Valley News reports today that Econet Wireless has shut down and put up for auction its water purifying company, Seldon Technologies. Since 2011, Econet Global had pumped some US $20 million investment into the US based company.
Concluding what is likely one of the Econet group’s biggest investment missteps, the company this month hired an auctioneer to sell off the company’s assets, mainly IP at a reserve price of $1.5 million. Econet is reported to have owned 85% of the company. Seldon Technologies supplied the water purification products that Econet sold in Zimbabwe and planned to distribute in Africa.
According to Valley News, Econet Wireless initiated the investment in Seldon Technologies back in 2011 when Strive Masiyiwa was referred to the startup by staff at Carbon War Room in Washington DC, where he is a co-founder. After providing convertible debt in the hundreds of thousands initially, Econet eventually made a $10 million investment in the company in February 2012, which included $1 million for distribution rights for Seldon’s devices in Africa. It was in 2013 though that Econet acquired a major stake in the company.
A problem however surfaced in 2013. According to Valley News, confidential business plans revealed that Seldon’s patented innovation, the carbon nanotubes meant to purify water by filtering out contaminants, actually “had little or no effect on performance” of the filtration. Essentially, the company’s secret sauce, it turned out, wasn’t doing much. It was ordinary filtration technology in common use that was being used.
Econet also found that the company had no capacity to commercialise their technology. A turnaround strategy was formulated and Econet even temporarily appointed its Johannesburg based group executives to oversee the company, but the turnaround failed. Another $10 million dollars later and after realising the company couldn’t sell nearly enough devices to keep itself afloat, a decision was made to find other investors for Seldon.
To go back a bit. Before Econet came along, Seldon had already spent some $27 million dollars in grants from the US government. No doubt therefore, Strive saw an opportunity to capitalise on that expensive R&D already paid for, invest some of his company’s money and provide the missing link of a huge market for clean water that is Africa.
Unfortunately, the discovery that Seldon’s technology wasn’t unique (at least not yet) changed the whole picture and we’re sure also impacted on the attractiveness of Seldon to new investors.
The founder of Seldon explains this lack of differentiation in a response to Valley News: “There are a lot of people out there that have activated carbon filters, (so Seldon is) one of a thousand companies.” That makes it “impossible to get product differentiation,”. An Econet executive, Myers, disagrees saying Seldon’s non-nanotube technology is superior to any filter currently on the market, but considering this is Seldon founder perspective vs investor, it’s hard to agree with Myers.
Another report says the US office 32 workers that were laid off as part of the shut down somehow suspected that Econet was shutting the US office so it could simply use Seldon’s patents to restart the company outside the U.S.
The shutdown follows the poor performance of the Zimbabwean economy where the Econet Group’s key profit making company, Econet Wireless Zimbabwe, is located. The Seldon Technologies company and Seldon Water operations are not listed anymore on the Econet group corporate website.
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17 comments
Millions in shareholder value goes down the drain, almost literally. But this is Zim. Nobody will ask questions.
Econet Gobal not Zimbabwean company
Actually, Econet Zim resources were used to set up the local Seldon business. The CEO mentioned this at the last AGM.
If that $20M had been invested in a Zimbabwean project. Our problem is we look down upon each other while thinking those outside can come up with better innovations than Zimbabweans at solving local problems
which projects now? we are in a failed state gentlemen, wake the f**K up
Read carefully the 27 million was from the us gvt so in no way was this going to come to zim. Pkus 20 meter yaidyawa vapfana vachibhadhara roora and the likes.
There is a Bulawayo based nano tech water purification company which is struggling due to cash flow challenges. They would not require anything more than a mill. Econet (or Strive to be more precise) could do well to check them out and help a Zim innovation which has promise. Contact Techno Park at NUST. I believe the company also won a $5 K grant from the Zimbabwean Ministry of Science and Tech.
Do they use nano carbon tubes?
nah probarly not but they in the end create an african specific product in cost and maintance structure
I know they use nano tech, Have no idea whether its carbon or what. They have small ones for fitting in house holds. The big plus would be that you will be helping in integrating academic resources in solving African problems. Thus the missing link in our development models.
We use nano porous magnetite particulate material. The materail is effective in removing both harmful micro organisms and heavy metals from drinking water. for more details contact donatus.dube@nust.ac.zw
Its called business people. Some projects fail, some succeed. Thats how people with money make more money, they take risks.
Having said that tho, I still wonder…who the heck in Zimbabwe, or anywhere else for that matter, bought these things and why?
What is next? Redan gas? EWZ economy must be reason liquid is IPOing in the UK. Their cashcow is in trouble. Sad story.
nah this was stright forward asset strip then transfer patents to some country like lichenstein or virgin islands to agin the most in tax paymens and no restrictions when delaing with us sanctions on a profitable country
clever strive now is into asset stripping buy the company for a specific function and sell off everything else plus the fact that r and d was paid for is clever
Sad
http://www.vnews.com/home/19204911-95/breakthrough-to-bust-the-rise-and-fall-of-seldon-technologies
This is what happens when a company has 4 manufacturing people to support 25+ employees in management and overhead jobs. When you have to fight to bring a Qc system in to ensure things are done right, it will always fail!