The unfinished business of a startup’s collapse

Koko Networks raised greater than $100 million from worldwide traders to promote subsidised clear cooking stoves, counting on carbon credit score gross sales to assist cowl their prices. Copia Global raised $123 million to convey e-commerce to smaller cities. Both companies constructed sizeable operations round expensive issues in African markets. When they collapsed, the query grew to become how a lot cash was left to repay those that had financed their development.

In February 2026, the directors of Copia estimated the realisable worth of its belongings at KES 206.6 million ($1.6 million), whereas its liabilities had been significantly larger than that determine. Similarly, Koko Networks (UK) Limited had accrued vital debt as a end result of regulatory and industrial issues that had disrupted its carbon credit score business.

The two failures expose a much less seen facet of enterprise capital. Raising thousands and thousands and reaching clients doesn’t assure that a business could have sufficient money or saleable belongings to satisfy its obligations. When the cash runs out, traders usually are not the one ones who lose. Suppliers, staff and lenders should pursue claims towards what stays, typically via prolonged courtroom proceedings that decide who will get paid and the way a lot.

When development doesn’t go away sufficient behind

Copia entered administration in May 2024 after struggling to maintain its agent-based e-commerce mannequin. The firm allowed clients in smaller cities to order items via native brokers. Its operations required warehouses, logistics, stock, and dealing capital to maneuver merchandise from suppliers to clients.

The mannequin addressed a actual distribution downside, but it surely additionally carried prices that endured when gross sales or funding weakened. Suppliers nonetheless anticipated cost, stock wanted financing, and logistics infrastructure required cash to function.

On September 17, 2026, the High Court in Nairobi ordered Copia into liquidation, appointing its present KPMG directors, Julius Mumo Ngonga and Anthony Makenzi Muthusi, as joint liquidators. Copia had KES 206.6 million ($1.6 million) in estimated realisable belongings, towards KES 169.5 million ($1.3 million) in creditor claims and administration prices, earlier than preferential claims and different prices. 

Koko, then again, offered subsidised bioethanol stoves and gas to households which may in any other case depend on charcoal or kerosene, utilizing income from carbon credit score gross sales to assist cowl the fee.

The mannequin trusted promoting credit generated by its Kenyan operations in worldwide markets. Access to higher-priced compliance markets required authorities authorisation. Kenya didn’t grant the required approval, reducing off a path to market that Koko wanted to assist its monetary mannequin.

Koko Networks (UK) Limited reported turnover of £39.8 million ($50.5 million) in 2024, up from £1.8 million ($2.3 million) a yr earlier. It nonetheless recorded a £14 million ($17.8 million) loss and accrued deficits of £104.6 million ($132.8 million), according to its accounts.

The UK entity entered administration in February 2026, with PwC appointed as administrator. Its directors later struggled to find a buyer for the company’s carbon credits, which had been valued at £274,992, according to Business Daily.

Copia struggled to maintain a expensive distribution community, whereas Koko’s income trusted regulatory approval and worldwide carbon markets. Their failures present why funding, buyer numbers and industrial attain can’t compensate for weak margins, inadequate working capital or publicity to dangers a firm can’t management.

Who will get paid when a startup fails?

Insolvency proceedings decide whether or not a distressed firm might be rescued or whether or not its belongings must be offered to repay collectors. When liquidation turns into obligatory, the proceeds are distributed in keeping with authorized priorities. Secured collectors can declare towards belongings coated by their safety, whereas sure worker and tax claims could obtain preferential therapy. Ordinary unsecured suppliers usually rank additional down the compensation queue.

Copia’s liquidation proceedings present how the method can grow to be contentious. Tuffsteel Limited, an unsecured creditor, informed the High Court it was owed KES 13.3 million ($103,000) for provides. Jastan Traders Limited, which offered transport providers, claimed KES 793,022 ($6,100). 

Both challenged facets of the proposed liquidation course of. Tuffsteel sought extra safeguards and an impartial forensic investigation into the corporate’s affairs, together with asset transfers and related-party transactions. The collectors additionally questioned the reported switch of Copia’s model, mental property and transactional information to US-registered Copia Holdings.

These had been creditor issues, not judicial findings that belongings had been improperly transferred. Justice Rhoda Rutto of the Kenya High Court dismissed the purposes for added orders and appointed the present directors as liquidators. The ruling allowed the liquidation to proceed underneath the present practitioners.

The dispute reveals why insolvency includes greater than promoting belongings. Creditors additionally need to know what the corporate owns, how belongings have been dealt with and whether or not the method protects their pursuits. The courtroom should weigh these issues towards the prices and delays additional proceedings can create.

Suppliers that prolonged credit score or delivered items on the expectation of cost underneath atypical industrial phrases might be left recovering solely a fraction of what they’re owed when a buyer collapses.

When a company construction complicates restoration

Technology teams typically function via a number of authorized entities, with one proudly owning mental property, one other operating native operations and a third borrowing cash or promoting merchandise internationally. Although the group could operate as one business, its belongings and liabilities stay legally separate.

Koko’s UK firm relied on carbon credit generated by its Kenyan operations, leaving it uncovered when regulatory obstacles disrupted entry to worldwide markets. Its administration and the Kenyan insolvency proceedings remained separate authorized processes regardless of their industrial hyperlinks.

Copia’s collectors, in the meantime, questioned the switch of mental property and buyer information to Copia Holdings. The courtroom dismissed their request for added safeguards, however the dispute raised questions on asset possession and creditor restoration.

Creditors can’t routinely declare belongings held by one other firm in the identical group. Guarantees, safety preparations and intercompany obligations could present routes to restoration, however these depend upon the related agreements and legislation.

The separation can go away collectors with restricted prospects for restoration, even when the broader business holds beneficial mental property, buyer relationships, or different belongings. Creditors can get well belongings held elsewhere within the group solely the place the related authorized preparations enable it.

The value of venture-backed failure

Copia and Koko expose distinct weaknesses in companies constructed to unravel expensive issues, from Copia’s want for adequate margins and dealing capital to Koko’s dependence on carbon-credit income and regulatory approval.

Their failures additionally unfold losses throughout traders, staff, suppliers and lenders, with every group going through completely different prospects of restoration. Employees could pursue unpaid entitlements, suppliers might be left with unpaid invoices, and lenders could search compensation from secured belongings or firms that assured the debt.

Creditors’ recoveries depend upon the belongings realised, the prices of insolvency, the validity of their claims and their authorized precedence. Neither firm’s proceedings set up how a lot each creditor will in the end obtain.

These circumstances elevate questions on how venture-backed development distributes danger. Investors finance enlargement, whereas suppliers and staff assist maintain it, but the latter could have far much less safety when a firm runs out of cash.

The two startups present how the dangers constructed into a startup’s business mannequin can fall on collectors when the corporate fails. Founders and traders could drive enlargement, however suppliers, staff and lenders can find yourself absorbing losses when margins show too skinny, working capital runs quick or regulatory approval fails to materialise. 

Kenn Abuya

Senior Reporter, TechCabal

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