Wala, South Africa’s blockchain startup has closed down, the startup’s CEO Tricia Martinez has confirmed in a blog post.
The company was founded in 2015 by Tricia Martinez and Samer Saab. It initially provided access to transactional banking, remittances, loans, and insurance, working with specialist providers to offer a full suite of financial services.
In 2017 the startup became crypto-focused with the launch of utility crypto-token Dala, which Wala hoped would support the operationalization and further development of scalable, blockchain-enabled financial platforms for emerging markets.
Wala did this by raising funding from Newtown Partners and with an additional US$1.2 million bagged through a token sale.
In September last year, the startup clinched the $100 000 grand prize in the Zambezi Prize for Innovation in Financial Inclusion. They secured over 150,000 users, mainly residing in Uganda, within months, but founder and chief executive officer (CEO) Tricia Martinez said it soon ran into problems.
In a post on Medium on 24 June titled “Dala: Where Things Went Wrong”, Martinez revealed that following eight months of trying and failing to secure funding, the startup had retrenched employees and turned off its app entirely.
Martinez reported in the post that in the first 4 months Dala token users grew faster than they could imagine. Through the Wala app (a mobile financial services platform), over 150K users, mainly residing in Uganda, signed up and began transacting with Dala. And users would sign up friends and family, transact and send payments to people and receive Dala rewards as an incentive; thanks to the Dala rewards model.
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“Rewards attracted scammers or people who figured out how to take advantage of a rewards system. This led us to change our rewards model multiple times and have to remove users who were abusing our system,” she said.
“The biggest problem we ran into was infrastructure. Our partners’ systems would regularly turn off due to internet problems or their own poor infrastructure, which meant our users were unable to transact, which was the biggest use case for Dala. This crushed our user engagement and most importantly trust in our system. It also forced us to expand the scope for Dala. We had to build even more infrastructure than we anticipated at the start.”
However, Wala’s main problem and the one that has finally forced the business to close was funding.
She said the startup survived off very little funding. This came after the company was able to raise just $1.2-million of the $30-million it aimed to net in an initial coin offering (ICO) in 2017.
Writing in the blog post: “We were able to make $1-million go a very very long way. With over 150 000 Dala wallets and more and more partners wanting to work with us we had a lot on our plate with limited resources. It came time to fundraise again and given our rapid growth I expected to find a number of people wanting to support this initiative. But I was wrong. I began fundraising at the start of crypto winter, which certainly didn’t help. For whatever reason, not many investors wanted to back a crypto company let alone a startup focused on African markets.”
“For eight months I traveled across the globe, pitching investors in blockchain, fintech, impact, African-focused… I met and engaged with over 100 investors, and despite our early growth numbers, we couldn’t secure the necessary financial support we needed to continue growing and operating,” she said.
Without the funding the startup had to start cutting back, turning off deposits and laying off most of its team, but on 24th June it turned off its app entirely.
“Our team was devastated, to say the least, and our users were upset. We provided a free financial payments system to consumers that solved a huge problem for them, but we didn’t have the funding to scale operations and solve the infrastructure problems that existed in these markets,” said Martinez.
Not many leaders in today’s companies are ready to acknowledge failure, but after her frank assessment of why the company had failed, Martinez encouraged readers to leave any questions they had for her below her blog. Stating that she wanted to be transparent about this because she believes it is important for people to learn from failure and bring light to the issues in emerging markets.
