Six months following a successful $3 million seed funding round spearheaded by Moniepoint, Payday, the Nigerian fintech startup, has begun engaging in discussions with potential buyers.
This development was verified by Favour Ori, the CEO of PayDay, who confirmed the company’s active involvement in conversations with prospective acquirers. “Active conversations are being had with people who reached out and expressed interest in buying,” Favour told reporters.
In March, a notable publication reported on discussions involving Moniepoint’s potential acquisition of Payday. Privately, a journalist from that publication mentioned that they anticipated the deal would be finalized within three months.
“Favour himself leaked the news,” a source close to the situation said. “[i]Moniepoint had issued a letter of intent to acquire Payday, contingent upon specific performance benchmarks being met. It was a matter anticipated in the near future[/i].” But by May, there was no update about the deal.
A highly placed member of PayDay’s management said the company was open to being acquired before its seed round. Despite this openness to being bought, the Moniepoint deal did not go through, with one source claiming that Moniepoint’s board was not keen on the deal. One source at a VC with equity in Moniepoint claimed that they first heard about the potential acquisition of PayDay in the media. Despite Moniepoint pulling out of the deal, TechCabal confirmed that talks to sell the company are ongoing.
A wave of bad press may have complicated attempts to sell the company. In August, PayDay acknowledged that it suspended access to customer accounts after it noticed some customers had lost funds to fraudulent activities. While an employee familiar with the matter refused to disclose how much was lost, they admitted that PayDay temporarily disabled access to several accounts to recover funds stolen by people who exploited a loophole in Payday’s infrastructure that enabled currency arbitrage. “The company didn’t publicly acknowledge that it had restricted accounts until a prominent blog accused the company of misappropriating customer funds,” a source told TechCabal.
As the company pushed back on bad press, it also had to deal with internal issues.
Current and former employees said PayDay slashed salaries of some Nigerian staff in July—three months after the $3 million raise. “They told us that it was because the company wanted to be domiciled in Nigeria and was obligated to pay its resident employees in Naira,” a current employee said. While employees expected the Naira equivalent of their salaries to align with their dollar salaries, the actual amounts fell short, amounting to 30-50% reductions. The company said the cut was necessary to adjust the wages of employees in Nigeria to the regular pay for such roles in the country. A highly placed source claimed that less than 10 of the company’s 60 staff were affected and that PayDay planned to assign stock options to the employees as further compensation. PayDay employees told Techcabal that the stock options that were promised had not materialised.
The displeasure of employees was complicated by the fact that Favour, who shuttled between Rwanda and the U.S maintained his monthly salary of $15,000. “I went months without a salary before we raised it,” Favour said. “After we did, I earned $15,000, but that has been slashed to reduce the burn rate.”
The salary reductions were implemented concurrently with the departure of several employees, among them co-founder and Chief Operating Officer (COO) Ogechi Obike. Obike’s departure was attributed to a misalignment of goals, as stated in her exit note.
Notably, three individuals who are both current and former employees recounted instances of heated disagreements between Obike and Favour during meetings.
“During meetings, he provoked arguments, particularly when she proposed alternative approaches different from his own,” said a company insider. The same source claimed Obike was omitted from conference calls involving service providers, investors, and other stakeholders. A source at PayDay’s management denied these claims and said that Favour often had praise for Obike, and she left by mutual agreement.
