Venturing into the world of entrepreneurship is often strenuous and risky business. But the rewards far outweigh the costs. Since 2013, the added prize of being lauded as a ‘unicorn’, that is a business valued at $1 billion or more, has become highly coveted among the entrepreneurial class. On the continent, very few can claim this status. FORBES AFRICA spotlights African founders who have scaled these heights, making their mark on the world at large and redefining the African story of success.
By: Marie Shabaya, Chanel Retief, Lillian Roberts, and Peace Hyde
Valuation Variations: What’s In A Name?
- Unicorn: A business valued at $1 Billion
- Decacorn: A business valued at $10 Billion
- Hectocorn: A business valued at $100 Billion
IN POPULAR IMAGINATION, UNICORNS CONJURE up the picture of a rare but beautiful mythical creature described by the ancients as resembling a horse, with a single horn emanating from the center of its forehead. A timeless symbol of purity and uniqueness, this rich symbolism also translates to the world of business. In the startup lexicon, a unicorn is also a rarity and defined as a relatively young company, usually less than 10 years old valued at $1 billion or more by public or private investors.
According to CBInsights, a New York City-based market intelligence company, as of October 2022, there were over 1,200 unicorns in the world. Popular unicorns include the artificial intelligence (AI) company, ByteDance, from China that is valued at $140 billion; Elon Musk’s spacecraft engineering firm, SpaceX, valued at $127 billion and Chinese online fashion retailer, Shein, valued at $100 billion. Some former unicorns include Airbnb, Facebook and Google. Furthermore, according to the report, the total cumulative valuation of these rarified businesses is $3,871 billion.
In Africa, the rise of these mythical commerce creatures is not different.
A few years ago, the continent saw the emergence of its first unicorn with the pan-African online retailer, Jumia Group. The company had capitalized on a major gap in the virtual market building a customized platform where consumers in 14 African countries can order their groceries, shop the latest fashion or
order takeaway from their favorite restaurants online. In 2019, Jumia became the first brand from the continent to list on the New York Stock Exchange (NYSE), after commanding a valuation of $1.6 billion the previous year. Since then, six more businesses have entered this very elite club, illustrating that the rate of unicorns forming on the continent is fast accelerating.
“I suppose the rise of African unicorns is starting to validate the potential of African companies,” says Ian Lessem, Managing Partner at HAVAÍC, a company in South Africa that invests in early-stage, high-growth technology businesses.
“So, it’s one thing to say ‘I want to invest in African businesses’, and then someone will say, ‘well, what’s the potential, how is my investment to make money’…as a continent, [we’re] an emerging market or frontier market.”
While continental startup ecosystems are relatively young compared to more developed markets such as the United States (US), Israel, or the United Kingdom (UK), they are growing at around 15% faster than these more mature markets each year, according to Lessem.
“And in 2022, the African venture capital (VC) market is set to be the only region in the world to have grown year-on-year,” Lessem tells FORBES AFRICA.
“So, while on a relative basis Africa is a small part of the global startup and VC sector, it is growing, and growing quickly, and with a maturing ecosystem and the continued influx of capital, its place on the global venture stage is set to continue, with many more unicorns to follow as a result.”
According to a study by Mastercard, the global payments giant, on the state of fintech in African markets, startups within this sector boasted exponential growth in 2021. In terms of funding, the study showed that the continent’s fintech startups recorded 894% year-on-year growth in 2021.
“[What] Africa has to do as a continent is figure out [how] we overcome some of [the] barriers that make it difficult to build big enterprises and can we make it easier to do business across the continent?” Sarah Dusek, an Investor and Co-founder of Enygma Ventures and Co-founder of Under Canvas Inc. says to FORBES AFRICA. “Money movement across the continent is still very challenging. And that’s where we’re seeing most of the unicorn space happen right now, in fintech.”
Nigeria emerged as a leading fintech hub across the Middle East and Africa as startups there accounted for a third of all funding deployed into fintech in 2021.
The African Private Equity and Venture Capital Association (AVCA) noted in October that, within the first half of this year, African startups captured $3.5 billion in venture capital investment. The industry group further stated that the funding, raised by 300 different companies, represented a total growth of 133% compared to the same period last year.
