Flutterwave: The making of Africa’s third unicorn

Wale Ameen

On Wednesday, 10th of March a land mark announcement came out from Nigeria and arguably West Africa’s tech epi-centre, Lagos, also the country’s financial hub. And it was the cheering news that one of Nigeria’s need promising Fintech startups, Flutterwave, had just closed its Series C round of funding which saw the seven-year-old company cornering a total of $170 million, thus effectively upgrading its status to a unicorn with its billion dollar valuation.

What’s a unicorn you might ask.

A unicorn is any private startup company that started after 2003 (within 10 years) that is now valued at more than $1 billion either by public or private market investors. This description was coined by a US-based investor,
Aileen Lee, in 2013. She also defines a “super-unicorn” as any company valued at more than $100 billion.
An important point to note here, however, is that to be recognised as a unicorn doesn’t necessarily mean that such a startup has made $1 billion in revenue but that such a startup is valued at that amount for investment,
venture capitalists and private equity valuation.

Indeed, for a company to be valued by investors at such an amount, it shows such must have really put in the work and its books very good and promising in terms of revenue and potential growth opportunities.

Flutter wave’s valuation is indeed a notable one as not so many startups come close to attaining such a feat even in their lifetime.

The Road to Becoming a Unicorn

The word eventful best describes the journey of the last five years for Flutterwave. Its first Series A funding round happened four years ago when it raised a total of $55 million. This was followed shortly with its sec￾ond round of funding. Two years ago, the company raised a total of $20 million in its Series A exten￾sion round from investors such as Mastercard, CRE Ventures, Fintech Collective, 4DX Ventures, and Raba Capital.

Last year, it raised another $35 million in its Series B round in partnership with payment processing company, Worldpay, and another giant, Visa to scale up its operations by expanding to Francophone and Northern
Africa.

The partnership with Worldpay also afforded the company to serve as a payment provider for Worldpay’s clients worldwide while Visa had its products like Visa physical and virtual cards on its network, thus effectively
expanding the startup’s reach and scope.

A few months ago, the company again made the headlines when it was listed as Ycombi￾nator’s most valuable startup in Africa. Speaking on his company’s latest round of funding, Olubgenga Agboola, the 35-year-old
chief executive officer (CEO), had this to say, “Our successes would not be possible without our amazing people, who work tirelessly to achieve our goals, the trust, and support we have received from our investors,
partners, and customers as well as regulatory bodies like the CBN, which under the leadership of [Godwin] Emefiele has created enabling environment for technology, innovation, and financial inclusion.”

But why is becoming a unicorn so special? Well, we shall attempt to put this in context. According to Aileen Lee, from the research of companies in the last two decades, only four unicorns are born per year on average and in the last ten years, only 39 companies have attained unicorn status with Facebook and Amazon leading
the pack for the decade with Google leading from the previous decade while in Africa, only two other companies have attained this status before Flutterwave, Interswitch, and e-commerce company Jumia.

African startups and the road to attaining a billion dollar status One thing that is easily deductible from the number of African startups that have attained unicorn status is the fact that they did so with the support of foreign investors. Interswitch attained the unicorn status and became Nigeria’s first when Visa acquired a 20 per cent stake in it back in 2019 while Africa’s first unicorn Jumia attained the status after it successfully
raised $326 million in funding from a consortium of lenders led by AXA , Goldman Sachs and MTN upping its valuation to $1.08 billion in 2016.

This shows that the road to attaining the unicorn status is lined up with quite a number o f investment rounds that a startup must go through if it must breakthrough and go global. These investment rounds will see a number of both local and foreign investors taking a bit in the big pie which the company is but that is the price any startup must pay if they truly want to attain continental and global dominance.

Are we going to see more big news in the nearest future?

I think the answer to this is certainly a yes but that also is fraught with many challenges on the part of local entrepreneurs. According to Kyane Kassiri, a venture capitalist at Lateral Capital, a company that invests in
African startups, Flutterwave’s unicorn status is “only the beginning” of a wave of more to come.

The challenge for local entrepreneurs here is to develop a product or service that is in tune with the present wave of human needs in the era of digitization. Zoom was well primed to take advantage of the surge in the
need for a platform that could facilitate virtual meet-ups via video conferencing during the pandemic.

As it stands, the foresight and ability to rightly predict where the next digital need is will be vital ability entrepreneurs must have to make a mark in the coming years. Facebook, a social connectivity platform was it within the last decade and for the continent, Interswitch, a payment processor, and Jumia, an everyday B2C
e-commerce platform had the magic touch. The challenge here is to plug in and just do it right.

Flutterwave’s achievement and growth within the short space of time is indeed a testament to the strength of the African fintech space and the fact that the next billion-dollar startups will most definitely be coming from Africa and as such investors must now take the continent very serious. As it stands, the company holds quite a lot of potentials still, that it might just as well be on its way to becoming Africa’s super unicorn!