Asher's Blog

Yesterday, I received an email from a company whose product I once used.

The company was shutting down. Customers would be moved to another provider for the remainder of their subscription periods, and the product would no longer continue as an independent business.

I am deliberately not mentioning the company’s name. This is not an autopsy of people who attempted something difficult, and I do not know everything that happened inside the business. Running a company is hard, and any founder who has carried salaries, investor expectations, customer obligations and personal uncertainty should be slow to mock someone else’s ending.

But the email made me think. The company had gone through Y Combinator and raised a Series A in the tens of millions of dollars. I cannot now remember whether the amount was $15 million, $30 million or $40 million, and the exact number is not essential to the lesson. It had access to enough capital to attract attention and create the appearance of considerable momentum.

I had paid approximately $1,200 for an annual subscription. After using the product for a year, I did not find it useful enough to renew.

That was the signal that mattered. The company’s fundraising announcement said that sophisticated investors believed in its future. My cancellation said that at least one customer did not receive enough continuing value from its present product. Both facts could be true at the same time, but only one of them was connected directly to the company’s ability to survive without raising another round.

Fundraising can hide a bad business. It can also hide a good idea with a weak product, a useful product with the wrong economics, or a promising company that has not yet found its durable form. Capital does not tell you which one you have. It gives you more time to find out.

Fundraising is not the product

The startup world often celebrates fundraising as though the company has completed the work.

A round is announced; the founders are photographed. The amount is converted into naira, and everybody remarks on how enormous it is. The company becomes part of a list of businesses to watch. Talented people apply, potential partners return calls and the founder is invited to speak about success.

Fundraising does matter. It is difficult to persuade investors to commit capital to an uncertain future, and the ability to raise can be evidence of vision, credibility and strong communication. Capital allows a company to hire, build technology, enter markets, survive experiments and move faster than operating cash flow would otherwise permit.

But fundraising is not customer value; an investor is purchasing a possibility. A customer is paying for usefulness now.

The investor may be correct that the market will become enormous. The customer may still find the current product unnecessary. The founder may tell a persuasive ten-year story while the company struggles to justify next year’s renewal. A large bank balance can temporarily allow those contradictions to coexist.

That is why fundraising can create a dangerous illusion. The company appears successful because it has money, even though it has not yet developed a reliable mechanism for making money.

Capital can postpone the verdict

Without external capital, the market delivers feedback quickly. If customers will not pay, the company cannot hire. If margins are negative, cash disappears. If retention is poor, the founder must replace departing customers continuously. The business encounters the consequences of its weaknesses almost immediately.

Venture capital changes the timing. It allows the company to operate ahead of its current revenue and invest in a future that does not yet exist. That is the purpose of venture capital, and it can be extraordinarily useful when the company is learning quickly and moving towards a large opportunity.

But the same capital can subsidize the absence of progress. The company can employ a large team before it understands the product. It can acquire customers whose revenue will never repay the cost of acquiring and supporting them. It can enter several markets without succeeding deeply in one. It can offer discounts that create usage but not willingness to pay. It can keep an unimportant product alive for years because there is enough money to postpone the final judgment.

Capital does not remove the verdict of the market. It can only delay it.

Eventually, the company must raise again, generate sustainable cash, be acquired or close. When funding conditions change, problems that were previously hidden by the bank balance become visible at once.

Africa has already seen this story

African startup funding is now substantial enough for us to examine it without romanticism.

Partech reported that African technology companies raised approximately $3.2 billion in equity and debt financing in 2024, including about $2.2 billion in equity. That capital supported serious innovation across financial services, health, commerce, logistics and energy. It also demonstrated that investors increasingly believe valuable technology companies can be built on the continent.

Yet access to capital has never guaranteed endurance. Nigeria-founded genomics company 54gene reportedly raised about $45 million across its funding rounds before winding down in 2023. The company pursued an important mission around African genomic data and also built significant COVID-19 testing operations during the pandemic. When the testing opportunity receded, the company faced leadership changes, layoffs and financial difficulty before entering liquidation.