“I think we have the potential for having a lot of unicorns on the continent. But equally, this ecosystem is really young,” says Dusek. “So if you think about how old the sort of Silicon Valley model of investing in the US is, it [is] 50 years old. [In Africa] we are under a decade in the venture capital model. Only $4 billion was invested in 2021 on the whole continent into businesses. So there’s no way we can have a lot of billion-dollar companies, when we’ve only invested $4 billion a year.”
However, there is a reason for the low investment volumes. Investor perceptions have long been marred with challenges and stereotypes that have been difficult to eradicate. However, Lessem believes that this is mostly due to lack of data.
“Africa is still a pretty new market…so investors will always be quite wary. The other challenge is when anything is new, there are very few data points,” Lessem explains. “So as a foreigner to go and say, ‘okay, well, I want to invest in Uganda’, what data do they have to draw from? In researching, you would see that it is probably hard for you to find some of the data you were looking for. ”
“I think it’s a bit of a chicken and egg [scenario],” Dusek adds. “Because I don’t think we can break those stereotypes without going to these places in the first place. If you look at most of the unicorns… how many of them are out of Nigeria? Most of them [are]… and that is just about building companies in big markets with big opportunities. And that’s actually one of the biggest challenges for Africa, we are a continent, not one country.”
Starting a business on the continent is not easy and is one that is riddled with a multiplicity of issues.
“Whereas I think in Africa, there is a perception that if you fail, it’s almost built for life, which I think is true, in terms of the stigma that comes with it. People almost don’t want to embrace failure. So I like to fail quietly. The only concern and a chance of failing quietly, is [that] for you to get assessed for business, you have to put yourself out there.”
Lessem further notes that one needs to remember that without meaning for it to happen, legislation and regulatory frameworks will always play a role in what businesses you invest in, particularly in Africa.
“Each country is different [and] we have very different legal systems. In southern Africa, we are very English and Dutch-law based. The same would be for Nigeria and Kenya. But then you look at Mozambique and Angola, and that will be Luciferians, which would be very kind of your Portuguese type of law, which is a little bit different.
“And then Francophone Africa; the DRC, Senegal, that would be French Civil Code. When you make an investment, you have to sign a subscription agreement and [understand] what you are actually signing in for [particularly if] you don’t have experience in the various kinds of laws [of] the country.”
Moreover, there is a reason why most of the continent’s unicorns are in West Africa or have founders from the region.
“Nigeria is a powerhouse economy in Africa with access to hundreds of millions of tech-savvy consumers who have access to mobile phones,” Lessem adds. “It stands to reason that it will attract VC funding and produce powerhouse startups. But taking a step back, and looking at what defines a unicorn, which loosely is a VC-backed early-stage business that has raised capital at $1 billion or more valuation.”
Lessem further compares Nigeria to South Africa. In terms of consumer numbers, Nigeria is far larger. However, from a capital markets perspective, South Africa has much more depth. What this means is traditional venture investors may lean towards markets such as Nigeria where their funding could play a more meaningful role, and potentially impact more people in the process.
“South Africa, on the other hand, has many other capital options besides venture capital funding and depending on the type of business can look to venture capital or to other capital pools as appropriate,” Lessem says. “That being said, venture capital funding plays an important role in South Africa, as well, especially for businesses looking to scale internationally and this is where we are going to see many unicorns emerging from South Africa in the coming years.”
And now that we are seeing growth happening in the unicorn space for Africans, the next barrier is breaking what could easily turn into a boys’ club if more women are not welcomed into the space, as one can intimate from the unicorns profiled within these pages. But that, according to Dusek, can only happen with more investment.
Women make up 58% of Africa’s self-employed population and businesses founded by women ultimately deliver higher revenue—more than twice as much per dollar invested—than those founded by men. This should make women-owned companies more attractive to investors. However, with all the data and research available, we are yet to see a female-founded and led unicorn from the continent.
“Women have shown that they are capable of accelerating the economy but this is only possible through the provision of equal opportunities. With decades of gender disparity issues, women are not asking for preferential treatment but for the same opportunities as men,” says Dusek.
“To tackle Africa’s socio-economic challenges, we need to invest in women-led businesses, because when women work, they drive impactful changes in society. We already know that women-led businesses are statistically more profitable than male-led ones, [they are] more likely to repay debt, and more likely to continue to operate after the first five years in business.”
