is the place Eyowo goes from right here. The corporate insinuated it has regained its licence and there are talks a couple of doable rebrand as “Entrepreneur Financial institution.”
In the end, whereas many ex-employees and prospects are sympathetic to Eyowo’s trigger, the corporate may enhance its communication, they declare.
For now, the corporate has begun paying again prospects with trapped deposits within the financial institution. Ex-employees are hoping in addition they get their again pay subsequent.
Editor’s be aware: An earlier model of this text acknowledged Softcom was launched in 2017. This has now been corrected.
