The African graveyard of failed startups is littered with once-promising ventures. But for some founders, failure has proven to be a crucial stepping stone to subsequent success. These founders, having weathered the storm of collapse, have emerged with valuable lessons, adapting their strategies and approaches to build more resilient and focused businesses.
In 2023, William McCarren faced a crossroads. Zumi, the startup he co-founded with Mohamed Nuur, Sabrina Dorman, Tomas Rosales, and Eric Njogu, was on the brink of collapse — for the second time. After laying off 150 employees, many of whom had come from top companies such as SpaceX, Amazon, Twiga, and Jumia, the Kenya-based firm bid farewell to its over 5,000 clients, who had generated more than $20 million (Sh2.6 billion) in revenue.
Zumi began in 2016 as a women-focused digital magazine but shut down shortly after revealing plans to pivot to e-commerce. The startup had reportedly raised about $250,000 in funding from UAE-based Majlis Investment and other investors. However, Zumi struggled with low digital advertising revenue, a common issue for digital media businesses. With insufficient funding, it shut down once, and then permanently in 2023.
Now, McCarren is back with a new venture — FARO, a South Africa-based recommerce startup — which recently secured $6 million in funding to expand operations aimed at reducing textile waste and making fashion more affordable across Africa. The investment round was led by JP Zammitt, President of Bloomberg, alongside venture capital firms like Presight Capital and Garage Ventures. Prominent angel investors such as Mato Perić (MPGI), Leonard Stiegeler (Pulse), Oliver Merkel (Flink), Vikram Chopra (Cars24), and Tushar Ahluwalia (Razor Group) also participated. The funding will primarily be used to scale FARO’s operations, with an ambitious goal of expanding its retail footprint to 1,000 stores within a decade.
FARO’s value proposition lies in repurposing unsold or returned inventory from global fashion brands like ASOS, Boohoo, G-Star, and Levi’s, reconditioning these items with industrial facilities, and selling them at discounts of up to 70% in African markets.
McCarren’s new venture starkly contrasts with Zumi. First, he relocated from Kenya to South Africa, which has a larger e-commerce market. Second, FARO controls the entire supply chain. While Zumi operated as a B2B e-commerce platform empowering retailers and suppliers in the apparel business — handling online sales, delivery, and payment — FARO is setting up pop-up stores. Four stores have already launched, generating $100,000 in their first month and proving the model’s scalability. Within a year, the startup achieved $2.3 million in revenue, demonstrating 20x growth, according to the company.
Just as with Zumi, McCarren is relying on a strong team with experience at industry leaders such as Amazon, Jumia, and Superbalist. However, FARO benefits from lessons learned: Zumi struggled with over-experimentation — pivoting unsuccessfully from a lifestyle media platform to an e-commerce business. In contrast, FARO is laser-focused on transforming surplus and returned fashion items into affordable, high-quality clothing for African consumers. FARO sources inventory at ultra-low prices — sometimes as little as £1 per item — through partnerships with global fashion brands, emphasizing profitability and operational efficiency.
This focus on margins addresses a key challenge in African e-commerce, where operational costs often outweigh returns. Jumia, for example, reported a $20.1 million operating loss in the third quarter of last year. FARO’s careful selection of investors, including JP Zammitt and high-profile venture capital firms, signals a strategic approach to both execution and future fundraising efforts.
For Nigerian founder Abdulhamid Hassan, the business model was not the central issue in his transition from his first startup, OyaPay, to his latest venture, Mono. In 2019, OyaPay, a Nigerian fintech startup, shut down barely a month after its first anniversary. The B2B company helped small businesses get paid, manage operations, and take orders ahead of time. However, unresolved family investment problems caused the startup’s untimely collapse.
“OyaPay was a lesson for me,” Hassan said in a recent interview. “It helped me understand what kind of investors to bring into the company — not necessarily in terms of entrepreneurship, but in terms of trust and alignment.”
Since OyaPay, Hassan has founded two companies — Voyance and Mono — which have raised millions in funding from leading global venture capital firms, including Tiger Global, Target Global, General Catalyst, and SBI Investments. By avoiding emotion-driven family investments, Hassan has found more stability in his ventures.
In Kenya, Erik Hersman, the CEO of the now-defunct hardware and services tech startup BRCK, has embarked on a new journey with Gridless, a bitcoin mining startup backed by Jack Dorsey’s Block. BRCK, which was the first company to pursue ground-up design and engineering of consumer electronics in East Africa, developed the BRCK connectivity device, designed to work in harsh environments with unreliable electricity. The device could support up to 40 connections, had an 8-hour battery life during outages, and switched seamlessly between Ethernet, Wi-Fi, and 3G.
