An Africa-focused remittances firm, Zazuu, has become the latest fintech startup to close shop after it failed to raise extra funding. Zazuu and other African fintechs’ funding problems are said to be linked to the collapse of Silicon Valley Bank in the U.S.
Zazuu Shuts Down Just Over a Year After Raising $2 Million
Zazuu, an Africa-focused cross-border remittances fintech startup, recently said its inability to secure additional funding had forced it to shut down. The startup’s decision to close shop come just over a year after it raised $2 million from investors that included Launch Africa, Founders Factory, and rapper Tinie Tempah.
In a Linkedin post explaining the “difficult news,” Zazuu said it had worked hard to make cross-border money transfers “fair.” However, the funding climate ultimately made it impossible for the startup to continue operating.
“With the support of our investors and team, we made huge strides – securing regulatory approvals, building our products, and laying the groundwork for future growth.
However, due to a tough funding climate, we failed to secure [a] growth funding
round. We explored every option before making this decision,” Zazuu said in a statement.
According to a Techcabal report, Zazuu is the latest fintech startup in 2023 to cite funding challenges as the primary reason for closing shop. Lazerpay, Paystack, and Vibra are some of the fintech firms which have either shut down or scaled down operations due to funding challenges.
African Fintechs ‘Need Favourable Funding’
Meanwhile, in his reaction to Zazuu’s announcement, Linkedin user and entrepreneur Ogar Phil Blaize suggested that the closure could be linked to the demise of the Silicon Valley Bank. Before its collapse, the bank had primarily focused on supporting tech businesses both in and outside the U.S. However, in his Nov. 20 post, the Linkedin user implied that there has been no bank focused on supporting African fintechs since Silicon Valley Bank’s collapse.
Therefore, in order to end the cycle of African fintechs shutting down due to lack of funding, Blaize said:
“Many startups affected with this dilemma, especially African startups will need favourable funding again to stand up else now or later we will be hearing more shut down.”
Register your email here to get a weekly update on African news sent to your inbox:
What are your thoughts on this story? Let us know what you think in the comments section below.