It is now common knowledge that African native crypto startups have endured a difficult year. Nestcoin, for instance, had to lay off staff in November. Another platform, Fluidcoins was acquired while controversies have continued to follow the eventual shutdown of Lazerpay and Patricia was a victim of a breach that resulted in a loss of funds.
But how do you explain the instance of raising a significant sum, embarking on a ‘loud’ marketing campaign, precipitating recruitment and ‘international web3 standard remuneration’ to a series of staff layoffs, salary reductions, top executive disagreements on the mode of company’s operations and prospects that has led to resignation – all within a year.
That is the story of the African crypto exchange, Mara.
Mara’s beautiful start
In May 2022, Mara announced that it had completed a $23 million seed round in equity and token sales from multiple investors which included top crypto and web3 investors like Coinbase Ventures, Alameda Research (FTX) and Distributed Global.
Founded by Chi Nnadi in 2021, the pan-African crypto exchange announced its mission to “increase the number of Africans who can participate in the crypto economy.” It set out to build a suite of products that address various crypto-finance needs for the African audience.
Now basking in the euphoria of raising arguably the largest round at that stage for an African crypto/web3 company, Mara went all out on a huge-scale marketing campaign on its mission to become the portal to the crypto economy for the African population.
Armed with $23 million, what followed was a massive marketing and PR campaign. The company sponsored crypto events, predominantly the 2022 Afro Nation Ghana event. It also sponsored the Ghanaian national football team, the Black Stars, to the 2022 FIFA World Cup in Qatar. According to the President of the Ghanaian Football Association, the sponsorship deal was worth $1 million.
According to our sources, the company sponsored celebrities and influencers to wear the Mara jerseys at the 2022 FIFA World Cup in Qatar. The global stage promotion cost the web3 company between $10,000 – $15,000 per influencer.
Similarly, Mara hired student brand ambassadors on university campuses across Africa. It also employed influencers in the crypto space. In a bid to extend its presence and impact on the continent, Mara hired workers across Africa.
According to our source, the workforce rose to about 200 at some point. And, for some, a number of the hired team members occupied redundant positions. Yet, Mara paid handsomely, in line with the standards of international web3 companies.
Mara announced plans to launch the MARA Chain, a layer-1 blockchain and Alchemy-esque platform powered by the native MARA token for developers to build decentralised applications (dApps) in Q4 2022. It also announced plans to activate a pro-exchange for sophisticated traders in Q1 2023.
Of expensive hirings and layoff
According to ex-employees, Mara is guilty of overhiring and overpaying staff during the boom, and laying off the same under the guise of ‘team restructuring’ when they can no longer maintain the standard.
A source told Technext that the company informed its employees, in December 2022, that it needed to keep the team smaller because they had gotten the hype needed at that point and the next thing is to eliminate ‘unnecessary roles’.
“They said they needed to keep the team smaller, because they have set up a lot of things and done enough PR and marketing and have gotten the hype they needed and now they needed to lay off unnecessary roles,”the sources said…
Technext learnt that the company hired a number of staff members, especially in the Marketing department, in duplicated roles and paid them handsomely.
Our sources claim that Mara has had to lay off around 85% of its employees and cut the salaries of existing workers, disguising the action as the process of “elimination of redundant roles to move the company to its next phase.”
However, the employees that were laid off were compensated.
At this point, a top executive with a solid reputation in the Nigerian crypto space resigned from the company after a fallout with the management. The company was also forced to put the lofty plans it had on hold.
We learnt that in 2022, Mara financed a trip across the continent for one of its top executives that cost the company as much as $10,000 (apart from the fixed salary). As part of its marketing drive, the company also paid as much as $1000 to community leads in addition to their salaries.
Our sources indicated that some employees got very pissed at some point with the outrageous amount some workers and influencers were paid despite below-par performances.
Challenging times after the FTX crisis
The FTX debacle had adverse effects on a handful of crypto startups, and African natives like Nestcoin were not exempt. According to our source, Mara lost money to the collapse, although the extent is not clear as Mara did not confirm the details to Technext in its response.
The trouble with Mara started shortly after the collapse. According to our sources, shortly after, Mara was not making significant revenue to keep the company going except for streams from partnerships and investments, despite the huge marketing that was done.
We indicated earlier that Mara planned to launch its own blockchain and native token in Q4 2022. Recall that its cofounder Chi Nnadi declared earlier in 2022 that :
“It’s more than just being able to buy crypto; it’s about African engineers creating their [own] projects. We want to be the source for incubating talent; we want to give them the platform through our exchange to launch their projects.”
The plans came to a halt with the realisation that funds were drying up, revenue was not flowing as anticipated and importantly because money was lost to the FTX challenge.
When Chi founded the company in April 2021, the rest of the executive team included Llinás Múnera, Dearg OBartuin, Kate Kallot and board advisors Kojo Annan and Tatiana Koffman, former executives from Amazon, PayPal, Uber, Nvidia, Founders Bank and Rappi.
We learnt that the company has seen some recent changes in its leadership ranks. This is a likely pointer to some instability and possible change of direction.
With a significant population of workers laid off and a number of others departing of their own will, some of the ex-team members are speculating that the company may soon struggle for survival.
Technext reached out to Mara for its response to the developments.
The company did not provide answers to the specific concerns provided by our sources but it shared a statement to explain that in spite of having a tough period, it is reorganising its business to focus on strategic initiatives and support business sustainability while pivoting to be more than a crypto exchange.
Below is the statement by Mara’s spokesperson:
"Last year, Mara raised $23M to support our vision to help Africans build wealth. We launched MARA Wallet, which already has over four million verified users. We also launched the Mara Foundation, a non-profit dedicated to accelerating blockchain capacity-building in Africa. We still have plans that go beyond being a crypto exchange and will be announcing them soon. Our mission remains the same - we want to inspire a movement that enables the emergence of 21st-century Africa through universal access to blockchain technology."
EDITOR’S NOTE: This article was edited on the 6th of June 2023 at 11:15 AM to exclude unauthorised mention
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