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 carry e-commerce to smaller cities. Both companies constructed sizeable operations round pricey 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 progress.

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

The two failures expose a much less seen aspect of enterprise capital. Raising hundreds of thousands and reaching clients doesn’t assure that a business can have sufficient money or saleable property to satisfy its obligations. When the cash runs out, traders will not be the one ones who lose. Suppliers, workers and lenders should pursue claims in opposition to what stays, typically by means of prolonged courtroom proceedings that decide who will get paid and the way a lot.

When progress 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 by means of native brokers. Its operations required warehouses, logistics, stock, and dealing capital to maneuver merchandise from suppliers to clients.

The mannequin addressed a actual distribution drawback, however it additionally carried prices that persevered 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 property, in opposition to KES 169.5 million ($1.3 million) in creditor claims and administration prices, earlier than preferential claims and different prices. 

Koko, however, bought subsidised bioethanol stoves and gas to households that may in any other case depend on charcoal or kerosene, utilizing income from carbon credit score gross sales to assist cowl the associated 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 collected deficits of £104.6 million ($132.8 million), in response to its accounts.

The UK entity entered administration in February 2026, with PwC appointed as administrator. Its directors later struggled to search out a purchaser for the corporate’s carbon credit, which have been valued at £274,992, in response to Business Daily.

Copia struggled to maintain a pricey distribution community, whereas Koko’s income trusted regulatory approval and worldwide carbon markets. Their failures present why funding, buyer numbers and business 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 could be rescued or whether or not its property ought to be bought to repay collectors. When liquidation turns into essential, the proceeds are distributed in response to authorized priorities. Secured collectors can declare in opposition to property lined by their safety, whereas sure worker and tax claims could obtain preferential therapy. Ordinary unsecured suppliers typically rank additional down the reimbursement queue.

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

Both challenged elements of the proposed liquidation course of. Tuffsteel sought further 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 knowledge to US-registered Copia Holdings.

These have been creditor issues, not judicial findings that property had been improperly transferred. Justice Rhoda Rutto of the Kenya High Court dismissed the functions for extra orders and appointed the prevailing directors as liquidators. The ruling allowed the liquidation to proceed below the prevailing practitioners.

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

Suppliers that prolonged credit score or delivered items on the expectation of cost below peculiar business phrases could 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 by means of a number of authorized entities, with one proudly owning mental property, one other working native operations and a third borrowing cash or promoting merchandise internationally. Although the group could operate as one business, its property and liabilities stay legally separate.

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

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

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

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

The value of venture-backed failure

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

Their failures additionally unfold losses throughout traders, workers, suppliers and lenders, with every group dealing with totally different prospects of restoration. Employees could pursue unpaid entitlements, suppliers could be left with unpaid invoices, and lenders could search reimbursement from secured property or corporations that assured the debt.

Creditors’ recoveries rely on the property 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 increase questions on how venture-backed progress distributes threat. Investors finance growth, whereas suppliers and workers 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 growth, however suppliers, workers and lenders can find yourself absorbing losses when margins show too skinny, working capital runs brief or regulatory approval fails to materialise. 

Kenn Abuya

Senior Reporter, TechCabal

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