News: Five months after, South Africa’s Cleanup Startup, shuts down its Nigerian and Kenyan businesses

SweepSouth

South Africa-based on-demand home cleaning startup, SweepSouth, has shut down its Nigerian business which it opened in June 2022 five months after it commenced operation. This is just as it also closed it Kenyan businesses which it opened in 2019.

According to techcabal.com, former SweepSouth employees who spoke to TechCabal said the company’s decision to end operations in Nigeria and Kenya took them by surprise. One source told us that the company only told them about the decision a few hours before they were disconnected from company systems.

SweepSouth launched in South Africa in June 2014 as an “Uber for cleaning services”, and raised an undisclosed seed round in 2015. With a presence across three South African cities, SweepSouth’s proposition was to help city dwellers find experienced cleaners at low prices. The startup charged as little as $3/hour at launch, and in 2016, it raised $600,000 from investors to expand across South Africa. While it didn’t announce a further funding round until late 2022, it is likely that the company raised money earlier, as it coincided with the beginning of a regional expansion. It launched in Egypt, Nigeria, and Kenya within a three-year window.

READ: The CEO of South African Start Up Airline Lift says adapting to flexible business model key to surviving pandemic

Half-hearted expansion fuels uncertainty
In 2019, SweepSouth began expanding across Africa. First, it acquired FilKhedma, a home services marketplace, in its best-thought-out expansion move. In Nigeria and Kenya, it opted to build from scratch.

One source who spoke to TechCabal anonymously for fear of reprisals said that SweepSouth’s expansion to Nigeria and Kenya was half-hearted. Our source told us that operational setups in the new countries were often shoddy. “In these countries, there were constant budget and headcount cuts which meant uncertainty and constant firefighting. There was also a culture of bureaucracy that meant that basic things for operational setup were never done.”

A crucial part of expanding its service was website redesigns for an international market and keeping the peculiarities of each country in mind. Sources said that the company moved slowly to get the right technology, leading to delays in launching apps for the new markets and unstable websites. Eventually, these delays and problems would lead to closing these new markets.

When asked about the decision to close its business in Nigeria and Kenya, the company said in an email, “We are always evaluating operations in each of the markets we’re in and their contribution to the overall business. We made the difficult strategic decision to take an operational pause in looking at the short- and medium-term unit economics in Nigeria and Kenya. There were also market-specific factors relating to currency devaluation in Nigeria and slowed economic growth expectations that we considered when making these difficult decisions.”

Employees caught off-guard by the closures
When SweepSouth announced that it secured $11 million in funding in September, many thought the startup would double down on its expansion. Instead, what followed, according to former employees who spoke off the record, was less enthusiasm from the company’s leaders. SweepSouth’s top management routinely missed all-hands meetings for their new operations. There were also changes in business projections that were not communicated.

One source told TechCabal “They told our team about the closure on a Friday, and less than two hours after the email, we were removed from all systems. We were on the receiving end of insults from customers, and were called names; our cleaners were confused by the suddenness of the closure too. Refunds also had to be given to people who had paid in advance, and that took a while. A lot of those refunds were not done until December.”

In an email to TechCabal, SweepSouth did not deny that employees were locked out of company systems hours after they were told about the decision to end operations. The company said in the email that “reserving access to company data is standard security practice internationally during such a period, and a prudent choice given our responsibility to protect customer information”.

On the claim that it did not make refunds to some customers until weeks after closure, SweepSouth’s email to TechCabal did not say how long it took to make the refunds. Instead, their email said they “made the announcement with enough notice to continue bookings for a few weeks after that. Once we reached the date in question, reconciliations were done for customers who had outstanding balances on the system, and they were refunded.”

SweepSouth CFO leaves the company amid layoffs
There were rumors that the company’s Chief Financial Officer (CFO) has left the company, and other unconfirmed reports of layoffs within the business, with one source claiming that at least 30% of staff across Egypt and South Africa were fired.

TechCabal can now confirm those reports. According to SweepSouth, in addition to laying off its Kenya and Nigeria teams, layoffs “affecting other team members.” Our CFO recently left the company due to long-discussed plans to relocate to Europe.” The company did not comment on the number of employees laid off.

Ultimately, it feels like a familiar tale of employees left to hold the bag while a startup rolls out the now-familiar excuse of the economy and broader macroeconomic conditions. While SweepSouth says it supported team members and carried them along in the decision to close operations, former employees insist that that is an incorrect version of events.

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