Konga.com’s acquisition by a local OEM Zinox Technologies is shocking and considered a defeat on the part of the e-commerce giant by technology pundits.
By some reports, the deal went for $10 million but according to a close source, it was “much more”. However, what is sure is that Konga’ s investors Swedish PE giant Kinnevik and South African media group Naspers made losses.
Founded by Sim Shagaya in 2012 as an indigenous competitor to Rocket Internet’s Jumia.com, the company raised $127.4 million in its 5 year run and appreciated to a $300 million estimation at the height of its reign circa 2015. Unfortunately, in the last two years, the business has dwindled and the company executed two massive layoffs, pivoted from e-commerce to marketplace and investors reportedly fired the founder as chief executive. Sim Shagaya became a ceremonial chairman of his own company. Questions have been ringing, ‘what went wrong at or with Konga?’
iROKOtv founder Jason Njoku, a friend of Sim, in response to a myriad of costic commentary on the development, penned a passionate post shedding light on the cause of Konga’s downfall without giving away much specifics.
“One day, Sim will share the true happenings of what really went down at Konga. I know more than most, but it’s not my story to share,” he wrote on his blog.
But repeatedly, the difficult Nigerian market came up in his fiery post as the cause.
“They (Konga) gave it their best and the market, this horrendously difficult market Nigeria, this market which turns dreams to ashes daily, just wouldn’t yield,” Njoku wrote.
“He (and Shola, CEO after him), did everything they could. Most will never know the pressures they were under. Most would never truly understand the demands and sacrifices they had to make in order to keep Konga alive.
“Let me be clear. Sim+Shola ‘went down’ with their ship I would say 95% of his material wealth was tied up in Konga,” he furthered.
Nigeria ranks poorly as 145th among 190 economies in the ease of doing business report, according to the latest World Bank annual ratings. Konga has become the latest victim of the country’s unease of doing business. Last year, general marketplace site Efritin.com, also exited Nigeria after spending $4 million in a little over a year of operations in the country. Nils Hammer, CEO of Saltside Technologies, investor behind the start-up, explained at the time that Nigeria just wasn’t ripe for further investment – data cost is high, macro economy not favourable, internet penetration and consumer purchasing power low.
About the white elephant in the room, Jumia.com, Konga’s competitor, Njoku would let anyone that cares to know that they are still only in the game because of their deep access to cash but “all they are doing is burning more of it.”
Seeing the handwriting on the wall, Millicom, an experienced technology investor and a former investor in Africa Internet Group, Jumia’s holding company, exited a majority of its 33 percent stake last year. It’s probably only a matter of time before they fold up too or they could stay alive long enough to crack the code of the untameable Nigerian market.