The story of African unicorns has been two years in the making for FORBES AFRICA. We’ve been watching the markets for the growth of these billion-dollar outfits and those behind them. The founders within these pages have not only grown and scaled their businesses, despite the odds, but have been thinking beyond reaching unicorn status, because for them, the work has just begun!
Editor’s Note: This list follows no particular order and is meant to introduce readers to the company’s founders who started businesses valued at $1 billion or more.
A Chip Off The Old Block
Ham Serunjogi and Maijid Moujaled CEO and President (respectively), ChipperCash
“I hope it will serve to show others that this is actually a really big opportunity. I think we’re still in the early innings.”
The Ugandan-born CEO of fintech unicorn, ChipperCash, Ham Serunjogi grew up watching his parents solve problems. Today, overcoming challenges is a daily routine and forms a culture of thought inherited from his upbringing.
“As an African, you’re in problem-solving mode all the time. For me, it was [multiplied] by ten, my parents were both self-employed, solo entrepreneurs, and [they had] a continuous problem-solving mindset,” recalls Serunjogi, speaking with FORBES AFRICA from San Francisco, California.
Serunjogi fondly recalls the early memories that shaped his own entrepreneurial stature.
“We grew up on a farm so initially [my parents] were trying to figure out how to get the farm going. Eventually, they had a dairy business and they had to figure out how to get that going. My dad is a computer scientist by training and he had an IT firm as well and he had to figure out how to get that going and how to manage a small team…it left such a strong mark on me. I always wanted to do something of my own when I grew up.”
After completing high school in Kenya, Serunjogi made his way to the United States to study at Grinnell College, a private liberal arts institution in Iowa State. It was here that he would meet his long-time friend and co-founder, Maijid Moujaled, from Ghana. Moujaled who is now President of ChipperCash was, like Serunjogi’s father, a computer scientist and had started a popular coding club at Grinnell. The two struck it off immediately noticing that they both saw the world from a similar vantage point.
“When I met Maijid, he was of a very similar mindset around the fact that there were so many opportunities in Africa for us to make a positive impact. We happened to be among the few [Africans] who got to go on and get educated in the US and we saw that as a privilege and an opportunity to learn in a new place and see how people solve problems in that area. For us, payments [in Africa] was [where] we felt that we could make a positive contribution,” he explains.
During their time at Grinnell, the two men began conversations around building a money transfer app that would enable Africans to easily make cross-border financial transactions; a gap which the antiquated continental banking system struggled to address for decades. They went on to establish ChipperCash in 2018, with combined savings of $30,000, launching a Beta version of the app in July that year. The service was simple but revolutionary, initially allowing users to send money between Uganda and Ghana, for free. It was a game-changer, not only was it easy-to-use it also overcame the cost hurdles presented by other alternatives available on the continent. In November 2018, they received their first injection of investor capital after 500 Startups, the San Francisco-based early-stage venture fund, agreed to put in $150,000.
Raising funds wasn’t easy. The founders had pitched to 50 VC outfits before the 500 Startups investment and many of the investors they had been in contact with were wary of an African prospect. Serunjogi, in an interview with Forbes earlier this year, notes that some of them were not just apprehensive but even averse to the idea of investing in an African startup with one investor reportedly telling Serunjogi, “regardless of what the metrics are, I have to apply a discount to this business because it’s in Africa”.
“With the pain we’ve gone through trying to raise money in a space where there has historically been no one [from the continent] raising money and the trauma of being overlooked that comes with going against those odds, I hope it will serve to show others that this is actually a really big opportunity. I think we’re still in the early innings,” he now reflects.
Today, ChipperCash is imbued with the spirit of its founders and has more than overcome initial hurdles. The company is highly-rated among investors, riding high with a $2.2 billion valuation after raising a total of $300 million to date with backing from noteworthy titans like Amazon’s Jeff Bezos and a roster of blue chip VCs. Their most recent funding round closed in late 2021.
