Edukoya, a Nigerian education technology startup lauded for raising the largest pre-seed funding round in Africa for an idea-stage venture, has ceased operations, just shy of its third anniversary. The company, which secured $3.5 million in its initial funding in 2021, confirmed the closure in a statement to stakeholders, citing insurmountable challenges in market readiness and macroeconomic conditions.

The Lagos-based venture, founded in May 2021, aimed to revolutionise online learning for K-12 students in Africa, offering digital educational content and tutoring services. Founder and Chief Executive Honey Ogundeyi, a serial entrepreneur with a strong track record in both business and technology, was the driving force behind Edukoya. Prior to this venture, Ogundeyi founded Fashpa, a Nigerian fashion e-commerce business, and held significant roles at major international firms including McKinsey & Company, Ericsson, and Google. Notably, she also served as the first Chief Marketing Officer at Kuda Bank, a prominent Nigerian neobank. Her inspiration for Edukoya stemmed from her own experiences navigating the Nigerian education system and subsequent studies in the UK, where she observed a stark quality gap between African and Western education. “Even the most brilliant students can be let down by the system,” she stated in a 2021 interview, highlighting the deeply personal motivation behind Edukoya’s inception.

Backed by an impressive pre-seed round led by European VC firm Target Global, alongside prominent angel investors including the founders of Kuda Bank and Paystack CEO Shola Akinlade, Edukoya garnered significant attention even before fully launching its platform. This substantial early investment reflected investor confidence in Ms. Ogundeyi’s vision and execution capabilities, as well as the perceived potential of the African edtech market.

This initial funding round, however, casts a long shadow when examined against Edukoya’s subsequent financial performance. While the $3.5 million injection in 2021 promised a strong launchpad, balance sheets from 2022 onward reveal a starkly different reality: a company consistently operating with net liabilities, a situation barely reflecting a substantial equity boost.

Balance Sheet Data Paints a Troubling Picture: Financial data reliably gleaned by Launch Base Africa, from Edukoya’s balance sheets for the years ending March 31st, 2022, 2023, and 2024, reveal a consistent and concerning trend. Even in 2022, a year after the purported $3.5 million raise, Edukoya presented a net liability of £353,881. This immediately begs the question: where was the impact of the significant funding? While cash reserves in 2022 stood at a seemingly robust £1.4 million, the overwhelming picture was one of financial imbalance.

This imbalance didn’t improve; in fact, it demonstrably worsened. By 2024, Edukoya’s net liabilities had ballooned to £511,332. Year-on-year, the company’s financial position deteriorated, with net liabilities increasing from £353,881 in 2022 to £441,539 in 2023, and further to £511,332 by 2024. This consistent negative equity trend is a stark indicator that Edukoya’s operational model was fundamentally unsustainable, despite the initial capital infusion.

Decreasing Assets, Stagnant Debt, and Potential Cash Burn: Further analysis of the balance sheets reveals other worrying trends. Current assets, a measure of liquid resources, steadily declined from £1.64 million in 2022 to £1.45 million in 2024. This suggests a gradual erosion of the company’s financial reserves, potentially indicating a high cash burn rate as Edukoya struggled to achieve profitability.

Adding to the financial strain is a large and stubbornly static long-term debt of £1,948,714 across all three balance sheets. This massive, unchanging liability casts doubt on the nature of the $3.5 million funding. Was it truly equity, or was a significant portion structured as debt, contributing to this persistent burden? The presence of such a dominant long-term liability, unchanged despite supposed substantial funding, significantly hampered operational flexibility and financial maneuverability.

Despite its ambitious mission and initial investor enthusiasm, Edukoya stated it faced significant obstacles in scaling its “synchronous learning model” — a real-time, interactive approach to online education. In a message to stakeholders, the company detailed key impediments including “market readiness challenges,” “widespread connectivity issues,” “limited access to devices,” and constrained “disposable income” within its target market. Broader macroeconomic headwinds further exacerbated the situation, hindering mass adoption of its services.

Operational Signals in the Financial Data: Beyond the headline figures, specific data points raise further questions about Edukoya’s operational effectiveness. While short-term creditors fluctuated, the decrease in “Accruals and Deferred Income” from £12,360 in 2023 to just £1,450 in 2024 is particularly noteworthy. If “Deferred Income” represented pre-paid revenue for future services, this sharp decline might indicate a weakening sales pipeline and reduced future revenue visibility, signaling operational struggles in customer acquisition and revenue generation.

Edukoya reported achieving some notable milestones. The platform claimed to have onboarded over 80,000 students, facilitated over 15 million answered questions, and conducted thousands of daily live classes. The company also integrated artificial intelligence into its platform, although details of this application remain scant.

However, these figures were ultimately insufficient to ensure long-term viability. Facing a challenging operational landscape, Edukoya’s management concluded that winding down operations and returning remaining capital to investors was the most prudent course of action. The balance sheets starkly illustrate that operational activity, while present, failed to generate the financial health required for long-term survival, especially when burdened by significant liabilities. “Rather than deplete resources chasing scale in a challenging market,” the company opted to halt operations, indicating a recognition that achieving venture capital-style returns was no longer feasible for this particular model in the current climate.

While the exact amount of capital being returned is undisclosed, one investor, speaking anonymously, praised Ogundeyi’s decision. They told Techpoint Africa, a technology news publication, that the move “demonstrates an ability to recognise when market forces make VC-scale outcomes unviable and return investor capital, thus upholding investor confidence.”

Edukoya’s closure comes after a period of reported internal adjustments and strategic considerations. Sources indicate the company explored partnerships, mergers and acquisitions, and various business model pivots in an attempt to navigate the challenging market. Reports also emerged of layoffs and the closure of its physical office over six months prior to the shutdown announcement, suggesting underlying financial pressures.

Adding to the complexity surrounding Edukoya’s final months are persistent rumours of a strategic shift towards fintech. Reports circulated about “Koya App,” a platform focused on financial literacy and savings for children, linked to the Edukoya team. While Edukoya vehemently denied a pivot to fintech, clarifying that Koya App was a separate initiative, the timing and personnel overlaps fueled speculation about a potential diversification strategy gone awry. Whether resources were diverted or strategic focus diluted by this parallel project remains unclear, but industry observers suggest it could have contributed to the company’s ultimate struggles within its core edtech offering.

Edukoya’s rapid ascent from an idea-stage startup to a heavily funded venture, and its subsequent demise, serves as a stark reminder of the complexities and inherent risks in building technology businesses in nascent African markets. Despite securing significant early-stage funding, a strong founder profile, and addressing a clear need for improved educational access, the company ultimately succumbed to a confluence of infrastructural deficits, economic realities, and potentially strategic missteps.