Kloud commerce, a Nigerian startup, has ceased operations after it was reported that founder Olumide Olusanya had mismanaged and misused company funds.
After securing a year-long $765,000 in pre-seed funding to build a multi-channel commerce solution for African businesses, the direct-to-consumer (D2C) startup has shut down operations following a series of disputes that paralyzed her for months.
According to a long investigation room published by WeeTracker, the company’s investors have asked the Economic and Financial Crimes Commission (EFCC) to open an investigation into the embezzlement of the founder and CEO.
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In a petition written by some investors, he alleged that the founder of the company had misappropriated funds from the company, referring to an account audit suggesting that the founder had misappropriated various sums of money invested in the startup for personal projects, as well as personal expenses on the business. accounts and lavished investors’ money on expensive hotels and car rentals on dodgy trips outside Nigeria.
One of the company’s investors said: “He was and still is a huge disappointment. A former accountant left after being pressured to do unethical things. I believe he mismanaged the funds we invested and deceived us as investors. It’s very rare for a founder to spend close to a million dollars and not be able to produce even a minimum viable product.
Earlier this year, the CEO of Kloud announced that the startup had received several offers from Omni, a B2C solution, and GoDigital, a B2B product. The founder also mentioned that the startup is already powering retail sales for 10 global brands, like Nike and Adidas in Nigeria and Ghana.
In December 2021, the founder told investors that one of his products had gone live in 800 sites in Ghana and Nigeria. According to an investigation, it was discovered that all these claims of progress by the CEO were all fake as he did all this to attract more money from investors.
The plaintiffs also accuse Olusanya of carrying out fraudulent activities within the company, in addition to an inflated payroll of employees working on non-existent or non-performing products, the investors also allege that Olusanya misappropriated company funds to personal purposes.
Olusanya reportedly withdrew $4 million ($9,000) as an “entertainment allowance” between August and September 2021, as well as $22 million ($50,000) for publicity events in Ghana where he spent $100 /night in hotels. An angel investment of $15,000 was also reportedly paid into the founder’s accounts.
Investors reportedly tried to remedy the situation earlier this year by removing Olusanya as CEO, a deal the founder initially agreed to but changed his mind at the last minute and told employees that the investors had attempted to perform a “hostile takeover” and then attempted to fire the employees. despite the wages due.
Some of the backers, including the one who expressed some initial reservations, say they were encouraged to increase their investments in Kloud Commerce by the periodic investor updates they received from DO, which painted a picture of impressive growth but which turned out to be largely false.
Following all these allegations, the CEO of Kloud, Olusanya, has not yet responded, but is said to be liquidating the company to settle its debts or at least some of them according to reports.