A unicorn is born and it has to find a home to rest. Yes, Flutterwave is an Africa-born unicorn, valued at excess of $1 billion, after raising $170 million. It is not necessarily surprising when you see how the company has integrated the disparate African countries. When others were working on needs and expectations, Flutterwave moved to perception. In his class note at Tekedia Mini-MBA, the company’s CEO, Olugbenga GB Agboola, explained his view of Africa and the world, and used his company to explain how they are tackling the opportunities. There is no way you will read that document and will not admire his firm.
“The company’s valuation is now in excess of $1 billion. The fundraise brings the total investment in Flutterwave to $225 million,” the company said in a statement.
“We may consider the possibility of listing in New York or a possible dual listing in New York and Nigeria,” Flutterwave CEO and co-founder Olugbenga Agboola told Reuters on Tuesday.
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And the company will open its war chest now for acquisitions because the Flutterwave Treasury with new $170 million can do great things: “We believe in payments in partnerships as you have to partner to scale. So, if in the course of making partnerships and scaling and we identify promising companies with a similar ethos and have our vision in mind, that is in making Africa a country, an acquisition isn’t off the table,” he said.
Yes, I am expecting Flutterwave to make its major acquisition before the end of Q4 2021. Any fintech with core value provision will become a natural suitor because the company has the capacity to unlock more resources for deals. I also expect the firm to move vertically, using its resources to fund more feeders into its ecosystems. That means, it could dedicate 5% of its revenue to support ecosystem players that would feed transactions into its platforms.
Flutterwave’s biggest competitor is not the banks, Interswitch or Stripe (Paystack), but OPay. OPay which processed $2 billion worth of transactions in December 2020 has eclipsed every fintech in Nigeria. In comparison, “Flutterwave has carried out more than 140 million transactions worth more than $9 billion since it was founded in 2016”. So, OPay and Flutterwave are the dominant forces to battle this out as OPay begins its expansion out of Nigeria.
Opera controls OPay, and from Opera’s earnings call, “In December OPay processed a gross transaction value of $2 billion on its platform compared to $1.4 billion in October, or a 43% increase in just over two months. Further, OPay’s revenue is increasing quite rapidly while the company is able to achieve profits right around breakeven despite the growth. We expect this growth to continue as OPay continues to scale in Nigeria and expands to an additional country in Africa.” Yes, OPay, the fintech company, which has Nigeria as its main base grossed $2 billion on transaction value in December 2020, hitting 43% growth from October numbers.
What can we say? We hope transaction fees drop to near-zero as that is what competition brings. In a class yesterday, Tekedia Beijing-based faculty, Dr Henry Chan, said it clearly: “Dr. Chan explained deeper why Alipay does more transactions than Visa and Mastercard combined. Alipay does $18 trillion while Visa and Mastercard combine for $16 trillion. He explained that a merchant will lose about 2-5% with Visa or Mastercard while Alipay will pick about 0.6%. With that construct, China went ahead of the West on the adoption of digital payment even though Visa has been around for decades before Alipay”.
Flutterwave Raises $170m in Series C Round, Becomes a Unicorn
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I put this comment on when someone noted that Flutterwave is not Nigerian, but American:
That is not news. We know that but it has to pay Nigerian tax before it pays American tax since it operates in Nigeria. For every transaction, from stamp duty to VAT, it makes Africa richer. While we hope these entities domicile in Africa, we need to do with what we have. Flutterwave was incorporated in Nigeria and could have moved jurisdiction mainly due to IP issues, but we will get there. At $1 billion, at least 10 people in Nigeria will be millionaires and very soon, they will move for changes.
I made two young people $millionaires within 12 months. Pass – One-click checkout and SproutPay were zero at Feb 2020. Last month, each raised money at multiples of $millions. Very soon, they will begin to write cheques for others. Rome was not built in a day.
Let’s celebrate Flutterwave, Pass, etc even though we know they are legally foreign. But we are happy they get those funds, employ and fix our economies. Very soon, DE will be disintermediated.
While they battle for market share and dominance, the more pressing issue would be to reduce failure rates of transactions, those of intra-Africa are still a nightmare, and to bring hundreds of millions of people into this space, it has to work seamlessly; efficiency is still super low at the moment.
Again, competition and scale should reduce transaction cost greatly, but it does appear that such is not applicable in this continent, a lot of things seem to have a fixed price. Our innovation and growth should work for ordinary people, a solution is no solution, until it becomes affordable across board.
We like celebrating big and beautiful numbers, but they need to permeate and touch more lives, innovation isn’t meant for the elites only, rather it’s the quickest and surest way to bring the small guys to the party.
May we all continue to work in such way that advances humanity and wellbeing.
Hi Francis,
You mentioned a number of areas for improvement.
From your post you said, “While they battle for market share and dominance, the more pressing issue would be to reduce failure rates of transactions, those of intra-Africa are still a nightmare, and to bring hundreds of millions of people into this space, it has to work seamlessly; efficiency is still super low at the moment.
Please can you provide a little more clarity and examples of such existing problems.
Just like I mentioned, fixing intra-Africa payment tops it, our experience using the platform to receive payments wasn’t beautiful at, even the local payment; so a lot more is still desired.