ChipperCash employs 350 people spread across their San Francisco headquarters and Africa offices in Nigeria, Kenya and South Africa. Their impressive growth, over the last four years, has enabled them to support a growing client base of 5 million in seven African countries. In addition to low-cost money transfers, they have also expanded their product stable with a crypto-trading service and a platform where their continental customers can purchase US stocks. Last year, the company’s revenues were well over $75 million up from $18 million in 2020.
However, for ChipperCash, reaching unicorn status was never the objective. While it remains a great vote of confidence from the market, signaling early success, the founders’ sights remain fixed on their initial motivations for founding the business, insists Serunjogi.
“Our task is to provide a platform that can help people move their money easily, invest in assets across the world easily, [and] interact with the online economy easily. Essentially, meet people at the fabric of their financial lives in Africa.”
Nevertheless, surpassing the $1 billion valuation mark is a feat for any business, African or otherwise, and very few from the continent have managed to scale such heights. The fact remains that Serunjogi and Moujaled have shifted the needle on what is possible for Africa’s innovators and entrepreneurs, establishing themselves as trailblazers in the fintech arena.
“If nothing else, I hope that ChipperCash can serve to show that there is a massive opportunity in Africa and maybe even pave the way for others who are more talented, more capable than Maijid and myself to come and do even more important work,” says Serunjogi.
“Africa offers the last great opportunity for exciting innovation in the world today.”
‘Keep Solving Problems And Getting Joy
Mitchell Elegbe Co-founder and CEO, Interswitch
“If you know you only have one opportunity, the way you use it is quite different but if you felt you could squander this one and get another opportunity, then your approach will be different.”
For Mitchell Elegbe, the journey to building one of Nigeria’s most respected businesses, Interswitch, was driven by the passion to solve a social problem. He encountered the problem years ago in his youth when he tried to withdraw money from an ATM while abroad when his card was seized and he was left stranded.
“I made up my mind that one day I would conquer this problem,” recalls Elegbe.
When he returned to Nigeria, he noticed how the issue of getting money out from banks was creating a social menace. At the time, there weren’t many bank branches available and the only way one could withdraw funds was to physically go into a bank and wait to be served. This could often take up to three to four hours. The tedious wait times invariably led to clients taking out much more than they needed to avoid a repeat journey.
“This was usually on weekends, typically on Friday, when people wanted to have enough money to spend, and if you [knew] Nigeria at the time, spraying cash was the norm. What this did was create a lucrative business for robbers. So, it was normal for people to attack you on Fridays because they [knew] there was a lot of money at home,” says Elegbe.
This was Elegbe’s mountain. The next question he needed to figure out was how lucrative the solution was and at what price point people were willing to pay to have it. As a result, he developed an approach which he terms as “the Tropical Savannah method” and one that forms the bedrock of Interswitch’s success.
“You have the Silicon Valley method and then the Tropical Savannah method and there is a key difference. What you find is that people get money and they buy market shares and they don’t tell you if that market they are buying will end up paying for the services. In Africa, where you have the Tropical Savannah, you don’t give free things and take it back.
“If all I need is a sachet of water, don’t give me a bottle of coke for free. Let me pay for my sachet of water. The day you start giving coke for free then get ready to sustain it. If you tell me you can’t give me coke anymore and I need to start paying for it, people will stop because the best I can pay for is the water because that is what I can afford,” says Elegbe.
In other words, you need to design your services to meet people at their point of need in the Tropical Savannah. Otherwise, at that point where you are now ready to monetize from your customers, you will not be able to.
“This is why a lot of fintechs are suffering and that is what is happening globally and why the valuations are crashing. In the Tropical Savannah, prove your model and show that there is somebody to pay for it at a price point that will make it profitable and then you can begin to scale.”
That method allowed Interswitch to raise only $500,000 against an initial $1 million target and still turn a profit in the first year of business.
“Sometimes in life you get just one opportunity and you need to grab that one. If you know you only have one opportunity, the way you use it is quite different but if you felt you could squander this one and get another opportunity, then your approach will be different. With Interswitch, I knew there was no way we could go back to people to ask for more money. Because if they could give us $1 million, they would have. So we had to make the money; we had to work.”
And with that, Interswitch was able to disrupt the traditional cash-based payments system at a time when Nigeria’s banks were still struggling to open enough branches to meet customer demand.