The initial BRCK units began shipping in 2014, and by 2015, thousands had been sold across 54 countries. BRCK was a spin-off from Ushahidi, a Kenyan technology company acclaimed for its open-source software tools. BRCK also signed a Memorandum of Understanding with Kenyatta University in 2015 to collaborate on technological solutions and capacity-building efforts.
Despite these achievements, BRCK shut down in 2022 due to funding issues and difficult market conditions. The startup had raised $3 million in 2016 from investors, including former AOL executives Jean and Steve Case, along with TED, MKS Alternative Investments, and others. This was in addition to $1.2 million in seed funding raised in 2015. However, the Moja platform, developed to monetize digital work and provide internet connectivity, failed to gain traction.
Now at Gridless, Hersman is tackling a bigger challenge in the global crypto community: decentralizing bitcoin mining. “Most people think about bitcoin as a way to save or spend value,” Hersman told CNBC last year. “But none of that happens without bitcoin miners and global distribution.”
In 2022, Gridless secured $2 million in seed funding led by Stillmark and Block, Inc., with additional participation from Factor[e]. The funds will support the expansion of bitcoin mines across Africa. Unlike BRCK, Gridless takes a more focused approach, addressing a single global problem — an approach Hersman acknowledges was lacking in his earlier ventures, which juggled multiple products and objectives.
Raised in Kenya and Sudan by linguist parents, Hersman’s technical expertise and local insight remain invaluable assets in his entrepreneurial comeback.
In Egypt, Nader El-Batrawi’s ride-hailing startup Ousta had a brief but eventful run. Founded in 2015, Ousta styled itself as Egypt’s first local ride-sharing app. It raised $1.25 million in bridge funding in 2016 to challenge industry giants Uber and Careem. However, this amount paled in comparison to the massive funding behind its competitors.
Despite expanding to 14 cities and building a network of 10,000+ drivers and 400,000 active riders, Ousta faced insurmountable competition. The 2019 merger between Uber and Careem, valued at $3.1 billion, sealed Ousta’s fate.
After Ousta, El-Batrawi found refuge in Jobzella, a professional job board startup. “The majority of our shares have been acquired by the Saudi group ‘Al Khaleej Training and Education,’ the largest training and education network in the Middle East,” El-Batrawi said. Unlike the cutthroat ride-hailing industry, Jobzella operates in a relatively stable space with less competition.
For Kenyan entrepreneurs Mesongo Sibuti and Tesh Mbaabu, the challenges faced by their B2B marketplace RejaReja (under MarketForce) have informed their new venture, Chpter. RejaReja shut down in 2022, despite raising $40 million in Series A funding from leading investors like V8 Capital Partners, Ten13 VC, and SOSV Select Fund.
MarketForce, initially a SaaS platform for FMCGs and financial institutions, pivoted during the pandemic to a B2B marketplace targeting neighborhood merchants. The pivot led to significant milestones: expansion to 21 cities in five countries, the creation of over 800 jobs, and nearly $160 million in gross transaction volume.
However, MarketForce struggled with the “funding winter” and the venture capital landscape’s harsh realities. “Venture capital isn’t for good or even great companies,” Mbaabu said. “It’s for those that produce outsized returns at the right time.” When expected funding didn’t fully materialize, MarketForce faced financial strain.
With Chpter, Sibuti and Mbaabu are focusing on helping online merchants turn social media channels into sales platforms using chat, order, and payment tools. Unlike RejaReja, Chpter has adopted a subscription-based model to ensure predictable, recurring revenue. The startup operates in Kenya and South Africa and recently raised $1.2 million in pre-seed funding from investors including Pani, Plesion Capital, Techstars, and angel investors like Nala founder Benjamin Fernandes.
Chpter’s founders seem to have learned from past mistakes by emphasizing certainty and sustainable growth. The introduction of subscription revenue and transaction fees reflects a more measured approach to scalability.
The Bottom Line
The stories of these African founders offer a powerful reminder that failure is often a stepping stone to success. Each of them faced immense challenges — whether from underfunding, market miscalculations, or unforeseen crises — but their resilience, adaptability, and willingness to learn propelled them forward. They embraced hard lessons, pivoted when necessary, and redefined their strategies with clarity and focus.
What sets these entrepreneurs apart is not just their ability to recover, but their commitment to building better and more sustainable ventures. From William McCarren’s pivot to a recommerce model with FARO to Erik Hersman’s focused efforts at Gridless, these founders exemplify the importance of innovation, market understanding, and the right team. Their stories are a testament to the grit required to navigate the complexities of entrepreneurship, especially in Africa’s unique business landscape.
For aspiring African founders, the message is clear: setbacks are inevitable, but they are not the end of the road. With the right mindset, an openness to change, and a determination to solve meaningful problems, failure can become the foundation for remarkable success. These founders have shown that in the face of adversity, the best way forward is to rise, rebuild, and do things differently.
