2024

when

April

When it was announced that 3-year-old fintech startup, <a href="https://thepeer.co/" target="_blank" rel="noopener">Thepeer</a> was shutting down, it seemed like any other news. However, serious allegations have emerged following the closure&nbsp;announcement by the founders of the company.&nbsp; 
A shareholder who spoke with Technext, under the condition of anonymity, has claimed that the founders have questions to answer about discrepancies between the company’s fundraising and its final financial state. 
According to the shareholder, a shortfall was observed when comparing the total funds raised and the remaining balance in March 2024. Some investors raised questions during a call when co-founders, Chike Ononye and Michael Okoh, acknowledged that they did not receive $750,000 of the <a href="https://technext24.com/2022/06/22/thepeer-raises-2-1m-seed-fund/" target="_blank" rel="noreferrer noopener">reported $2.1 million seed funding</a>.&nbsp; 
“As shareholders, we found out 1.2 million dollars was missing, based on what the company raised and what was left in the account as of March 2024.&nbsp;And, we had a call where the team agreed to an audit the following week. The co-founders also claimed that $750,000 (part of the $2.1 million raised) never came in on that call”, the shareholder said. 
“While we did the calculation, even though $750,000 never came in, almost another $500,000 is still missing.”&nbsp;&nbsp; 
Despite agreeing to an audit the following week, the founders abruptly announced a shutdown before the audit could take place. “But the week when the audit was supposed to happen, the team (co-founders) announced that the company is shutting down”, it said. 
According to the shareholder, despite this, several shareholders and investors, concerned about missing funds, pressed for transparency and an audit. Their efforts have been met with resistance, with less than $350,000 promised to be returned, and the avoidance of conducting an audit. 
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 Chike Ononye and Michael Okoh – Thepeer cofounders
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When asked if there are documents to prove the allegations of possible misappropriation, the shareholder said, “The only way to find out is to do an audit to calculate how much exactly was spent and on what it was spent.” 
The shareholder also mentioned that the cap table (a document detailing ownership and investment percentages) was not shared by the co-founders. Hence, other investors did not know what was invested by whom and no one could ascertain if the said $750,000 from the $2.1 million seed round did not truly get into the account. 
Speaking to Technext, the shareholder said even after Chike and Michael announced that the company was shutting down, the shareholders and investors requested the cap table and an audit through a signed document.&nbsp; 
“I suspect that the co-founders want to avoid this entire audit and legal process by this shutdown. Because why would they decide to shut down when the shareholders had requested an audit? About four shareholders co-signed a request to do an audit,” he says, notwithstanding the shutdown. “If they keep failing to reply and do an audit, legal steps will be taken.” 
<h4 id="thepeer-co-founders-respond-to-the-allegations" class="wp-block-heading">Thepeer co-founders respond to the allegations</h4> 
“We did not misappropriate funds [that caused the shutdown of the company],” Michael said in an interview with Technext.&nbsp; 
The co-founders, Michael and Chike declined to comment on the request for an audit or the cap table. But Chike said the company spent less than $1 million of the seed funds.&nbsp; 
A signed audit request document shared with Technext indicated that four investors were interested in getting a cap table (due April 20, 2024) and an audit request confirmation (due April 21, 2024).&nbsp; 
<h4 id="relocating-to-london-and-the-companys-health" class="wp-block-heading">Relocating to London and the company’s health</h4> 
The shareholder insisted that Thepeer may have stood a better chance of survival if the co-founders had not taken other actions. He says, for instance, that both founders relocated to the UK after the seed round.&nbsp; 
“Immediately after the seed round, the founders left the country for the UK, and because of that there was no eye on the ground. Thepeer is a Nigerian company, doing partnerships in Nigeria and the founders are not even in the country. It was like the company was just floating. The company was doing about $100 monthly revenue. How can the company survive if the founders are not in the country?”&nbsp; 
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He adds that there was no official communication to investors and other shareholders on the decision to relocate permanently.&nbsp; 
When asked how investors reacted to the relocation, our source said that there was no way to gauge that since there was no official channel of communication with all the investors involved.&nbsp; Besides, it argued, the founders sent only “about two investor updates” since 2022. 
“We once argued about why they are not sharing investor updates with me as a shareholder, and I had to involve lawyers to get the only update sent to me,” the investor recalled. 
Responding to this, Chike suspects that the concerned shareholder is a third co-founder who has been inactive in the operations of the company: 
“We had a third co-founder/shareholder, Akintunde Sultan, who did not contribute to the operations of the company. We decided to ask him to step aside as COO and got another person to take up the role”, Michael said.&nbsp; 
Following that decision, the founders signed an agreement that indicated that the said co-founder should “resign as a director of the Company and such resignation will take effect on the 30th of June 2022 (the Final Date)”. Consequently, the inactive partner also “ceases to be a signatory to Peerstack accounts.” 
The agreement also indicated that the inactive shareholder still be regarded as a co-founder, treated “as a shareholder in the company” and entitled to every right and benefit that will accrue to a shareholder”. 
<h4 id="questions-around-investors-update" class="wp-block-heading">Questions around investors’ update</h4> 
