On Thursday morning, TechCabal exclusively reported the sale of the crypto payments startup, Fluidcoins, to the UAE-based Blockfinex. However, reports from several sources close to the situation paint a picture of a complicated sale. An investor update sent by Lanre Adenowo, the Fluidcoins CEO, and seen by this publication, shows that the startup had run out of money and had to make a fire sale. Part of the statement reads, “We have a balance sheet deficit on Flip for ~$30K…[we are] unable to raise extra cash hence requiring us to either shut down or make a fire sale—went with this option. Shutting down wouldn’t cover item 2.”
There were some speculations that the sale of Fluidcoins was not approved by existing investors, but Joe Kinvi, an angel investor who spoke to TechCabal disputed this claim. Joe Kinvi told TechCabal that all investors were aware of Fluidcoins struggles and knew that the company was considering a sale. The sale considerations began after “the market moved against Fluidcoins,” Joe Kinvi added. Danny Oyekan, the CEO of Blockfinex, also said that he was told that investors knew about the deal.
But another investor close to the situation who spoke to TechCabal anonymously, claimed that even though they knew the business was struggling with liquidity crunch and considering selling, Adenowo ended up making “a uniform decision to sell a business whose stakes have been shared like it’s a sole-proprietorship.” He added that the company and its founder could have done a better job in carrying investors along.
Where does this leave investors?
Adenowo confirmed to TechCabal that Fluidcoins raised a total of $150,000 over the last 18 months of its existence. The startup’s cap table includes two syndicates, ten angel investors and one crowdfunding organisation. Fluidcoins raised $30,000 from a crowdfunding company. And according to a document seen by TechCabal, Fluidcoins raised $50,000 from two syndicates and $70,000 from 10 angel investors. The sale means that all the investors will walk away with no returns, one of the highlighted risks in venture capital investing.
One investor close to the situation told TechCabal that before a deal was agreed with Blockfinex, Fluidcoins had other offers on the table. A Nigerian open banking startup whose founder was an angel investor in Fluidcoins had reportedly offered to buy, and Payday, a cross-border remittance startup, had also reportedly offered to buy the company. The investor said both offers were acquihire deals, much like the Blockfinex deal, and that some of the offers included making Adenowo CTO of one of the acquiring companies, along with cash and equity. Both offers fell through.
TechCabal reached out to Lanre Adenowo but he declined to comment on any of the details contained in this report. Payday’s CEO, Favour Ori, also declined to comment on this story.
*This is a developing story.