Iyinoluwa Aboyeji had no interests in technology and had no interests in business. Where he lived, near Simcoe St, Oshawa around the University of Waterloo, Ontario, Canada, he had just one focus: to complete his legal studies and take up a job with the United Nations or become a career politician. But then, a stranger was in his way, baggage in hand, staring at him on a heavy afternoon. The stranger had just made it to Ontario, and was looking for where to stay, at least for a night. At first, Aboyeji thought this must be a joke: the stranger had long hair and was white. However, what followed was Pierre Arys ending up staying up to a year, before heading towards Silicon Valley for his cooperative education term. And what remained was an upturned man.
“He told me about this amazing world of Silicon Valley, tech and investments, and I was sold,” Aboyeji said, in a recent interview with Forbes.
Last week, after so many years of meeting Pierre Arys, Aboyeji turned in a Unicorn — not some rare, venerated white horse, but a continental payments Behemoth now valued at more than $1bn.
To be specific, according to news sources, Flutterwave, a payments company Aboyeji co-founded towards the tail end of 2016 (precisely December 1, 2016 in Nigeria), has raised a record-shattering $170m, putting it at a valuation of more than $1bn and by industry standards, a Unicorn.
While Flutterwave’s feat continues to make waves across Africa and beyond, we look at the lessons to be gleaned from the startup’s successful journey to a billion dollar company.
Solving A Continent-wide Problem In A Record Time
Flutterwave’s co-founders understood that although they were not the first in the industry they were about to confront, they needed to bring a major difference to the existing solutions. At the time they came, there was already, for instance, the Nairobi-based Cellulant doing exactly what they were about to do.
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In fact, a year after Flutterwave raised $10m Series A in 2017, Cellulant proceeded to raise $47.5m from heavy weight investor TPG Growth’s The Rise Fund.
The funding, even though the company had other businesses at the time, was solely for one purpose — to scale digital payments across Africa.
And even before the funding, Cellulant already had presence in several African countries, including Ghana, Botswana, Zambia, Kenya, Uganda, Rwanda, among others.
Flutterwave would only later, buoyed by its $10m and $10m raises in 2017 and 2018 respectively, launch operations in Kenya, Uganda and a few other countries.
Suffice it to say that Flutterwave knew from the outset — unlike Cellulant which kept on test-rolling different services, from napkin to telecom, to agriculture — the problem it was out to solve.
The startup also had a big sketch of a solution that would not only begin and end in Nigeria — it launched operations almost immediately at the time it was founded across Ghana, Kenya, and Uganda, the last two being homes to early Mpesa mobile money markets.
“Flutterwave began because of some of the experiences I had running my last company Andela,” said Aboyeji.
“One of the biggest problems we ran into was sending money into Africa. We had to incorporate in every African country we had developers so we could pay them. Because of that, we processed payments every one to three months to avoid incurring too many fees. Each time, it took at least a week to transfer the money to our local bank account and it still cost us a fair bit each time,” he said.
Having A Formidable Team With Global Connections
One thing that made the major difference for Flutterwave is its founding team, led by Aboyeji. Although co-founder Olugbenga Agboola was himself a techie at the time (having previously worked for PayPal and Google), and although they had penciled down notable tech talent from Paypal, Andela, Standard Bank, Google Wallet and other top companies, the coming onboard of Aboyeji as the CEO of the startup substantially changed the dynamics for the company.
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Prior to his coming onboard Flutterwave, Aboyeji had previously helped Andela, a startup he personally founded, to secure up to $180m in funding within a record time from notable venture capital investors, including GV, Omidyar Network, Spark Capital, Learn Capital, Salesforce Ventures, TLcom Capital Partners, Chan Zuckerberg Initiative, DBL Partners, CRE Venture Capital, Amplo, among others. A bulk of the money was raised in just four years, with funding done almost every year, even though Andela is but an edtech company.
And so his impact on the startup as the CEO of Flutterwave was felt immediately. He first properly launched the startup at the Y Combinator of 2016, and then followed it up with a $10m fundraise in 2017 and another $10m in 2018.
It is also noteworthy that some of the investors in Flutterwave — such as CRE Ventures — were previous investors in Andela.
In essence, having a team with deep connections to the Silicon Valley at a time when the concepts of VCs and startups were relatively new to the continent helped Flutterwave to mark its territory early enough.
There is, therefore, no gain saying the fact the first two years of the startup (2016–2018) was key to its eventual success.
A History Of Favourable Regulatory Ecosystem
Flutterwave’s success could also be tied to a relatively stable regulatory ecosystem that favoured it far ahead of others that came later. But first, there is a need to mention that the startup was also strategic about its incorporation.
That is, apart from headquartering in the United States, it also maintains legal presence in countries where it is currently in operations. This strategy has enabled it to decentralise the effects of adverse regulations, especially in Nigeria where its founders come from, and which is its primary market.
Between 2016 and 2021 during which the startup substantially functioned, Nigerian regulators were relatively less killing with their regulations.
Major efforts towards regulating the fintech industry in Nigeria only started in 2018, two years after the company was founded.
Today, the Central Bank of Nigeria has been proactive with regulations, including recently blocking banks in Nigeria from hosting accounts associated with cryptocurrency trading. It has also stopped fintech startups from receiving remittances into Nigeria.
Generally, Nigeria has equally been unfavourable to bike-hailing business, with the country’s Lagos state government banning bike-hailing activities on its major highways, a singular act that has put so many investments in bike-hailing startups in the West African country at risks of failure.
Had the Central Bank of Nigeria been ruthless with regulating fintech companies such as Flutterwave, it is doubtful whether it would have achieved the Unicorn status in such a record time.
