September 20, 2023 at 4:26 PM #57395justseyiKeymaster
TechCabal Exclusive: Nigerian Fintech PayDay Seeks Sale Six Months After $3M Raise
According to sources, many of Favour Ori’s decisions seemed sudden and unexpected. “There were instances when we would wake up to discover upcoming features through Twitter, and even the product team had no prior knowledge of these developments,” one person said. “At times, he would suddenly take control of the company’s social media account to respond to customer complaints.” An employee insisted that Favour’s behavior was typical of founders in the early stages and not necessarily odd or worrisome.
Months after securing $3 million in funding, Nigerian fintech startup PayDay is actively exploring the possibility of selling the company. Favour Ori, the CEO, confirmed that PayDay is engaging in discussions with potential acquirers. “Active conversations are being had with people who reached out and expressed interest in buying,” Favour told TechCabal.
In March, one publication reported that Moniepoint was in discussions to acquire PayDay; a journalist at that publication privately mentioned that the deal was expected to close in three months. “Favour himself leaked the news,” one source close to the situation said. “Moniepoint had issued a letter of intent to acquire PayDay, contingent upon specific performance benchmarks being met. It was a matter anticipated in the near future.” However, by May, there was no update about the deal.
A high-ranking member of PayDay’s management indicated that the company had been open to acquisition even before its seed round. Despite this openness, the Moniepoint deal did not materialize, with one source suggesting that Moniepoint’s board was not enthusiastic about it. A source at a VC firm with equity in Moniepoint mentioned that they first heard about the potential acquisition of PayDay in the media. Nevertheless, TechCabal confirmed that discussions regarding the sale of the company are ongoing.
A series of negative press reports may have complicated efforts to sell the company. In August, PayDay acknowledged suspending access to customer accounts after discovering that some customers had lost funds due to fraudulent activities. While an employee with knowledge of the situation did not disclose the exact amount lost, they admitted that PayDay temporarily disabled access to several accounts to recover funds stolen by individuals who exploited a loophole in PayDay’s infrastructure enabling currency arbitrage. “The company didn’t publicly acknowledge that it had restricted accounts until a prominent blog accused the company of misappropriating customer funds,” a source informed TechCabal.
As the company dealt with the fallout from negative press, it also faced internal challenges.
**Contentious Salary Adjustments at PayDay**
Both current and former employees revealed that PayDay reduced the salaries of some Nigerian staff in July, three months after securing $3 million in funding. “They told us that it was because the company wanted to be domiciled in Nigeria and was obligated to pay its resident employees in Naira,” a current employee said. While employees expected their Naira salaries to be equivalent to their dollar salaries, the actual amounts fell short, resulting in reductions of 30-50%. The company stated that the salary adjustments were necessary to align with typical pay rates for such roles in Nigeria. A high-ranking source claimed that less than 10 of the company’s 60 staff were affected and that PayDay intended to compensate them with stock options. However, PayDay employees informed TechCabal that the promised stock options had not materialized.
Employee dissatisfaction was compounded by the fact that Favour, who divided his time between Rwanda and the U.S., continued to receive his monthly salary of $15,000. “I went months without a salary before we raised it,” Favour said. “After we did, I earned $15,000, but that has been reduced to reduce the burn rate.”
These salary reductions coincided with the departure of several employees, including co-founder and Chief Operating Officer (COO) Ogechi Obike. Obike’s departure note cited a misalignment of goals as the reason. Three current and former employees described meetings where Obike and Favour clashed. “During meetings, he provoked arguments, particularly when she proposed alternative approaches different from his own,” said a company insider. The same source claimed that Obike was excluded from conference calls involving service providers, investors, and other stakeholders. A source within PayDay’s management denied these claims, stating that Favour often praised Obike, and her departure was by mutual agreement.
**Favour Ori’s Management Style**
Several individuals indicated that Favour had a tendency to recruit top talent from well-known startups, primarily through social media. However, once recruited, he often restricted their ability to implement their own ideas, instead compelling them to conform to his directives, effectively stifling their expertise. A member of PayDay’s management, requesting anonymity, countered some of these claims, saying, “The team is dealing with a lot, and everyone is stressed. I don’t know that anyone left because they were dissatisfied.”
The impulsiveness of the company’s founder sometimes came at a cost. Some customers experienced financial losses while attempting to create virtual cards, and others encountered difficulties accessing their accounts. “All of this happened because Favour abruptly switched from our previous Mastercard provider to a new one, with minimal to no prior vetting. As soon as the switch happened, we were inundated with a wave of customer complaints,” said an employee to TechCabal. The company asserts that it has reimbursed all affected customers.
Recently, Favour has reduced his involvement in the company. “He is no longer as active as he once was on the company’s Slack channel, except for a few occasions when he drops messages in the engineering channel,” a source informed TechCabal. Additionally, it was disclosed that while he is occupied with attempts to sell the company, Favour has been working full-time at GitHub. “Early in the year, during a team hangout, Favour showed us his GitHub work ID when introducing himself, implying that PayDay was a side hustle.” Furthermore, PayDay’s co-founder, Elijah Kingson, is employed at the London-based fintech company Revolut. Both co-founders declined to comment.
September 21, 2023 at 7:53 AM #57407Esther AmadiModerator
If Nigerian banks did the right thing. Fintechs like payday won’t be stressing us like this. Not to talk of CEO’s like Favour Ori
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