Only very few people in Nigeria knew or understood what cryptocurrency or Bitcoin was all about in 2015 when Franklin Peters had a crazy idea to develop a platform for crypto trading. All the developer friends he spoke to didn’t know what to make of his idea because it was strange to them.
Eventually, he paid foreign developers to do the job, and today, he has built Africa’s largest indigenous cryptocurrency exchange. In 2020, Peters had the gut to pull out of a $15 million investment deal with a UK syndicate of hedge funds. He has since moved on to create a new payment platform that allows users to spend their crypto, using a debit card.
In this no-holds-barred interview with Business Elites Africa, Peters tells us why he’s currently not open to external funding, and a lot more.
You started your company in 2016 and 3 years later raised $15 million seed investment, how did you pull it off?
BITFXT started as a vision to create a solution around the tech industry, particularly blockchain technology. I came across bitcoin and blockchain in 2015 and got into it fully in 2016 after so much doubt. One big challenge people faced was being able to buy crypto in a safe and secured platform. I remember being scammed by somebody on WhatsApp. I sent him money to buy some bitcoins and he disappeared. There was no way to trace him. Although I had his bank account details I couldn’t go to the police station to report him.
The officers couldn’t have understood what Bitcoin was at the time. So it’d be a wasted effort. And being a computer scientist, it dawned on me that there is a problem here, and scientists are built to provide solutions. So I had to contact some of my developer friends. Unfortunately, most of them didn’t know what Bitcoin or blockchain was all about, so they couldn’t build anything. I had to outsource it to some Indian developers, who were the only major developers in the space at the time.
In 2018, I needed to raise funds because the company was becoming bigger than what my personal finances could handle. I had to reach out to friends and family. One thing with fundraising is that first of all, you have to ensure that you have a sellable product. Anybody that wants to invest in your product would want to see that it has a future. The future is what we saw before we started the company. I had known since then that Bitcoin was going to go mainstream. So starting on time to create a solution was a very important thing to me.
After we had garnered a good number of users, downloads and the figures in our back office was all good, we thought our concept had been proven. So we started talking to external investors and sealed a deal with a UK syndicate of hedge funds. But their method of funding was Equity Swap, whereby a company uses a part of their equity to purchase a portion of your equity. That was the form of investment deal we signed. Plus, they added some funds to aid marketing and ensure that the company grows.
However, I’ve pulled out of that investment. Not everybody knows this. That’s why interviews like these are very important so that other people can learn how to prepare themselves against such unexpected situations. Why I pulled out was that the requirement was not very suitable for the future we were building. The contract stipulated that we’d divert from the core crypto project into other things like the stock market. This was contrary to my personal dream for the company.
Did you not discuss this before contracts were signed?
We talked about it. Also, there were a lot of grey areas in the contract that were unclear, which my lawyer warned against. But I was desperate at that point because we needed the funds. Midway into the partnership, I started seeing what my lawyer warned me against initially. So I advise anybody who wants to raise funds to be calm. Take it one step at a time…
EDITOR’S NOTE: Read the full interview here. It’s on page 28 of our latest magazine edition, ’25 Entrepreneurs & Brands to watch in 2021′ or watch his live chat with us below.
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