Nigerian fintech start-up, Paystack is downsizing its team outside Africa, starting with the layoff of 33 employees in Europe and the UAE, where it has an engineering hub.
“We’re changing our operating model to prioritize locating team members within the markets we serve, to localise costs and get closer to customers,” says Shola Akinlade, co-founder and CEO of Paystack.
The depreciation of currency in Africa, particularly in Nigeria—Paystack’s primary market— has posed a difficulty for numerous startups.
These companies secure investments in foreign currencies, such as US dollars, while generating most of their revenue in local currency. Subsequently, they face the challenge of covering software costs and salaries [of foreign team members] in dollars.
Earlier in August, Femi Iromini, co-founder and CEO of Moni told Rest of World that “Before the [currency float in Nigeria], we were reporting our revenue at $1 per ₦500. This changed to $1 per ₦700. That’s a 40% dip for most startups.”
The affected employees will receive a four-month salary as a severance package, as well as a three-month insurance cover.
“These are some of the most talented people I’ve ever worked with, and my goal is to ensure that every single one finds new roles as soon as possible,” Akinlade said while announcing what he described as “a difficult day at Paystack”.
The layoff at Paystack comes exactly a year after its parent company, Stripe parted ways with 14% of its workforce as part of efforts to reduce cost.
According to Stripe CEO, Patrick Collison, “We grew operating costs too quickly. Buoyed by the success we’re seeing in some of our new product areas, we allowed coordination costs to grow and operational inefficiencies to seep in.” Recall that in 2020, Stripe acquired Paystack in a $200 million deal, making it the biggest acquisition in the Nigerian startup ecosystem. Cadbury Nigeria Shrinks Amid 81% Drop in Equity Capital