Lagos startup filed Police complaint against GetEquity founders over unpaid funds

Peppa, a startup that offers escrow services to online shoppers, has filed a police complaint against Jude Dike and Temitope Ekundayo, the co-founders of GetEquity, a self-described “marketplace for private capital” that helps startup founders raise venture funding from retail investors.

The police complaint is related to $43,000 that Peppa had raised using GetEquity, three people with direct knowledge of the matter told TechCabal. Those sources confirmed that Ekundayo, GetEquity’s COO, was invited by the police and detained for two days in connection with the complaint. He has now been released, and GetEquity said it plans to institute legal action over his detention.

The Alagbon division of the Nigerian Police Force did not respond to a request for information.

GetEquity told TechCabal that the police complaint and the subsequent detention of its co-founder was an “intimidation tactic,” claiming the startup had already paid $29,000 out of the $43,000 raised by Peppa. GetEquity says it has now paid the outstanding amount owed.

“We approached GetEquity to help us collect money from angel investors as part of a small family and friends round,” said a source at Peppa who requested anonymity to allow them to speak freely.

According to the terms of that deal, GetEquity would collect these funds on behalf of Peppa and a commission for its service. “As our company had completed a Know Your Customer (KYC) process, our agreement stated that we could collect the money that had been raised whenever we were ready, and it would be wired to us,” said the person at Peppa.

Two people at GetEquity confirmed that Peppa completed the funding round in July. Yet, when the company tried to collect the money it had raised, GetEquity could not pay upfront and proposed a four-week payment plan instead. GetEquity later reneged on that payment plan.

GetEquity says FX volatility impacted ability to pay

“As a business, we’ve had to deal with high volatility in the Nigerian exchange rates,” said Dike, CEO at GetEquity. He explained that his startup receives funds from investors looking to back startups listed on the GetEquity app. Retail investments are deposited in several currencies, while the platform pays the funds to the associated startups in US Dollars.

He claimed that while the company makes provision for exchange rate volatility in the process, the “volatility of the Naira increased exponentially between 2022 and 2023.”

“You had situations where if the investor makes a payment today, it takes two days for the transaction to settle, and the price of the US Dollar may have changed by as much as N200 in those two days.”

Dike admitted that this extreme volatility “led us into a hole we needed to sort out with our liquidity partners.” He said the company’s outstanding payouts were worth tens of thousands of dollars without a timeline for when it suffered the financial crisis.

However, Dike claims that the company eventually rectified the situation and said it entered into an agreement with Peppa to stagger those payments. At the time of the police complaint, GetEquity still owed $14,000.

One person at Peppa said the company filed a police complaint only as a last resort after months of dialogue with GetEquity.