The startup seed fund established as a collaboration between Andela and Flutterwave co-founder Iyinoluwa Aboyeji has announced it made nine investments totaling US$1 million in the third quarter of the year, taking its portfolio to 28 companies. Under the auspices of Future Africa Fund which was launched in April 2020.
Iyin Aboyeji, co-founder, Andela and Flutterwave
The Fund was opened to co-investors and members began being admitted in June, and in less than six months Future Africa has built a community of over 125 angel investors from all over the world. The first deal presented to the Future Africa Collective was oversubscribed by 28 per cent within 72 hours, and the second deal was oversubscribed by 68 per cent within seven hours. Sources say that both deals had an allocation of US$100,000 as they raised over US$250,000 for a particular company within 4 days.
In total, Future Africa has backed 28 startups so far, with nine of those investments made in Q3, totalling US$1 million. They are all Nigerian startups.Those startups are investtech platform Bamboo, tech-enabled concierge Eden, agri-tech startup Releaf, lung imaging device maker Tambua Health, credit provider Indicina, lending startup Evolve Credit, distribution platform Shara, prop-tech startup Myawayhome, and data company Stears.
The Fund’s managers say that they have also pioneered a new model of investing in Africa that gives investors the flexibility to subscribe to a quarterly fund and get exposure to all the deals we participate in within that specific quarter. “We call this the Future Africa Rolling Fund. So far we’ve raised over US$500,000 in this fund,” the source said.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
Cash may have traditionally been king, but Covid-19 has contributed to a faster pace of digital payment adoption. Recently, two global fintech players discussed the emergence of a plethora of digital payments and debated if cash is on its way out. OmosalewaAdeyemi, Head of Global Partnerships and Expansion at Flutterwave and Nicolas Vonthron, co-CEO of Mama Money; explored the future of payments and banking in an increasingly digital world.
OmosalewaAdeyemi, Head of Global Partnerships and Expansion at Flutterwave
Sending money home during the lockdown
Vonthron says Mama Money’s digital offering grew five times during lockdown as users look for ways to send money home online following sudden border closures. “There are 5 million migrants in South Africa who came to find a better future for their families. At Mama Money, we help them access financial services and enable them to send money home to over 50 countries in Africa, Asia, and Europe at a fair price.”
The digital identification challenge
Digital identification still remains a key requirement of regulators. It is also a major challenge for fintechs. With Mama Money, migrants can easily use their passports, foreign ID, or asylum documents for identity verification, as opposed to the more rigorous verification requirements by banks and other financial institutions.
Reacting to their seamless verification and compliance mechanism, Vonthron says, “On the receiving side, we partnered with companies such as Flutterwave and mobile money fintechs who do due diligence and have reliable identity mechanisms.”
Vonthron points out that since no off-the-shelf identification system that does not require a physical document exists, the digital identity challenge has yet to be solved.
Adapting to consumer behaviour
According to Adeyemi, Africa has more than 300 types of digital payment methods that don’t speak to each other, making it difficult to pay across countries and even within a country. However, this is the problem Flutterwave presently solves by partnering with fintechs like Mama Money. She continues, “Flutterwave has focused on innovation and partnerships because it is difficult to change consumer behaviour in each country.”
South Africans prefer credit cards and electronic fund transfers for payments and therefore Flutterwave built a solution to allow for these payments, and integrated with local fintechs. Flutterwave’s payment platform unites various niche and local payment systems available on the African continent.
Nicolas Vonthron, co-CEO of Mama Money
With the popularity of mobile payments on the continent, Flutterwave and Mama Money have simplified the process for a South African to support a Nigerian, by tapping a few buttons on a phone. Small and medium businesses are included in the race to go digital.
Businesses are going digital
The pandemic and the resultant lockdown made consumers more willing to try online methods of payment. Additionally, some central banks across the continent asked players in the financial industry to reduce transaction rates.
In hindsight, the lockdown has been generally positive for digital transactions, with many more businesses opting for digital payments as movement ceased. This was the key motivation for the Flutterwave Store. This product is helping SMEs sell and deliver products conveniently.
On the general verification requirements for Flutterwave, Adeyemi says, “Flutterwave registers businesses, but also solopreneurs who have a verifiable identity. We request different information for each vendor and with individuals; we require identification such as a selfie, passport or identification document.
Cryptocurrencies
While Flutterwave and Mama Money see the advantages of cryptocurrency, they are not yet ready to delve into the market. “Crypto is not a good medium of exchange and is rather used for investments and speculation, but blockchain could enable more efficient high-value settlement,” says Vonthron.