Kenyan logistics company Sendy also raised more than $20 million while attempting to build technology-enabled fulfilment and delivery infrastructure across Africa. It later reduced staff, sought an acquisition and wound down after being unable to secure sufficient additional capital.

These examples should not be simplified into “the companies were bad.” Biotech and logistics are difficult, capital-intensive sectors. Market conditions changed, and information available outside the companies is incomplete. Both companies attempted to solve real African problems and built capabilities that required courage.

The narrower lesson is that money raised cannot answer the final business questions.

Do enough customers care? Can the company serve them at sustainable economics? Can the model survive when capital becomes less available? Does the organization learn and adapt quickly enough? Is there a viable route from today’s product to an enduring institution? No fundraising announcement can answer those questions permanently.

Money can make weak signals look strong

The more capital a company has, the more carefully its leaders must interpret growth.

Suppose a company spends ₦500 million to acquire customers who generate ₦100 million in gross profit and then leave. Revenue increased, customer numbers grew and the brand became visible, but value was destroyed.

Suppose another company gives customers a service below its true cost. Usage may grow quickly because the company is paying part of the customer’s bill. If pricing later rises to a sustainable level and most customers disappear, the earlier growth did not prove product-market fit. It proved that people like subsidies.

Capital can purchase downloads, discounts, publicity, expansion and even revenue. It cannot purchase durable customer need.

This is why founders must separate market signals from spending signals. A market signal tells you customers return, pay, expand their usage, recommend the product and experience real difficulty when it is unavailable. A spending signal tells you activity increases when the company puts more money into producing it.

Both can matter, but they are not the same. The company I mentioned earlier had persuaded me to pay $1,200. That was a real sale. But when I chose not to continue after one year, that was another piece of information. Acquisition proved that the promise was compelling enough once. Retention would have proved that the value remained compelling after experience.

In subscription businesses, the second proof is often more important than the first.

Runway is not progress

Founders frequently calculate runway: how many months the company can continue operating before the money runs out.

Runway is necessary, but it can be misunderstood. Eighteen months of cash does not mean the company has made eighteen months of progress. It means the company has eighteen months in which progress must occur.

The real question is what must become true before the end of that period.

Must retention improve? Must gross margin become positive? Must the enterprise product be completed? Must the company reach a certain recurring-revenue level? Must one market demonstrate repeatable acquisition? Must operating costs be reduced? Must a regulatory approval be obtained?

If those milestones are unclear, runway becomes a countdown rather than a strategy.

Paul Graham describes startups as being “default alive” or “default dead.” A company is default alive when its current trajectory allows it to reach profitability before its cash runs out. It is default dead when it will require additional capital to survive if nothing material changes.

Many venture-backed companies are deliberately default dead for a period because they are investing aggressively in growth. That is not automatically irresponsible. The danger is failing to know which condition you are in, or assuming that another fundraising round will arrive simply because the previous one did. Capital markets do not owe a company continuity.

The round can become the strategy

Another danger appears when fundraising becomes the founder’s primary skill and attention. The company begins planning from one round to the next. Metrics are selected for their appeal to investors. Product decisions are timed around the next pitch. Growth that looks impressive in a deck receives more attention than the quiet work of making customers stay.

The founder becomes excellent at explaining the future and increasingly distant from the present.

Fundraising should finance the strategy; it should not become the strategy. The purpose of a round is not to reach the next round. It is to create capabilities and results that make the company fundamentally stronger. The capital should help the company discover or deepen a sustainable advantage: superior technology, distribution, regulatory access, proprietary data, brand trust, network effects, efficient operations or a product customers increasingly depend on.

If the money is gone and none of those things is stronger, the company has spent capital without building leverage.

Raise from leverage, not desperation

At Eazipay, we have raised less than $5 million. That is meaningful capital, but it is not an unlimited amount, particularly when building financial and employer infrastructure in Africa.

