Lidya, the Nigerian-founded digital lender, has ceased operations, informing customers it is in “severe financial distress” and “no longer able to continue in business.” The closure of the once-promising fintech, which had raised $16.45m from investors including Alitheia Capital, Accion Venture Lab, and Flourish Ventures, follows a period of intense internal turmoil, operational failure, and an unresolved legal dispute involving one of its co-founders.

In an email to customers, the company stated it “is unable to process funds or settle claims at this time,” confirming fears from users who had reported frozen funds and failed transactions for months.

The company’s collapse brings a dramatic end to a venture launched in 2016 by Jumia alumni Tunde Kehinde and Ercin Eksin. However, the partnership at the top fractured significantly, culminating in a dispute that highlights a worrying trend of founder-investor conflicts destabilising African startups.

While Lidya’s 2021 announcement of its $8.3m pre-Series B round stated that co-founder Ercin Eksin had “left Lidya to pursue other projects,” with Tunde Kehinde taking over as sole CEO, Eksin later publicly refuted this.

In a statement that has since gained prominence, Eksin alleged he was forced out. “I didn’t leave Lidya to pursue other projects,” he stated. “The existing investors took control of the company in an unjust manner. Therefore, I’m currently litigating them in the U.S.”

Eksin, whose LinkedIn profile shows he left the company in 2023, is now COO at a Swiss firm. The litigation he referenced adds a complex layer to Lidya’s downfall, suggesting a breakdown in governance and alignment long before the financial distress became public.

Operational Unraveling

Following Eksin’s departure, Lidya’s operational trajectory became erratic. The company had expanded into Europe in 2020, launching in Poland and the Czech Republic, but abruptly exited both markets in 2023 to “refocus on Nigeria.”

This pivot included the launch of Lidya Collect, a loan recovery platform. However, the product was beset by problems. Customers reported that the platform, designed to streamline debt collection, was failing, locking up their funds and forcing them to manually recover debts. “It’s been a horrible few months just trying to recover our money,” one affected customer told Techpoint Africa earlier this year.

The internal unravelling accelerated in 2024. Lidya’s Portugal-based tech team was reportedly disbanded between May and September after the company failed to meet payroll obligations. This was followed by the departure of Chief Technology Officer Cristiano Machado in September and, critically, co-founder Tunde Kehinde in October 2024, leaving the company without its founding leadership in its final months.

A Pattern of Costly Conflicts

Lidya’s case repeats a pattern we are seeing with increasing frequency. Its failure joins a growing list of high-profile African startups that have faltered or collapsed after intense disputes between founders and investors.

• Capiter (Egypt): The B2B e-commerce startup, which raised $33m, was liquidated in 2022 after its investors ousted its founders, Mahmoud and Ahmed Noah, alleging mismanagement of funds and failure to engage with the board.
• HealthPlus (Nigeria): Founder Bukky George was removed as CEO of the pharmacy chain following a protracted dispute with investor Alta Semper, which had invested $18m. The conflict, which involved multiple court cases, ended with the company’s acquisition by mPharma in 2022.
• iProcure (Kenya): The agritech, which had raised over $17m, fell into administration last year. Its co-founder, Alex Carcoforo, partly attributed the collapse to investor pressure to “professionalise” by hiring expensive management, which inflated the wage bill by 130% and derailed the company’s path to profitability.

These incidents often share common themes: a breakdown of trust, misalignment on growth strategy versus cash burn, and costly legal battles that consume critical resources and management focus.

While not all founder removals are contentious — Kenya’s Twiga Foods, for example, saw founder Peter Njonjo step down in a more managed transition — the trend of acrimonious ousters is proving particularly damaging. As Y Combinator co-founder Paul Graham has argued, professional managers brought in to replace founders often lack the “founder mode” of innovation and adaptability, a dynamic that appears to be playing out with destructive consequences in Africa’s startup ecosystem.

For Lidya, the U.S. litigation alleged by Eksin remains an unresolved footnote. But for its customers, employees, and investors, the company’s shutdown is a stark warning of how internal conflict can prove just as fatal as market competition.