He believes it is not really feasible for Mama Money’s customers to use crypto for cross border transfers because most of its customers are not sufficiently literate in cryptocurrency and many regulatory frameworks do not permit it. “We are watching what is happening, but we have not yet seen anything working at scale,” Adeyemi says.
Is cash really on its way out?
Vonthron and Adeyemi agree that digital banking is on the increase, but believe that it can only gain prevalence if infrastructure issues, such as the requirement of identity for onboarding, are fixed. Adeyemi does not believe in a world without cash, although it will certainly be used less. For her, cash may continue to be king for the foreseeable future.
Their views on traditional banking align, as they still see the need for traditional banking, but agree that there is a need for collaboration between traditional banks and fintechs.
For the fintech space in Africa to continue to grow, Adeyemi believes that the conversation between innovators and regulators will help to solve many problems. “We need engagement around the possibilities and the risks for regulation to protect both fintech and consumers. Regulation is a big deal and we should see the regulator as our friend, not the enemy.”
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
Nigerian based fintech startup Flutterwave has launched a very innovative portal for African merchants to create digital shops to sell online. The portal named Flutterwave Store has been described as less Amazon and more eBay — with no inventory or warehouse requirements. Flutterwave insists the move doesn’t represent any shift away from its core payments business. The company accelerated the development of Flutterwave Store in response to COVID-19, which has brought restrictive measures to SMEs and traders operating in Africa’s largest economies.
Flutterwave’s CEO Olugbenga Agboola
After creating a profile, users can showcase inventory and link up to a payment option. For pickup and delivery, Flutterwave Store operates through existing third party logistics providers, such as Sendy in Kenya and Sendbox in Nigeria. The service will start in 15 African countries and the only fees Flutterwave will charge (for now) are on payments. Otherwise, it’s free for SMEs to create an online storefront and for buyers and sellers to transact goods.
While the initiative is born out of the spread of coronavirus cases in Africa, it will continue beyond the pandemic, Flutterwave’s CEO Olugbenga Agboola is adamant Flutterwave Store is not a pivot for the fintech company, which is an alum of Silicon Valley accelerator Y-Combinator. “It’s not a direction change. We’re still a B2B payment infrastructure company. We are not moving into becoming an online retailer, and no we’re not looking to become Jumia,” he was quoted as saying. He was referring to Africa’s largest e-commerce company, which operates in 11 countries and listed in an NYSE IPO last year.
Flutterwave has a very different business than the continent’s big e-commerce players and plans to stick with it, according to him. When it comes to reach, VC and partnerships, the startup is one of the more connected and visible operating in Africa’s tech ecosystem. The Nigerian-founded venture’s main business is providing B2B payments services for companies operating in Africa to pay other companies on the continent and abroad.
Launched in 2016, Flutterwave allows clients to tap its APIs and work with Flutterwave developers to customize payments applications. Existing customers include Uber and Booking.com. In 2019, Flutterwave processed 107 million transactions worth $5.4 billion, according to company data. Over the last 12 months the startup has been on a tear of investment, product and partnership activity. In July 2019, Flutterwave joined forces with Chinese e-commerce company Alibaba’s Alipay to offer digital payments between Africa and China.
The Alipay collaboration followed one between Flutterwave and Visa to launch a consumer payment product for Africa, called GetBarter. Then in January of this year, the startup raised a $35 million Series B round and announced a partnership with Worldpay FIS for payments in Africa. On the potential for Flutterwave Store, there’s certainly a large pool of traders and small businesses across Africa that could appreciate the opportunity to take their businesses online. The IFC has estimated that SMEs make up 90% of Sub-Saharan Africa’s business serving the region’s one-billion people.
Flutterwave confirmed Flutterwave Store’s initial 15 countries will include Africa’s top economies and tech hubs of Nigeria, Ghana, Kenya and South Africa.Those markets already have a number of players driving digital commerce, including options for small businesses to post their wares online. Jumia’s Jumia Marketplace allows vendors register on its platform and use the company’s resources to do online retail. Facebook has made a push into Africa that includes its overall push to get more users to sell on Facebook Marketplace. The social media giant now offers the service in Nigeria — with 200 million people and the continent’s largest economy.
eBay has not yet gone live in Africa with its business to consumer website, that allows any cottage industry to create a storefront. The American company does have an arrangement with e-commerce startup MallforAfrica.com for limited sales of African goods on eBay’s U.S. shopping site. On where Flutterwave’s new product fits into Africa’s online sales space, CEO GB says Flutterwave Store will maintain a niche focus on mom and pop type businesses.