I know we will need more capital to pursue the level of ambition we have. Capital allows us to build better technology, hire exceptional people, serve larger organizations and enter new markets. I am not against fundraising. I want us to raise more.

But I want us to raise with leverage. Leverage means the company has evidence that makes the opportunity difficult to dismiss. It may be strong recurring revenue, improving retention, excellent margins, important enterprise customers, proprietary technology, regulatory positioning or distribution that a new competitor cannot reproduce quickly.

I was extremely happy when we signed our first enterprise customer with thousands of employees. It was not merely because the contract increased revenue. It gave us evidence that our product and organization could be trusted at a larger scale. It also forced us to raise our standards.

One enterprise customer is not the destination, but it changes the quality of the story. It moves the company from “we believe this can work” towards “this is beginning to work at a level that matters.”

That is the kind of progress I want capital to accelerate. The best time to raise is not necessarily when you have no need for money; few growing companies ever reach that condition. It is when you possess enough evidence and optionality to negotiate without accepting any terms simply to remain alive.

Desperation is expensive. It produces excessive dilution, unfavourable rights, rushed decisions and distraction. Leverage gives the founder choices.

Africa makes capital discipline more important

Building in Africa creates a particular tension. The market opportunity is enormous, but purchasing power can be limited. Infrastructure gaps increase operating costs. Currency devaluation can make dollar-denominated growth appear weaker. Local debt is often expensive, while foreign equity can be highly dilutive. Later-stage capital is more difficult to obtain than early enthusiasm, and investors may require proof that would be demanded much later in a more established ecosystem.

A founder must therefore be ambitious and financially disciplined at the same time.

This is harder than repeating “stay lean.” Some businesses cannot be built cheaply. Financial infrastructure, logistics, healthcare and manufacturing may require technology, licences, working capital, risk systems and experienced people before revenue reaches scale.

The correct goal is not permanent smallness; it is intelligent expenditure. Spend heavily where spending builds a durable advantage. Be conservative where spending merely creates appearance. Know which roles are essential at the present stage. Understand the cost of every product promise. Match long-term commitments with dependable funding. Build more than one route to survival where possible.

At Eazipay, we are not trying to build an unambitious company merely to keep costs low. We are working on structures that allow us to continue pursuing large goals without placing the entire company at the mercy of the next funding conversation. Some parts of that strategy are naturally private, but the principle is simple: ambition should be financed deliberately.

Running out of money does not only create a spreadsheet problem. It creates emotional pressure, family pressure, employee pressure and business pressure. Under that pressure, founders make decisions they would reject under better conditions. Cash buys more than time; it protects judgment.

Be brutal about the reality

Large fundraising can make it emotionally difficult to admit that the original idea is not working.

The company has hired employees around the thesis. Investors approved it; the founder has repeated it publicly. Changing direction can feel like admitting that everybody was wrong.

But the purpose of capital is to discover a business, not to defend a presentation.

If retention is consistently weak, ask why. If customers like the product but will not pay enough to support it, examine the model. If one part of the product is valuable while the rest is ignored, consider narrowing the company around the valuable part. If customers use the product for an unexpected purpose, investigate whether they have found a better market than the founder originally imagined.

The answer may be to improve the existing product. It may be to add adjacent services, change the customer segment, alter distribution, combine with another company or pivot more substantially.

But a pivot is not random movement. Adding several unrelated features because the first product is weak can waste the remaining cash even faster. Every new direction should be based on accumulated customer evidence, the company’s capabilities and a market large enough to justify the change.

The question is not, “What else can we build?” It is, “What have we learned that gives us an unfair chance of building something customers will value?”

Know when an acquisition is a good ending

Not every company must become independent and enormous to create value. Sometimes the best outcome is an acquisition. A larger company may have the distribution, capital or complementary product required to make the technology useful at scale. Customers can receive continuity, employees may retain meaningful work, and investors may recover or multiply capital.

Founders should not treat this outcome as shameful merely because it differs from the original ambition.

