A group of over 100 investors owed by Abuja-based digital agro-investment firm, Thrive Agric, has asked the platform to pay nearly N50 million owed in overdue investments or face legal action.
In a group statement sent to BusinessDay, the investors said they were compelled to seek legal redress given that the management of Thrive Agric has consistently breached promises made to clear the backlog of payment that go back to March 2020.
“They kept on giving us updates that the farms were doing fine. They kept on promising that the poultry was growing. They did a photoshoot on farms. Meanwhile, in May 2020, Eje Uka, the CEO of Thrive Agric told investors with due payments in March 2020, that they were unable to pay because of offtakers. This means that there are people they have been owing since March,” said a spokesperson for the investors.
As an agro-investment startup founded in 2016, Thrive Agric enables investors to support agricultural ventures by investing in farms at specific seasons. Those who invest earn a return on their investments depending on the duration and the amount they invest.
Investments on Thrive Agric mature between three to nine months and returns range from 6 percent to 25 percent. The company got accepted into US-based early-stage venture capital firm Y Combinator, where it was able to access $150,000 in 2019. So far, the company has received $170,000.
The impact of the COVID-19 pandemic has affected the fortunes of virtually every company in Nigeria and around the world. However, for Thrive Agric the problem preceded the pandemic era. Sources close to the company told BusinessDay that it started experiencing some internal challenges from the beginning of the year. Some investors also said Thrive Agric had some outstanding payments to make in 2019 which they failed to do and by March they had not paid up in full.
Read more Three investment risk lessons from Thrive Agric’s revenue struggles
Several investors who knew there was trouble opted for a 6-month and 9-month short term investment with Thrive Agric with the hope they would get their money back.
“We had students preparing for post-graduation crisis, a pregnant woman who is due in October, business people who took loans for their businesses and will lose their collateral if they do not get their money back,” the spokesperson said. “But Thrive Agric did not tell us anything; not until about September 29, when agitations started increasing on social media. This is largely because investments made in March were now due for September, and those in April will be due in October, and so on.”
When BusinessDay reached out to Uka Eje in September after some investors took to social media to agitate for their payment, he assured that “everyone will get paid but it is just the timing.” But payment will depend on the outcome of its cash inflow.
“We need to make sure that we measure cash inflows so that we can have a conversation and let them know when they are going to get their money back, which might be in the next couple of months. We don’t want to promise and then we go back. That can be quite upsetting,” Eje told BusinessDay.
Eje said much of its problems came from offtakers refusing to make payment and the COVID-19 made it even worse. An offtaker refers to a party who buys the product being produced by the project or who uses the services being sold by the project (farm produce). The project output buyer can be an independent third party or an affiliate of the project sponsor.
In an email sent to one of the investors which BusinessDay saw, Eje claimed the impact of the pandemic was such that it paused its crowdfunding subscription campaigns to protect subscribers.
“Our business has been hit very hard. All of these factors have had a ripple effect through the organisation and reduced operations will below normal levels. In summary, the combination of more expensive inputs, restricted distribution, and constrained markets reduced business earnings. Like many others around the world, nothing prepared us for this unpredictable challenge,” Eje said in the email.
While the pandemic affected every business, investors said in the case of Thrive Agric, communication was very sparse in coming. After several emails, texts, calls, messages, deleted social media comments, Thrive Agric finally sent a mail informing investors that they should wait for 12-24 months before they will get their money.
The investors finally met to take a decision on the way forward on Saturday 3 October 2020. There are two classes of affected investors; those whose funds are due and are yet to be paid, and those whose investments will be due soon. The decisions reached the meeting include that, for those in the first class, Thrive Agric has a five-day ultimatum to pay or face legal consequences. For those in the second class, Thrive Agric will need to write and sign a legal note that the investments expected will be paid immediately it is due without delay.
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