The Angani saga isn’t quite over, ousted founders allege unpaid debt

dollars

The main actors of the rather troubling Angani saga that raised uncomfortable questions of startup governance in East Africa’s most vibrant technology ecosystem seem to have moved on. Angani appears to have resumed business as usual, while the estranged founders, Phares Kariuki (CEO) and Brian Muita (CTO) moved on to a start new cloud venture that does pretty exactly the same thing, and called it Node Africa, to massive acclaim and an outpouring of support and solidarity from the Kenyan technology ecosystem.

But not all has been settled. There is still the small matter of an unpaid debt of $50,000.

This is not just any debt. It’s a loan from the mother of one of Angani’s original founders, Brian Muita, which was extended to the startup to help get it off the ground in the early days. An email exchange which was confidentially made available to TechCabal revealed that with interest, the total sum comes to $62,000.

In the email, which was addressed to multiple stakeholders, including but not only Brian Muita, Erik Hersman, Miguel Granier and Riyaz BachaniPhares Kariuki alleged that only one payment of $2,000 had been made to date.

Erik, Miguel and Riyaz, who are on the Angani end of the controversy didn’t say much in the email thread. Indeed, in the correspondence that TechCabal has seen (more might have occurred since we first received it), the only reply came from Erik, which was to say that the email thread wasn’t the proper forum to get into, and that both Phares and Brian as directors have a way to bring up issues internally.

Phares and Brian however had strong words for Angani’s management, whom they say ignored several attempts to address the issue internally.

“This is a matter of principle”, Phares said. “There’s a debt that was given to the company that bought storage amongst other expenses that the business is making use of now. It was agreed that repayments were to start in October. When we were kicked out, only one was processed. The only reason the loan was extended to the business was because Brian was there. We’ve never been given severance pay or any of the ‘benefits’ Erik/Riyaz/Miguel spoke of, we’ve not even asked for them, but this is daylight robbery.”.

According to Phares, the loan was applied to staff salaries, operational costs, and storage that is still in use by Angani.

Understandably, many in the Kenyan technology ecosystem would like to put the Angani episode behind them. However, one of the questions that this new twist brings up is whether Angani is still operational. Since the incident, the company has largely gone quiet. The last few times it’s said anything, on its blog or Twitter, was to inform the public that services had been restored. There doesn’t even seem to be any of the usual customer relationship management activity going on on its Twitter feed. A lot of Kenyan startups were affected by the November 2015 outage, and in the weeks that it took for Angani to resolve the situation, many, if not all, were forced to find other cloud hosting providers.

In email and phone conversations with Riyaz Bachani, who is currently at Angani’s helm (his LinkedIn profile reads “founder and COO at Angani”), Riyaz maintained that the company has been operational since services were restored in November, and is meeting its obligations to its clients.

He acknowledges the loan from Brian Muita’s mother, but says Angani is not in default.

“Angani is fully committed to repaying this loan. It is not due yet, and Angani is not in default”.

Citing confidentiality reasons, Riyaz did not give a specific due date for the repayment. However, he said that in general terms, the loan is not due for more than a year.

The major bone of contention seems to be over a number of pre-exit negotiations between the founding duo and Angani. In a separate conversation, Phares told TechCabal that because of the personal nature of the loan, the repayment terms were left open-ended, but when the founders were shown the door, one of the conditions for leaving was that the loan be repaid. According to that arrangement, the default currently stands at $14,000. Phares says that before he left, there were bank instructions in place to ensure that the loan was serviced regularly, but that the Angani’s current management must have pulled the orders.

Clearly, Angani’s management didn’t consider itself bound by those conditions. According to Riyaz, “discussions around an earlier payment plan did take place, but were never confirmed, since Phares and Brian failed to execute or agree on the severance term agreements that would have facilitated this.”

However, Riyaz confirmed that the company made a payment on 4th December, 2015.

The amount of money Angani has raised to date is not public knowledge, but people close to the matter believe it might be in the region of half a million dollars. Known investors are Savannah Fund and Invested Development to which Erik Hersman and Miguel Granier are affiliated respectively, as well as Africa Angels Network (now CRE Ventures).

At the moment, it is not clear how the loan impasse will be resolved. This story will be updated with more information as it comes.