However, selling under severe financial pressure is different from building strategic acquisition options early. When the company has almost no cash, poor retention and no competing alternatives, the acquirer controls the conversation. If the founder recognizes the limits of the independent business earlier, there may be time to build relationships, demonstrate strategic value and negotiate from a better position.

Try to end with a good story. A good story does not always mean a billion-dollar valuation. It can mean customers were protected, employees were treated honestly, valuable technology found a home and investors received the best outcome still available. It can also mean the company closed responsibly rather than continuing to consume money while pretending recovery was certain. The quality of an ending is part of the founder’s work.

Multiply capital by building value

I feel a deep responsibility towards investors. Capital entrusted to a founder should be treated seriously. We should work to multiply it, not merely spend it.

But multiplying capital does not mean chasing valuation announcements. Valuation is a price assigned during a financing event. Value is what the company has built that customers, acquirers or public markets will continue to pay for.

Value can appear in recurring revenue, cash flow, intellectual property, regulatory permissions, customer relationships, data, operational capabilities and a brand that retains trust. A high valuation without these foundations can disappear during the next round. A company with genuine value has more options even when the funding market is difficult.

Investors understand that venture capital involves risk. A founder cannot honestly guarantee that every investment will succeed. The responsibility is to make disciplined decisions, report the truth, protect remaining options and refuse to use new capital merely to hide old problems.

You do not multiply capital by raising more capital. You multiply it by converting capital into an asset or business worth more than the resources consumed to create it.

A practical test after fundraising

After raising a round, founders should ask a set of questions that fundraising excitement often postpones:

• What must be demonstrably true before we raise again?
• Which metric would still look good if we stopped subsidizing it?
• Are customers renewing because of real value or because switching is temporarily inconvenient?
• Does serving an additional customer improve or worsen our economics?
• What have we learned that competitors cannot easily purchase?
• Which expense is building enduring capability, and which is maintaining appearance?
• If no investor funded us again, what would we change today?
• Are we using capital to accelerate evidence or to avoid evidence?
• What adjacent opportunity is supported by our customer relationships and capabilities?
• What are our acquisition, restructuring or orderly wind-down options if the independent plan stops working?

These questions do not make a founder pessimistic; they make ambition more durable.

You are not alone

There are founders who will work for five years without seeing the outcome they imagined at the beginning. They will raise money, lose deals, rebuild teams, change products, face currency shocks and wonder whether perseverance is courage or denial.

There is no slogan that makes this easy. What I can say is that you are not alone. Running a business is genuinely difficult, and building in Africa adds constraints that many global startup stories do not adequately describe.

Keep working, but do not use hard work to avoid the facts. Stay close to customers. Protect cash. Keep the company capable of learning. Collaborate where another business has what you lack. Sell early enough to create options. Raise when capital can accelerate something real. Reduce costs before the situation becomes irreversible. Pursue acquisition if it produces a better outcome. Continue trying, but make every attempt more informed than the last one.

Fundraising is useful; it can expand ambition and compress time. It can finance experiments that operating revenue could never support. Many important companies would not exist without it.

But money cannot make customers care. It cannot repair bad economics merely by increasing volume. It cannot turn weak retention into product-market fit or replace the difficult work of deciding what the company should become.

A large round can make a company look healthy while the underlying business remains unresolved.

Do not confuse the ability to raise with the ability to endure. The round is not the result. It is a responsibility and a period of time in which you must produce the result.

Use it well. —

References and further reading

• Partech, 2024 Africa Tech Venture Capital Report.
• BusinessDay Nigeria, “Investor confidence takes hit as promising African startups fail”.
• TechCabal, reporting and analysis on the wind-down of 54gene and the closure process at Sendy.
• Paul Graham, “Default Alive or Default Dead?”.
• Ben Horowitz, The Hard Thing About Hard Things.
• Eric Ries, The Lean Startup.
• Annie Duke, Quit: The Power of Knowing When to Walk Away.