“I did not think we were creating anything fantastic because the process of making cash available via ATM was already well-established in other parts of the world. The challenge we had in Nigeria was that the infrastructure was not there. Power was a big problem, telecoms was not where it should be, and when we started in 2002, the GSM license was not where it should also be,” says Elegbe.
What that meant was Elegbe had to take a bet on the future.
“So, we basically made a bet that we were going to build an online real time payment infrastructure and we were going to make a bet that we can manage and design out the challenges of power and that telecoms will improve because if people were spending hundreds of millions of dollars to get a GSM license, it only makes sense that I could do a good job with those licenses. So, the bet was to attempt to create an online real-time payment infrastructure.”
That is exactly what they did and that bet has paid off significantly. From attracting a $200 million investment from Visa who took a 20% stake in the business, which pushed the company into unicorn status to the recent injection of $110 million joint investment from LeapFrog Investments and Tana Africa Capital to scale its digital payment services across the continent, Interswitch has been at the helm of democratizing cash transactions to 200 million Nigerians over the past two decades.
“The vision at that time was to leapfrog and to take Nigeria where it was at a very backward stage to a stage where it was more advanced. So, we wanted to create enough innovation to drive the penetration and adoption for electronic money and to that extent we were able to achieve that,” says Elegbe.
For Elegbe, the goal was never to become a unicorn. In fact, he did not even know what that term meant.
“I only began to know about the term unicorn when someday we got to know that Interswitch was now being described as a unicorn. In all my years running Interswitch, unicorn was never the goal for me. It was more of the ability to take one problem at a time, solve it, see the impact it was having on people and be encouraged by the problem we are solving.”
“In our case we began to hear about the unicorn thing when Visa invested in us [to] a valuation that was about a billion dollars. The objective was to just keep solving problems and getting joy when you see the problem solved. The idea of a unicorn is knowing that you are a billion-dollar valued business but for me it is just a mark and means nothing. Sooner or later everybody will get there. The real issue is what impact are you making with the technology that you have deployed,” says Elegbe.
‘Education Can Move The World’
Melvyn Lubega Co-founder, Head of Strategic Partnerships and Director, Go1
“I’m an African passionate about solving significant problems with technology.”
In 2021, just six years after its founding, eLearning platform Go1 became South Africa’s first tech scale-up to be valued at more than $1 billion. This was thanks to the tenacity of its co-founders South African, Melvyn Lubega, and Australian, Andrew Barnes.
The last time FORBES AFRICA sat down with Lubega was when he made the 2018 FORBES AFRICA 30 Under 30 list, and sitting down with him now he notes that the biggest change since then, rather than the unicorn milestone, was Go1’s exponential growth.
“In 2018, I think we had just over 100 people in the business, whereas today, we have over 700,” Lubega says. “But it’s not only about hiring more bodies, but more so the depth at which [we are] able to understand the problem we are solving.”
Go1 was founded in 2015 by Lubega along with Barnes, who he met at Oxford and capitalized on a gap in the enterprise training market. The global workplace training platform has now aggregated over 100,000 courses into one subscription, and offers it to private organizations as well as governments around the world.
“I think it’s realizing the global opportunity in what we’re building, even though we had our local roots, [has] been the big difference in terms of the size of the prize and of the opportunities,” Lubega says.
Just six years after its founding, Go1 is expected to surpass the value of a billion dollars thanks to its most recent capital raise that is near closing with a formal announcement expected soon.
Lubega was born and raised in South Africa. However, his parents were born in Uganda. His grandfather, having fathered 30 children, had always been passionate about education and was a medical doctor himself. This, for Lubega, is where he drew inspiration around wanting to solve the vocational education conundrum on the continent.
“I’m an African passionate about solving significant problems with technology,” he explains. “Education has had such an impact in my life, and something which has been ingrained in me since I was young…The role of education and excellence have [allowed] me incredible opportunities.
“So we just want to see the transformative effect. Something that has been very humbling in the business and we’re very fortunate about is that we have been able to upskill over five million people.”
Furthermore, technology has been the catalyst of this change and has also been the pioneer of taking this edtech to new heights, which includes the unicorn status. The fact that most of the unicorns are in the tech space, in Lubega’s opinion, has a lot to do with what problems are being solved at the moment.
