The short: Dr Abasi Eno-Obong, the CEO of Nigerian genomics startup 54gene, resigned following a series of financial struggles at the company.
Pandemic boom: 54gene had a significant headstart as one of Africa’s leading genomics companies, with a stint in Y Combinator’s 2019 class and a $25 million raise in 2021 – things were looking up. Its first big ambition was filling the gap in the genomics market, where Africa accounts for less than 3% of genetic material used in pharmaceutical research.
And in 2020, the COVID-19 pandemic presented 54gene with a lifetime opportunity as one of Nigeria’s largest COVID-19 testing providers. To meet this demand, the company raised $40 million between 2020-2021 to hire more staff and rapidly scale operations across Nigeria.
Money problems: A year and about 200 layoffs later, 54gene needed more money. Sources claim the company’s valuation dropped from $170 million when it raised its Series B to about $50 million in a bridge round led by its board of directors. For self-preservation, the investors in this bridge round closed with a liquidation preference, meaning the lead investors would be paid back triple their money before other stakeholders, such as other investors, founders, and employees, in the event of an exit.
A new CEO: In both rounds of layoffs, anonymous accusations of misappropriation of funds were made against the then-CEO and his executives – but the allegations remain unproven. In a last show of faith, Ene-Obong’s protested the liquidation condition demanded by early investors in the bridge round, but his protests changed nothing.
Ene-Obong will be replaced by General Counsel Teresia L. Bost, former Vice President and Associate General Council at Jazz Pharmaceuticals.
Final thoughts: I heard from sources that the board and investors unanimously voted for Eno-Obong’s ouster. Investors were sceptical about the company’s aggressive growth – and not in a good way. Sources claimed the company was “americanised” with many western hires, which caused a strain on their runway. However, investors are optimistic about 54gene’s future – just without Ene-Obong.