Strong Product Diversity And Partnerships
Apart from offering a wide range of fintech support services from POS (Point Of Sale) to Debit and Credit Cards, Bank Account, Mobile Money Wallets, American Express, M-Pesa, Visa QR, Bank Transfer and USSD, Flutterwave made a major move by differentiating and targeting customer segments.
First, it expressed its interests in African businesses doing local and international transactions but who are finding payments difficult.
Through the launch of its Business-to-Business (B2B) product, Rave by Flutterwave — or simply Flutterwave for Business — in 2017, the startup was able to resolve this.
With Flutterwave for Business, businesses can choose to integrate Flutterwave with their websites to power checkouts or can simply generate payment links from their dashboards if they don’t have websites.
That way, accepting and monitoring payments, customers and so much more have become much easier and transparent for a lot of businesses, not just in Nigeria but across 33 African countries and the UK and US where the startup is present in.
Again, noticing that by focusing only on a B2B model, an important customer base may have been neglected, Flutterwave quickly expanded its product offering to end users under a B2C model through Barter by Flutterwave.
Barter by Flutterwave is a mobile app for people who want to create virtual cards for their shopping, or send money within their friendship circles, as well as people who want an easy and convenient way of paying bills.
Today, the startup claims to have processed 140 million transactions worth more than $9 billion barely 5 years after it was founded. It also claims 290,000 businesses use its platform to carry out payments under its Rave model, while over 500,000 users do so using Barter. The company’s most recent product offering, Flutterwave Store, launched at the heart of the Coronavirus pandemic in 2020 and already available across 15 African countries, now, also, helps over 20,000 merchants to create storefronts and sell their products online.
It is therefore doubtful if, without diversifying to other product categories, Flutterwave would have reached the Unicorn status.
Flutterwave also seems to be investing more on non-customers than customers. The startup has poured a lot of resources in securing partnership deals with leading payments companies across the world.
In 2019, it entered into partnership with China’s Alipay, which in 2013 surpassed PayPal in payments volume. The partnership sees Flutterwave integrated into the Alipay platform, a move which is considered a significant step towards capturing payments activity around the estimated $200 billion in China-Africa trade.
Apart from Alipay partnership, Flutterwave currently also maintains partnerships with Visa, Worldpay, among others.
Good Choice Of Investors
Perhaps, the single most significant contributor to Flutterwave’s success is not just the funding, but the choice of the investors who understand its market. For one thing, the backing from Y Combinator in 2016 set the pace and help sustain the startup’s valuation. And for another, the entrance of investors such as Green Visor, GreyCroft Partners, Glynn Capital, MasterCard, Fintech Collective, 4DX Ventures, Raba Capital, Visa, Endeavor, African fund CRE Venture Capital, WorldPay FIS, among others, further helped to plug the startup into the global value chain.
| S/N | AFRICAN UNICORNS | SECTOR | YEAR FOUNDED | YEAR BECAME A UNICORN | COUNTRY (PRIMARY MARKET) | FOUNDERS |
|---|---|---|---|---|---|---|
| 1 | Jumia | Ecommerce | 2012 | 2019 | Nigeria | Jeremy Hodara and Sacha Poignonnec, ex-McKinsey consultants |
| 2 | Interswitch | Financial services | 2002 | 2019 | Nigeria | Mitchell Elegbe |
| 3 | Fawry | Financial services | 2008 | 2020 | Egypt | Ashraf Sabry |
| 4 | Flutterwave | Financial services | 2016 | 2021 | Nigeria | Iyinoluwa Aboyeji, Olugbenga Agboola |
Respect To The Entrepreneurs, Iyin Aboyeji And Olugbenga Agboola
After the encounter with Arys, Aboyeji co-founded with him, Bookneto, a Canadian online question and answer tool designed to facilitate online examination service. The University of Waterloo, however, sued the hell out of the startup for infringing the intellectual property rights in past questions designed by some professors, forcing the founders to sell the startup to Canadian Innovation Centre.
On coming back to Nigeria, Aboyeji, under the continuing inspiration of Arys, proceeded to branch over to Fora.com, a startup that ran open online courses, like Udacity, Coursera, etc. But then he claimed he was naive for Nigerian trusting regulatory authorities so much and for believing that by partnering with Nigerian universities Fora.com was going to make massive hits.
He quickly spun Fora.com into an MBA-selling programme, targeting young bankers desirous of climbing the corporate ladder. That, too, was blown away by the hurricane of superior insights suggested to him by one Jeremy Johnson in New York, on his voyage to secure funding for the then MBA-selling Fora.com.
He had previously met Jeremy in Nigeria, and so being in New York, Jeremy’s place, it was necessary that they met. Jeremy told him that education geared towards skills rather than degrees was what Nigeria, which was sinking under heavy unemployment figures, needed. And so, there and then, Andela, Africa’s leading talent acquisition startup, most recently valued at $700m, was born.
Done with Andela, including helping it to raise more than $180 million in venture capital from the likes of Mark Zuckerberg and other notable investors from Silicon Valley, Aboyeji made his way to Flutterwave, then solving the second problem he was looking to solve — payments.
Aboyeji is no longer the CEO of Flutterwave, having resigned in 2018. He had further moved on to found a community investment firm Future Africa, where he is presently.
For Agboola, this is his first time of being a proper entrepreneur. Before Flutterwave, he had worked with Nigeria’s Standard Bank, Guarantee Trust Bank, Sterling Bank and Access Bank, mostly as head of digital financial services. He is also a former techie with PayPal and Google.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer
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