“I think entrepreneurs are often solving smaller problems. And I think in sectors where the biggest problems exist is where the most value can be created and hopefully captured.”
However, Lubega is very cautious about Go1’s unicorn title. “It is humbling but it certainly wasn’t a target for us, if I’m being honest,” Lubega says. “Because for us, we were still working and building our business. Yes, we’re growing… [But] the reality is that we were still just building our business and trying to have an impact, because even before we raised the unicorn round, we [are] still targeting to get to a billion learners.”
‘Able To Build The Company To Over 200,000 Companies’
Shola Akinlade, CEO and Co-founder, Paystack Ezra Olubi, CTO and Co-founder, Paystack
“On a continent with over a billion people, it was shocking to see that we were struggling with processing payments when others were doing it quite easily elsewhere.”
Backed by strong global partners including Stripe, Visa and Y Combinator, Paystack with over 80,000 customers is on a mission to digitize transactions and solve the payments problem in Africa. The company currently processes over $200 million worth of monthly payments with a presence in Nigeria, Ghana, South Africa, San Francisco and Dubai.
Founded by Nigerians Shola Akinlade and Ezra Olubi in 2015, Paystack’s simple and easy-to-use payment solution allows businesses to set up card payments as well as mobile money transactions on their digital platforms in under 30 minutes.
“On a continent with over a billion people, it was shocking to see that we were struggling with processing payments when others were doing it quite easily elsewhere. We are looking to expand our solution across Africa while we run independently with the backing of Stripe,” says Akinlade.
Akinlade is an alumnus of Babcock University, several miles north of the Nigerian capital, Lagos, with a degree in Computer Science. After a brief two-year stint as a management trainee and Database manager with Nigerian Breweries which was later acquired by Heineken, Akinlade decided to go solo and began his first company, a software development and consulting company called Klein Devort, with their flagship product, Precurio, intended to create an intranet collaboration platform trusted by organizations in over 40 countries.
“We were able to build the company to over 200,000 companies and that opportunity led to me developing more software solutions for Nigerian banks where the inspiration for Paystack initially came,” says Akinlade.
With Stripe’s acquisition of Paystack for an estimated $200 million, Paystack will, in the long term, contribute to expanding Stripe’s global payments and treasury network which covers over 45 countries creating easy accessibility for its customers to expand to Africa according to Akinlade.
Backed By Tech Legends
Iyinoluwa Aboyeji Co-founder, Andela
“I thought to myself there has to be someone in Nigeria who can do this especially with our population of 200 million.”
After graduating from Waterloo University, in Canada, Iyinoluwa Aboyeji, spotted an opportunity in the Nigerian massive open online courses (MOOCs) market and relocated back home to start Fora.com, a startup with a focus on incorporating MOOCs into the university environment.
After running the company for a number of years, Aboyeji managed to score a meeting with Jeremy Johnson, an investor in New York and, after a few cups of coffee, made the decision to pivot from MOOCs to skills training with a specific focus on Salesforce engineers who were hard to find at the time.
“Jeremy told me if I could find him a Salesforce engineer who was great, he could pay $150,000 and I thought to myself there has to be someone in Nigeria who can do this especially with our population of 200 million,” says Aboyeji.
With that, Andela was born and since then the company has evolved to become one of the most coveted software skills training companies on the African continent. At its height, the firm was lauded for being harder to get into than Harvard, training the continent’s top software engineers for the global market.
Today, Andela is helping tech companies build remote engineering teams with a valuation of $1.5 billion following a $200 million series E round led by Japanese financial giant, SoftBank.
At that point, the company had already secured backing from the Chan-Zuckerberg Initiative and Spark Capital. So far, the company has raised a total of $381 million since being founded by Aboyeji in 2014.
Aboyeji still holds a small stake in the company after moving on to co-found another African unicorn, Flutterwave. His latest venture, The Fund for Africa’s Future, backs mission-driven founders turning Africa’s biggest challenges into global businesses that deliver outsized returns and impact.
Expanding Africa’s E-Commerce Sector
Iyinoluwa Aboyeji, Olugbenga Agboola, and Adeleke Adekoya Co-founders, Flutterwave
Flutterwave is a Nigerian fintech company with headquarters in the US, providing payment infrastructure for global merchants and payment service providers across Africa. It was founded in 2016 by Iyinoluwa Aboyeji, Olugbenga Agboola, and Adeleke Adekoya. It accepts 30+ currencies, averages 500,000 payments daily, and has over 15 payment options.
