BlackCopper, a Nigerian digital lending startup backed by Techstars, has found itself mired in debt, owing investors over ₦1 billion after failing to recover loans from customers. Founded in 2020 with the promise of providing collateral-free loans to small and medium businesses, the startup quickly ran into trouble, with over 60,000 disbursed loans largely unrecovered.
Initially celebrated as a disruptor in Nigeria’s underserved lending market, BlackCopper’s business model has faltered due to defaults and what its CEO, Olumuyiwa Faulkner, calls a “funding mismatch.” Customers reportedly falsified information during the onboarding process, while others simply defaulted, leaving BlackCopper to chase small loans of ₦5,000 to ₦10,000—a costly and inefficient process.
The company’s woes have had severe ripple effects. BlackCopper has laid off 30 of its 40 employees and managed to repay only ₦200 million of the ₦1.2 billion owed to investors in the past 18 months. Investors, many of whom were promised returns based on the strength of BlackCopper’s risk assessment model, have expressed frustration over Faulkner’s lack of transparency. Some have even questioned whether the loans were genuinely disbursed, given the staggering level of non-performing loans (NPL).
Faulkner denies allegations of fraud but acknowledges mistakes in managing the business model. He attributes the crisis to short-term funding pressures from investors, who benchmarked their returns against fluctuating treasury bills and foreign exchange markets. These pressures, he argues, forced BlackCopper to halt lending, removing customers’ incentive to repay their loans.
Compounding the frustration, Faulkner relocated to Canada, citing his wife’s education, leaving some investors feeling abandoned. He maintains, however, that he remains committed to addressing BlackCopper’s financial issues and exploring new revenue streams, including using the company’s technology to build apps for other businesses.
As Faulkner contemplates fundraising and pivoting, the future of BlackCopper remains uncertain. Investors are left grappling with a harsh lesson in the risks of digital lending in an environment where defaults are high and incentives to repay are weak. While Faulkner insists the market remains viable, critics argue that the barriers faced by traditional lenders were warnings fintechs should have heeded.
