Startups Crash, Founders Burn, Yet Investors Escape Scrutiny—But Should They?

For years, Africa’s tech startup ecosystem has celebrated its successes with fanfare but largely blamed founders when things go south while mostly overlooking the hand of investors in botched jobs. When a company collapses, the narrative is often framed as poor execution by founders, internal mismanagement, or unfavourable market conditions.

However, recent high-profile failures across sectors from fintech to e-commerce to biotech reveal a pattern in which investor silence, misaligned incentives, and even alleged sabotage have contributed to companies’ undoing.

The most striking example of this is the collapse of 54gene, where its founder, Dr. Abasi Ene-Obong, has, for the first time, spoken at length about how he believes investors actively worked against the company’s success; a point he had previously referenced, albeit in scant detail.

His revelations, combined with botches across other sectors, have reignited calls for investors to move beyond passive financing and embrace real accountability.

A Startup Killed From Within?

54gene was once the poster child of Africa’s biotech revolution. Founded in 2019, the Nigerian genomics startup sought to address the lack of African DNA in global pharmaceutical research. By 2021, it had raised USD 45 M, secured high-profile partnerships, and was on the cusp of a major breakthrough: A multi-million drug discovery deal that could have propelled it into global relevance.

Then, everything unravelled. A leadership shake-up, mass layoffs, and a bridge funding round that dramatically slashed the company’s valuation all signalled trouble. But, according to Dr. Ene-Obong, the company’s downfall wasn’t just the result of financial struggles; he claims it was deliberately engineered by some of its investors.

“We actually had a USD 200 M drug discovery deal, had a contract in hand, and we were going to get royalties on top of that,” he revealed on a recent episode of the entrepreneurship podcast, Founders Connect.

“But the company wasn’t allowed to take the money. Why? Because the hostile takeover had already started, and stopping growth was part of the strategy.”