Beyond the accusations of missing funds, the shareholder paints a picture of a company with questionable leadership and a lack of transparency. For instance, the shareholder noted that a troubling silence fell over Thepeer in the months leading up to its closure.&nbsp; 
“The reason they are not sending investor updates is because there is a possibility that they are intentionally hiding the updates from some of the shareholders or, perhaps, sending something else to others”, the shareholder said.&nbsp; 
An email from March 2024 (seen by Technext) highlights that updates for investors and shareholders were not sent for over six months. This information blackout created uncertainty about the company’s operations and financial health. 
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 Michael Okoh
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The shareholder further claimed that it was discovered, in March 2024, that a pre-seed investor received a recent report while he and others were left in the dark. This alleged discrepancy in communication suggests a potential need for more transparency and raises questions about how Thepeer treated its stakeholders. 
Michael, however, insists reports were delivered to investors “as at when due.” Shareholders like Sultan were not investors. 
<h4 id="what-caused-thepeers-shutdown" class="wp-block-heading">What caused Thepeer’s shutdown?&nbsp;</h4> 
A <a href="https://blog.thepeer.co/thepeer-sunset" target="_blank" rel="noopener">blog post</a> signed by the co-founders and published on April 1, 2024, indicated that the company suffered because the company “could not align our product with the market’s needs at our current size and scale. 
“We embarked on a mission to create something unprecedented, a unique method for transferring money between digital wallets and making payments for goods and services directly from these wallets. Yet, we soon realised that exceptional technology alone wasn’t sufficient”, it explained. 
It was not an April fool’s post, this was real and the company said that day “marks the sunset of our journey.” 
The founders cited ‘compliance’ and ‘regulatory environment’ and ‘internal processes of some companies’ to be their biggest headache, and confirmed by Michael in an interview with Technext.&nbsp; 
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 <img loading="lazy" decoding="async" width="524" height="524" src="https://technext24.com/wp-content/uploads/2024/04/image-15.png" alt="Chike Ononye - Thepeer" class="wp-image-230507">
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 Chike Ononye
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“Compliance issues hindered us from launching key wallet providers or maintaining their services,” the founders wrote in a post. 
The exact reasons for Thepeer’s compliance issues remain unclear. But, there are a few possibilities including difficulty onboarding key wallet providers.&nbsp; 
Thepeer’s statement suggests they faced hurdles in getting approval and integrating with major digital wallets in Nigeria. The potential reason is the strict KYC/AML requirements from Thepeer or partner wallets which might have created friction in the onboarding process.&nbsp; 
Disagreements over data-sharing practices or security protocols could have also been a factor.&nbsp; 
The founders also said, “The overall acceptance of wallets as a viable payment option didn’t grow as rapidly as we had hoped, this meant we had to spend a lot of time and resources educating people about what we do.” 
This indicates a lingering challenge with wallet adoption, including lower-than-expected wallet usage. Thepeer likely encountered slower-than-anticipated consumer adoption of digital wallets as a preferred payment method. 
This meant their core service (facilitating payments through wallets) wasn’t gaining traction as expected. 
Implications? 
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 Without key wallet integrations and lower wallet adoption, Thepeer’s ability to scale and reach a broader customer base was hindered. Besides, educating users about digital wallets might have diverted resources from other crucial areas like product development or marketing.
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Michael and Chike also, said, “Thepeer will be placed on maintenance mode for the interim. We’ll work to maintain the platform for as long as possible until we discover a new home for it.” 
<h4 id="could-the-issues-be-resolved-differently" class="wp-block-heading">Could the issues be resolved differently?</h4> 
The lack of a formal structure within Thepeer may have exacerbated the situation. The shareholder’s statement, “There is no Board [above the co-founders], there is no cap table,” underscores this point.&nbsp;&nbsp; 
The absence of a board or established processes for dispute resolution could have hindered any attempt to address concerns internally before the situation escalated. 
“I believe the company still has potential if it is better managed,” the shareholder says.&nbsp; 
<div class="wp-block-image"> 
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 <img decoding="async" src="https://technext24.com/wp-content/uploads/2022/06/IMG_1731-1536x1024-1.jpeg" alt="Thepeer" class="wp-image-146935">
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 The team at Thepeer
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<h4 id="the-fate-of-employees" class="wp-block-heading">The fate of employees</h4> 
While the spotlight focuses on financial discrepancies and accusations, a human element often gets overlooked. One crucial question remains: what happened to the employees?&nbsp;&nbsp; 
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 <blockquote>
 According to Michael, Thepeer did attempt to soften the blow for its workforce.&nbsp; Employees were reportedly allowed to keep their work laptops and received an additional month’s salary after the shutdown.&nbsp;&nbsp;
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Chike adds, “We were transparent with our employees and we tried to transition them in the best way possible which included also helping some of them find new opportunities.”&nbsp;

Exclusive: Thepeer shareholders ask founders for audit, may take legal actions

Technext.ng

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