Pivo's Shutdown: The Fallout of Cofounder Disagreements

Pivo Technology Inc. was a Nigerian-based fintech startup launched in 2021. The company, headquartered in Yaba, Lagos, sported a staff size of 11–50 employees, headed by Nkiru Amadi-Emina (CEO) and Ijeoma Akwiwu (COO).

Pivo offered financial services to African small and medium-scale businesses (SMEs) on three fronts: Pivo Capital, Pivo Business, and Pivo Plus. Their core services included credit loans, expense management for SMEs within supply chains, and insurance services, respectively. Customers were granted adequate credit funding based on provided data and previous transaction history without collateral. Business owners could access Pivo’s services by setting up a corporate account on their application.

Pivo Capital offered credit loan services to SMEs, while Pivo Business, also known as Pivo Finance, helped them set up digital bank accounts. These were subsequently used to facilitate P2P transactions and monitor payments made with debit cards. Revenue was generated mainly by charging interest on approved loans and by charging fees on transactions made on the application.

In recent times, the Nigerian tech ecosystem has witnessed a significant rise in the launch of fintech startups aimed at providing better services than traditional banking institutions. Supported by increasing internet activity and the use of digital devices, they have acquired licenses to compete fairly with existing corporations in the financial sector.
The rise of fintech startups like Pivo was due to the CBN’s open banking policy launched in 2023. It provided an avenue for financial inclusivity, leading to competition and the launch of innovative ideas.

The Business Model of Pivo

Pivo’s mobile app was released in 2022 on the Google Play Store and Apple Store. Users were required to download the app and complete the necessary KYC to successfully sign up for a Pivo Business account. The app allowed them to make payments, request financial history, and generate account statements. It also allowed them to apply for Pivo Capital business loans, view loan requests, and place requests for customised debit cards.

The app promised ease of use, with easy navigation across pages and similar functionality to traditional banking apps and neobanks like Opay. With over 5,000 downloads and a 4.6/5 rating, users dropped excellent reviews on its assistance in expense management.

Pivo shielded customers from the rigorous processes associated with obtaining loans at traditional banks. They also tackled SMEs' cash flow problems by providing access to smart bank accounts, debit cards, and digital invoicing tools to track payments. Pivo implemented this end-to-end financial model with freight carriers and companies offering logistics services.

Compared to Fairmoney and Brass, other financial lending institutions, Pivo has an interest rate of 11%; Fairmoney’s rates range from 2.5% to 30%, while Brass’ rates start at 9.75%. Although Pivo has a higher interest rate, Fairmoney and Brass are focused on providing credit loans for individuals.

Pivo’s Funding Trajectory

Within two months of its launch, Pivo received its pre-seed round from five investors, including Microtraction and Mercy Cop Ventures. In May 2022, they were part of the Nigerian startups selected for Google’s Black Founders Fund and received $100,000 in non-equity assistance. By November, Pivo had successfully raised $2 million in seed funding, backed by Y Combinator and several other investors.

One year after launch, Pivo revealed that they had 300 active SMEs and 10 ecosystem partners, like JetStream Africa and SabiRoad, with expansion plans for providing in commercial hubs in Nigeria, such as PortHacourt and Kano. They expressed their intent to offer their services in East Africa and become a primary end-to-end financial services platform. They confirmed that they had processed over $1 million in loan applications by the end of 2021, intending to do more. By 2022, Pivo Capital disbursed $3 million in credit loans and $4 million through Pivo Business.

Pivo’s Business Challenges

Despite the large influx of funding, Pivo was not immune to Nigeria’s economic turbulence. The Federal Government’s sudden choice to redesign currency notes led to cash scarcity, directly affecting small businesses and startups. To prevent unexpected financial losses and provide continued customer support, they decided to tighten loan credit requirements, while requesting detailed information during loan processing. This strategy gained them a 98% repayment rate.

What Led to Pivo’s Shutdown?

Pivo’s shutdown announcement created a buzz in the Nigerian tech ecosystem, as it occurred shortly after its Y Combinator funding in 2022. Insider information, yet unconfirmed by involved parties, presented a co-founder conflict which disrupted the company dynamics and working conditions. The co-founders were friends turned business partners. While this threatened Pivo’s survival, concerned investors revamped existing guidelines to ensure business continuity. However, the enforced measures didn’t last as the business eventually closed its doors to customers in December 2023.

Both co-founders have declined conversations with news outlets, and have given no further information on customer transition. PayDay, a Nigerian fintech startup, reportedly had co-founder conflicts. It also occurred after raising $3 million in funding. Like Pivo’s case, a co-founder was fully involved in running another business.

Final Thoughts on Pivo’s Closure

Although Nigeria’s financial sector has proven to be a hostile ground for small businesses and startups, its abrupt regulatory policies would be little compared to issues caused by internal conflict. Sixty-five per cent of startups reportedly fail due to founder conflicts, often within two years of business - as with Pivo’s case.

Situations like these can be avoided by signing founder agreements prepared by appropriate legal parties. Founders should make user-driven decisions, and amicably settle disagreements, taking care not to cause a public smear for the company. Third-party facilitators can contribute unbiased information in such disagreements and are recommended for startups.