The Next Wave: The unfinished business of a startup’s collapse
Copia and Koko expose distinct weaknesses in businesses built to solve costly problems, from Copia's need for sufficient margins and working capital to Koko's dependence on carbon-credit revenue and regulatory approval.
The collapse of two African startups, Copia Global and Koko Networks, highlights the vulnerabilities of funding models that do not account for operational costs and market risks. Both companies raised millions of dollars from international investors, but their financial struggles exposed the hidden costs of their business models.
Copia Global aimed to bring e-commerce to smaller towns in Africa by allowing local agents to sell goods online. However, the company's distribution model required significant investments in warehouses, logistics, and working capital. Despite generating revenue from carbon credit sales, Copia struggled to sustain its operations and ultimately entered administration in May 2024, with only a modest estimated value of assets remaining.
The High Court in Nairobi subsequently liquidated the company, prioritizing claims against its remaining assets.
Koko Networks, on the other hand, sold subsidised bioethanol stoves to households in Kenya. The company relied on carbon credit sales to cover costs, but the lack of government approval for its carbon credits in Kenya limited its market access. Koko Networks reported a significant loss in 2024, with accumulated deficits of £104.6 million ($132.8 million), despite a rise in turnover. The company entered administration in February 2026, with administrators struggling to find a buyer for its carbon credits.
These failures underscore the importance of considering all financial variables when evaluating a startup's viability. Funding alone does not guarantee a business's success. Companies must have sufficient working capital, manage operational costs effectively, and secure regulatory approvals to maintain a sustainable business model.
Investors should also be aware that even if a company appears successful, its assets may not be enough to cover all claims in the event of a collapse. The interconnected nature of global markets means that companies relying on international revenue streams must adapt to changing regulations and market conditions to ensure long-term sustainability.
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