Thursday, 01 December 2022 06:12

Staff layoffs as ‘crypto winter’ breezes into Nigerian startups

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The crypto winter, marked by plunging bitcoin and ethereum prices, as well as the collapse of companies like FTX, Celsius, and Voyager, is now triggering layoffs at Nigerian crypto companies. At least two startups, Quidax and Lazerpay, have acknowledged their ongoing pains.

Quidax, an exchange that has processed over $3 billion in crypto transactions, laid off a fifth of its staff last week, citing a need to be “more capital-efficient” to survive the downturn. The four-year-old company laid off employees from its marketing, engineering, business, and product teams, as the drop in the value of cryptocurrencies reduced transaction volumes and, consequently, company revenues.

Quidax wants to be the crypto exchange of choice for Africans, and it hired according to that goal, one former employee told Quartz. Splashy marketing accompanied the recruitment. Quidax was a lead sponsor of this year’s Big Brother Naija, Nigeria’s most-watched reality television show, and it signed Don Jazzy, a veteran music producer and record label executive, as its main brand ambassador. Another former employee told Quartz that this marketing expenditure had been earmarked before the crypto winter set in, “so it’s not like they used salaries to sponsor Big Brother.”

In a taste of things to come, Quidax cut salaries in July. The salary cuts and layoffs were first reported in Notadeepdive, a newsletter on Nigerian tech and the economy.

Crypto seed round failures are mounting

Unlike Nestcoin, a Lagos-based crypto exchange laid off staff because $4 million of its operating capital had been deposited with FTX, Quidax said its problems are unconnected to FTX’s collapse. The company insisted that customer funds are safe, and that it is not on the verge of shutting down.

Lazerpay, a crypto payments processing company that launched in February, has made the same claim even as it has also started layoffs. Lazerpay tried to raise a seed round this year, but a proposed lead investor “pulled out abruptly due to market conditions and disagreement on terms,” Njoku Emmanuel, the company’s CEO, said in a statement. Lazerpay needed to let some employees go to maintain its existing runway, Emmanuel said.

To be sure, Nigerian non-crypto startups, including well-funded ones, have also been laying staff off. 54Gene, a company building a DNA databank, raised $25 million just last year, but it laid off nearly 200 staff in October. Vendease, an operating system to ease inventory management for restaurants, laid staff off barely two months after raising $30 million from two of Africa’s leading venture capital firms.

But the events in crypto are likely to attract more attention as African regulators seek to impose rules on the largely free-wheeling industry.   

 

Quartz