EkoRent Africa, the Finnish owner of the startup that pioneered an electric taxi-hailing service called NopeaRide, is winding up its operations in Kenya after four years.
In a press statement, NopeaRide, which means ‘fast ride’ in Finnish, said that it will be closing down for good. The company expressed its “deepest sympathies to our dedicated team of staff and drivers,” after covid ravaged its operations and funding shortfalls hijacked its expansion plans.
In 2021, NopeaRide announced that it would increase the number of cars in its fleet from 30 to 100 as part of a growth strategy. But by the time it closed shop on Nov. 28, it had only 70 electric cars. A funding round that NopeaRide hoped would help it bounce back to pre-covid profitability levels failed to materialize.
“Many of the additional vehicles arrived in Nairobi just about the same time when the strict covid-19 curfew rules were put in place in March 2020,” the company’s statement said. “Those rules led to daily kilometers driven by Nopea vehicles dropping approximately 60% overnight.”
Why NopeaRide failed in Kenya
Starting off in August 2018 with three EVs and two charging stations in Nairobi, NopeaRide created a network of charging stations, imported dozens of electric cars, and by June this year, it had driven more than 4 million kilometers, helping Nairobi cut over 650 tons of carbon emissions, according to company data.
Over the years, NopeaRide has been receiving several rounds of funding, but the money has not proven sufficient to run a sustainable business. PIDG Technical Assistance provided $80,000 in 2020 to support the startup’s first solar-powered charging hub in Nairobi, and an additional $80,000 grant to support long-term growth. One investment came from a €200,000 ($206,000) financing round led by EEP Africa for piloting solar EV charging stations in Kenya, which would allow EkoRent Africa to determine how to scale across the rest of east Africa. NopeaRide was also one of the beneficiaries of the UK’s clean energy investment plan through its partner InfraCo Africa, which signed an agreement with EkoRent Africa to offer $1.2 million in financing for NopeaRide.
But with covid lockdowns confining taxi customers at home, NopeaRide’s revenues dwindled as the Kenyan economy struggled to recover from the pandemic in 2020 and 2021.
NopeaRide said it used that period of low business activity to refine its algorithms. And as the electric motorbike business started gaining traction in Nairobi earlier this year, NopeaRide jumped onto the bandwagon, building e-motorbike battery swapping stations in the city. Still, it struggled to break even, so it discontinued the project.
But other electric mobility startups continue to thrive in Nairobi. These include BasiGo, Roam, EVM Africa, and Caetano. The government, through public power companies Kenya Power and KenGen, is also investing in the sector.
Nairobi’s startups are going through a rough tide
NopeaRide only becomes the latest startup to affirm the results of a 2015 Fortune survey, which shows that 90% of startups collapse within their first five years. NopeaRide now joins a growing list of startups that have run into stormy weather in Nairobi.
“Businesses failing happens daily,” said Sheila Birgen, a startup coach and mentor at Pan-African Innovation Community. “The death rate is even higher for startups, in any country. The Kenyan startup ecosystem isn’t exempted. What we need to discuss is local founders getting pre-seed funding to also experiment. That is the issue.”
In June, Kune Foods, which attempted to offer Nairobians affordable meals through online delivery, folded after just one year. Its CEO Robin Reecht, just like EkoRent Africa’s CEO Juha Soujanen, cited the inability to raise more funds as the main reason for shutting shop.
In July, the agritech startup WeFarm closed down. Its failure was followed by that of Notify Logistics in September. The previous month, Sendy, a startup trying to provide logistics services to Africa, cut its workforce for the second time by 20%. Sky Garden, an e-commerce platform modelled on the Nigerian Jumia, has also found it rough navigating the startup world in Kenya, due to financing hurdles.