Major eyeroll after reading this piece on Techmoran. (cached version - Techmoran have taken the original piece down).
Of course the embezzlement story sounds sexier, but it's not true. I just had a quick chat with Lino Carcoforo and a couple of points on what the real story is are below - Techmoran are just plain unprofessional for not including any response from the funders.
M-Kazi raised a total of USD200,000, NOT USD1m.
Main reasons for winding down:
1. Billing issues with Safaricom - Having negotiated rates through Craft Silicon to ensure better margins on SMS and USSD, M-Kazi was not able to bill Safaricom directly due to a lack of a tripartite agreement.
2. Lack of cash flow due to not being able to bill
3. Discrepancy between M-Kazi system sms sent and Safaricom delivery reports
4. Failure to close subsequent funding as a result of not showing adequate growth in user acquisition - again, directly tied to lack of marketing spend.
I think the real story should certainly be of interest to both the tech and the VC community. Lino (Lino.Carcoforo@gmail.com) is happy to answer questions and discuss.
Edited to add: Techmoran have taken the old piece down and published the information they received from actually getting in touch with Lino.