Eri Noju, a startup founder, caused quite a stir earlier in the year when he went on Twitter and volunteered details of how he pulled off a risky maneuvre that involved pouring the bulk of a USD 200 K pre-seed raise into the notoriously uncertain and perpetually volatile cryptocurrency market.
A group of apparently risk-loving investors were somehow talked into signing off on an unconventional undertaking that pushed 65 percent of a startup’s pre-seed funding into bitcoin and nano. Noju told WeeTracker that they had done their homework, and a total of USD 130 K was invested (or basically gambled?) in crypto - USD 50 K in bitcoin and USD 80 K in nano. Quite some effort at putting money where the mouth is, no?
Well, the 27-year-old rookie founder behind BigeriaExchange, a fledgling crypto startup in Nigeria, did manage to pull it off, claiming to be “up USD 650 K in profits as of May after exiting some positions while holding others.”
But it could have just as easily gone sideways. Bitcoin, for example, endured a drop in excess of 80 percent of its value in the first half of 2018, and to think bitcoin is one of the most stable of the cryptocurrencies.
That kind of plunge could be disastrous: No startup wants to see its working capital suddenly shrink to less than a fifth of what it’s supposed to be, more so if the capital shrinkage had nothing to do with the ultimate exercise of, you know, actually building something.
Even with impeccable, faultless execution, nothing is ever fully certain in crypto, as Noju himself pointed out. Hence, the founder’s revelations were received with pairs of opposing sentiments: intrepid/smart or reckless/foolhardy, among stakeholders in the local tech ecosystem.
Apparently, crypto is great for startup endeavour, but maybe not the Noju-led iteration of it. And indeed, a more wholesome and perhaps more ideal brand of ‘cryptocurrency-in-startup-dealings’ is now seeping into African tech, at least in angel circles.