In 2021, Flutterwave raised a $170 million Series C funding round, giving the company a valuation of over $1 billion, hailing its unicorn status. In 2022, Flutterwave raised a $250 million Series D funding round, valuing the company at over $3 billion valuation.
In 2021, Flutterwave launched Send, an African-focused remittance service. During the pandemic, Flutterwave launched a digital store to help the continent’s SMMEs. Over 20,000 businesses joined through a campaign known as ‘Keeping the Lights On’. On the platform, customers can create a free e-commerce store and create invoices.
September 2022 saw the Central Bank of Nigeria granting the company the country’s highest payment processing license, allowing it to process transactions between banks and cards without intermediaries including processing funds transfers between banks and fintechs, as well as participating in agency banking and other payment services.
Digitizing African Economies In A New Era
Wemimo Abbey Co-Founder, Esusu
“We like to call ourselves [social] justice capitalists.”
Wemimo Abbey, co-founder of Esusu, a company which reports rent payments to major credit bureaus helping renters establish their credit scores and owners maximize returns, says the company was born out of personal struggles.
Abbey grew up in the slums of Lagos, Nigeria, and was raised by his mother, along with two sisters, after his father passed away when he was just two years old. Despite having less than a secondary school education, his mother ensured he went to one of the best high schools they could find. This took the family from the lush tropical climate of Lagos to the freezing climes of Minnesota in the US.
“During that transition, something important happened. We didn’t have a credit score. We walked into one of the largest financial institutions to borrow money [and] were turned away. We had to go borrow money from a predatory lender at over 400% interest rate.”
His mother pawned his father’s ring and borrowed money from church members to make payments. This led Abbey and his co-founder, Samir Goel, to start a company premised on the idea that no matter where you come from or the color of your skin, your financial identity shouldn’t ring fence your path in life.
Aside from establishing credit scores, Esusu gives zero-interest rent relief paid directly to landlords when people cannot pay, so people are not evicted.
Abbey says they’re not solving homelessness backwards, adding that they operate on the social aspect of ESG – to give data-driven improved credit scores.
After university, both Abbey and Goel quit their corporate jobs, combining savings and $100,000 in credit card debt to fund the startup. After being rejected by almost 326 potential investors at the time, Abbey says it’s a scrappy story of realizing potential. Today, Esusu covers three million rental units in 50 US states, across real estate asset classes including affordable public housing, luxury student housing, military, and everything in between. They’ve grown from a staff of 20 to 200 in under two years. Not to mention, they’re making an impact despite their youth; Goel is 28, Abbey is 30.
“At Esusu we like to call ourselves [social] justice capitalists. Doing good and doing well isn’t mutually exclusive,” Goel says. He argues they are in the best position to create solutions for the demographic that not only looks like them but also are going through similar challenges.
They started with a savings model, digitizing age-old collective community savings techniques. However, they soon learned people already knew how to save, so they pivoted their model after realizing most consumers didn’t have access to affordable financing in an emergency.
“It’s quite obvious that we don’t look like everyone else in Silicon Valley. But I think beyond that, one of the things we realized is a lot of the people we were talking to lacked proximity to the issues that we were trying to solve,” says Goel. He says that, from their perspective, they’re serving the majority, as there are more people who are credit invisible like immigrants, minorities, and low-income households. Within these brackets, there are more people living paycheck-to-paycheck than those who are not.
Abbey reflects that a mobile phone is a powerful tool for digitizing African economies and unlocking opportunities. “We’re very excited that on the African continent with the emergence of new technologies, borrowing money doesn’t have to be a derivative of your father’s last name anymore.” He adds that it has become more about credit risk and financial profiles. These innovations, he notes, means the world is seeing Africans create solutions for Africans.
“So this is the movement of the African continent from this aid-based, poverty-ridden continent to a new era of innovation, technology, championed by its youth population. We think the movement is just getting started. So, it’s common business sense [for] the folks in Silicon Valley making these investments on the continent. My opinion – the best is still yet to come.”
