Paystack revenue was just $1,300 when Y Combinator, a U.S -based accelerator, accepted it and gave it about $120,000 in funding for a typical 7% equity. I have explained the numbers here. My focus in this short note is to point out how foreign investors look at things. Yes, when Paystack did this deal, the total revenue was less than N500,000 in Nigerian naira.
Yet, someone brought it home and wired $120,000 in equity funding. Today, that $120k is estimated to be at least $12 million after Paystack exited at $200 million via Stripe acquisition. Until we see things that way, even the promises in Lagos and across Nigeria will not come to us.
Do you have revenue?
Yes
How much revenue?
$1,300
Yup, this was literally everything we had made when we applied! Note that $1,000 of this came from a single transaction ?
I like to point this out when speaking to founders who have overblown assumptions about how much traction they need to have before applying to YC.
When that investor asks for a three year revenue traction in Nigeria, share this piece!
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The investors here are never wired to see ahead, even if preach from now till 2030, once it’s time to make a deal, they quickly revert to their primitive mode. It will still happen tomorrow.
Investors still use the eye and metric they apply to industrial companies in valuing digital companies, and they keep missing the mark. A serious digital business education is needed in this clime; people aren’t really at the level we place them most times.
Who are the LPs of a typical African investor? That likely has as much to do with the conservative investment approach than anything else.