When Startups Collapse, Employees Pay the Price

In October, a LinkedIn post by Anthony Buchi, a former employee of Nigerian technology company Prunedge, caught the attention of hundreds across the tech community.
In his post, Buchi recounted how the company allegedly withheld months of unpaid salaries after announcing a 50% pay cut in 2022. What began as a cost-saving measure, he said, eventually turned into a broken promise.

According to his account, employees were told the company had gone bankrupt but were persuaded to stay on reduced pay with a promise that outstanding balances, plus interest, would be reimbursed within six months. When the months passed with no payment, frustration grew. Some staff resigned, others stayed hoping things would improve, and eventually, everyone was let go.

“Six months passed, and when we asked for our money, they kept saying, ‘there’s no money yet.’ By 2023, it became clear it was all lies,” Buchi wrote in his post.

“Prunedge went ahead to hire new employees, carefully making sure none of the old staff remained, so the newcomers wouldn’t know they were owing people over a year’s worth of salaries.”

The post struck a chord not just because of its emotional weight, but because it revealed something deeper about the fragility of work in Africa’s tech ecosystem, where employees often bear the brunt when startups collapse.

A Pattern Beyond One Company

While Prunedge has yet to publicly respond to the allegations, Buchi’s post is far from an isolated case. Over the past three years, numerous Nigerian startups have struggled with salary delays, unannounced pay cuts, and sudden layoffs as the funding climate tightened across the continent.

Between 2022 and 2024, the global venture slowdown hit African startups hard. Many faced liquidity crises after their runway ran out and investors pulled back. For some, survival meant downsizing or freezing operations entirely. But behind every “restructuring” headline were employees left without salaries, severance, or communication.

Across social media, similar stories have surfaced,  workers describing how they were kept on “half pay” or left unpaid for months with promises of eventual reimbursement. These posts rarely get as much attention as funding announcements or product launches, yet they reveal a side of tech that rarely makes the press.

It reflects a growing imbalance: startups are celebrated for rapid growth and innovation, but not held accountable when things go wrong.

The Legal and Ethical Blind Spot

Part of the problem lies in weak labour protection frameworks around startup employment. Nigeria’s labour laws technically require employers to pay agreed wages, but enforcement is inconsistent. Many startup contracts are loosely structured, offering little clarity on payment timelines or termination terms.

In early-stage ventures, especially those reliant on venture capital, payroll often depends on investor inflows. When those funds dry up, salaries become the first casualty. Unlike large corporations with structured HR systems, startups rarely have reserves or governance policies to manage financial crises responsibly.

Legal experts note that unpaid salary cases in Nigeria almost never make it to court. Employees fear being blacklisted within the close-knit tech community, while legal costs and lengthy processes discourage litigation. As a result, unpaid salaries often fade into silence, with no institutional system holding founders accountable for wage debts.

The Human Cost of Startup Failure

Behind every unpaid salary is a story of personal strain. Buchi wrote that the Christmas of 2022 was “horrible” because he couldn’t afford much, not from laziness or unemployment, but from unpaid wages. His words reflect what many in the tech sector quietly experience  the emotional and financial toll of sudden income loss.

For young professionals who left stable jobs to join promising startups, the betrayal can cut deep. Many workers describe feeling used, unappreciated, and disillusioned with the “build Africa’s future” rhetoric that often accompanies early-stage ventures.

Beyond finances, unpaid salaries erode morale across the ecosystem. Skilled developers, designers, and operations staff begin to distrust startups entirely. This mistrust contributes to a slow but steady talent drain as experienced professionals shift to multinationals, remote global roles, or leave tech altogether.

What’s lost isn’t just money, but belief , the conviction that African innovation can also mean fair, accountable work.

What the Ecosystem Must Confront

The conversation around Prunedge’s alleged debt to former staff raises difficult but necessary questions about accountability in African tech.
Who protects workers when startups fail?
What responsibility do founders have beyond investors and customers?
And how can the ecosystem build safeguards that prevent people from losing their livelihoods to opaque management?

Some founders argue that the unpredictability of startup life makes such cases inevitable. But transparency during financial distress can make a major difference. Being upfront with staff, providing clear timelines, and ensuring partial settlements where possible builds trust even in hard times.

Investors, too, have a role to play. Due diligence shouldn’t end at financial statements and market potential. It should include governance standards, including employee welfare. For regulators, agencies like NITDA and the Nigerian Labour Congress could explore frameworks specific to startup labour, bridging the gap between innovation and responsibility.

The story of unpaid workers in Nigeria’s tech scene isn’t just about one company’s missteps. It’s a mirror reflecting an ecosystem still learning how to balance ambition with accountability.