Goel says Esusu does not look like other unicorns in the US, as their capitalization table is 75% black and brown women, the management team is 93% people of color, first- or second-generation immigrants and women. The company as a whole is composed of people of color.
Abbey says when they were declared a unicorn, they were immensely grateful. The company tells the story that it’s possible to invest in a minority-owned business and outperform other companies. Overall, Esusu tells a story of the impact and effect capital can have in the lives of many.
Abbey observes that a lot of African countries are young with the oldest around 60 years old, unlike the US which is over 300 years old. “If you look at the rate of growth, it’s actually accelerating compared to where places like the United States were when they were at this age,” he says.
It’s a renaissance that technology is going to revolutionize the way the continent thinks, and the way other places think about Africa. The narrative is changing from tourism and wildlife to which high-growth startups to invest in.
“We need to do more of the showing and stop telling people. Let the record speak for itself! Relegate the rhetoric, consider there’s something genius and there’s something special about the folks that come from the continent. And we’re just getting started. Because we’re young, we’re vibrant, we have ideas that can really change the world,” Abbey concludes.
Other Unicorns Operating In Africa
OPay is a mobile payment service platform, allowing users to send and receive money, as well as pay bills in Nigeria and beyond. OPay was founded in 2018 by Zhou Yahui, a Chinese billionaire entrepreneur.
OPay has 18 million registered app users and 500,000 agents in Nigeria, the website reports, processing $3 billion monthly in transactions. OPay gives individuals a point-of-sale machine and software, acting as banks and ATMs. Another form of payment processing is the use of QR codes. The app attempts to serve the unbanked in Africa, and beyond.
In 2021, the World Economic Forum reported that OPay was a $2 billion fintech startup, becoming Africa’s fastest-growing unicorn, arriving at this milestone in less than three years.
Since 2018, Nigeria has been the base of the company’s operations. Beyond point-of-sales machines, agents can open bank accounts, receive deposits and fulfill withdrawals.
In 2022, OPay and Mastercard announced a strategic partnership to expand the service’s offerings across the Middle East and Africa. The partnership allows consumers and merchants to engage with businesses worldwide due to a Mastercard virtual payment solution linked to the OPay eWallet. Customers can also use the payment solution to access well-known global brands.
Wave Mobile Money is a US and Senegal-based mobile money provider assuring low fees on accounts, deposits, bill payments, and withdrawals for Senegal and the Ivory Coast. Reportedly serving 10 million people, Wave charges a controversial 1% commission to send money but does not charge to deposit or withdraw. While other companies use USSD codes, Wave uses QR codes on cards and in-app, scanned by an agent.
In 2021, Wave raised $200 million in a Series A round of funding. Overall, it has raised $290 million in equity and debt capital funding so far. This brought Wave’s overall valuation to $1.7 billion.
In July 2022, Wave cut 15% of its 2000 staff, affecting almost 300 employees in Burkina Faso, Mali and Uganda. A company spokesperson reported that a small percentage of those employees worked remotely. It reportedly secured a €90 million ($89,666,010) syndicated loan from the International Finance Corporation (IFC), Lendable, Norfund and other lenders in one of the largest debt deals on the continent. The loan, Wave reports, will help expand its customer base and grow operations.
Fawry Banking & Payment Technology Services is the largest e-payment network in Egypt, enabling electronic bill payments, mobile top-ups, and for merchant payments through websites, mobile phones and POS systems through its peer-to-peer model, with more than 60,000 service points. It was founded by Ashraf Sabry in 2008.
Fawry has banking options, microfinance products, insurance, a platform for consumer goods companies and merchants, as well as consumer finance.
Fawry reports that it processes two million transactions daily, with $8.3 billion processes in 2021. It has a network of 36 member banks and close to 270,000 agents. The myFawry app got 5 million downloads in 2021. This year the company reported that 40.5 million customers use the company monthly.
ADQ acquired 12.6% of Fawry for $68.6 million, signing a rights issue for additional shares worth $54.9 million.
In 2022, the EgyptAir Academy partnered with Fawry to make their services available on the academy’s electronic portal. Fawry announced it will begin providing the Sudanese payments platform, Cashi, with its digital transformation systems, as part of their strategy to expand into new markets and offer support for popular digital platforms.