Kenyan buy-now-pay-later (BNPL) startup Lipa Later has been placed under administration after failing to raise the necessary funding to continueoperating as a going concern.
Founded in 2018, Lipa Later aims to empower African businesses to do more by enabling e-commerce, financial inclusion and shopping all on one centralised and fully integrated platform. The startup offers consumer credit, working capital and e-commerce solutions for merchants.
The startup raised US$12 million in funding in 2022, and then US$3.4 million from a privately-placed debt issuance in September 2023. That December, it acquired online retailer Sky.Garden for KES250 million (US$1.6 million), revamping its platform with new features to launch a rebranded e-commerce ecosystem.
Lipa Later said at the time of its US$3.4 million debt round that it was targeting more funding, but given the global capital shortage that has failed to materialise, ultimately leaving the company unable to pay employees and suppliers. One such example of the latter saw Lipa Later taken to court last year by London-based consultancy firm Africa Foresight Group (AFG), which sued the company over an unpaid US$13,516 consultancy fee.
The company has now been placed under administration, effective March 24, with Joy Vipinchandra Bhatt from Moore JVB Consulting LLP appointed administrator.
The legal process of being put under administration provides a financially-challenged company with “breathing space”, freeing it from creditor enforcement actions while any possible financial restructuring takes place to rescue the company as a going concern, where possible.
This may take the form of a sale to an unrelated party, but if the company cannot be reasonably saved, the administrator will aim to achieve a better return for creditors than would be likely if the company were wound up without first being in administration. If an administrator fails to revive or sell the company, it will consider liquidation as a final resort to ensure creditors recover at least some of their money.
In the case of Lipa Later, creditors have until April 23 to submit claims.
“We are currently engaging all key stakeholders of the company to elicit their cooperation in order to achieve the best possible outcome for the company,” Bhatt said.
Lipa Later is just the latest Kenyan commerce-focused startup to experience financial difficulties amidst the global funding winter. Copia was placed in administration last May, and MarketForce closed down its B2B e-commerce platform RejaReja.