“The goal is not be become like eBay, that’s advocating for everybody. We’re just giving small merchants the infrastructure to create an online store at zero cost right from scratch,” he said. That’s something Flutterwave expects to be useful to Africa’s SMEs through the COVID-19 crisis and beyond.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
New funds are increasingly opening up for Africanstartups. Iyin Aboyeji, who made a mark as an early co-founder of Andela and then Flutterwave has launched Future Africa Collective, a fund looking to make more accessible the opportunity of investing in African tech startups for younger interested investors.
Iyin Aboyeji, co-founder, Andela and Flutterwave
“As with every recession, foreign capital will dry up [and] as soon as there’s a recession or a Naira devaluation, companies die,” Aboyeji says. “The question is ‘how do we maintain resilience [of the ecosystem] by quickly figuring out alternative funding sources.’’
Here Is All You Need To Know
With this new model, interested young startup investors will be offered the opportunities to join and invest in screened startups. “We do the diligence and present that to qualified pool of investors for a chance to fund the deal,” Aboyeji says in an interview.
Investors who decide to fund any deals can follow through with the Collective’s US-based fund partner.
So far, signed up investors have comprised diaspora-based Nigerians looking to tap into tech opportunities back home as well as younger, upwardly mobile Nigerians interested in aggressive investment strategies, Aboyeji says.
Aboyeji says the big goal is to “create new and more sustainable funding sources for the ecosystem” and “extend funding to founders particularly at the earliest stages.”
How Good Is The Model For The African Startup Ecosystem
Already, there are early signs of promise: eight investors pooled $100,000 for the Future Africa Collective ’s first fully funded deal within three days and it received 400 applications from potential investors within the first week.
Much of the Collective’s credibility likely stems from Aboyeji’s track record as a startup founder and investor. He previously co-founded developer outsourcing firm Andela and payments company Flutterwave — both companies have received over $235 million in funding between them.
Earlier this week, 54gene, a genomics research firm Aboyeji invested during its seed round, also raised $15 million in a Series A round. Aboyeji, 29, has already invested in 20 companies across Nigeria and East Africa.
The Collective’s launch coincides with notably growing appetite to invest in dollar-denominated assets among Nigerian millennials. Given the threat of inflation and devaluation of the Nigerian naira, dollar-denominated assets are a more stable choice for long-term bets to store and grow wealth. And, over the past year, a crop of local fintech startups have found success offering products that allow young Nigerians invest in US stock markets and real estate.
Being able to raise funding from several “ordinary” Nigerians (average ticket sizes expected to range between $10,000 and $25,000) is also likely to boon for local startups, particularly early-stage companies seeking seed funding. This is especially the case with local high net-worth individuals not investing in or championing Nigerian startups like their counterparts in the US and Europe.
The timing of the Collective’s launch, amid the coronavirus pandemic, is also important. With local and global economies shut, the economic cost of the outbreak is climbing. World Bank projects Sub Saharan Africa will fall into its first recession for 25 years while the International Monetary Fund predicts Nigeria is headed for its worst recession in 30 years.
Investment in Nigerian startups has soared over the last five years, making Lagos the most valuable tech hub in Africa and dominating investment rounds on the continent last year. But the funding has been dominated by funds from Silicon Valley, London, China or elsewhere rather than from local investors or high net worth individuals, who tend to focus on more traditional sectors like energy and agriculture.
While there’s an increasingly influential angel investor community building in Nigeria and across the continent, there have been fewer opportunities open to non-professional or sector-affiliated investors. By opening up to everyday middle-class investors, Collective will be aiming to plug an underserved gap where there’s increasing interest. One example of a startup that has tried to open up investment opportunities to ordinary Nigerians is Farmcrowdy, which allows backers to stake stakes in local farms.
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.
Nigeria and San Francisco-based fintech startup Flutterwave is starting this year on a grand scale. The startup has raised a $35 million Series B round and also announced it has processed $5.4 billion dollars for businesses and individuals and new partnership with Worldpay FIS for payments in Africa.
Flutterwave CEO Olugbenga Agboola
‘‘With this capital from our investors, we will be able to continue to provide innovative solutions…to make and receive payments seamlessly. As always, our goal remains the same, we want to continue to connect Africa to the rest of the world by making sending and receiving payments as frictionless as possible for banks, businesses and individuals,’’ Olugbenga ‘GB’ Agboola, Flutterwave Cofounder and CEO said.
Here Is All The Deal
This Series B round of investment was led by the US VC firms Greycroft and eVentures led the round, with participation of Visa, Green Visor, Endeavor and African fund CRE Venture Capital. WorldPay FIS also backed Flutterwave’s $35 million Series B.
Flutterwave is also partnering with Worldpay in Africa, thereby making Flutterwave, WorldPay’s payment provider in Africa.
With the funding, Flutterwave will invest in technology and business development to grow market share in existing operating countries, CEO Olugbenga Agboola.
The company will also expand capabilities to offer more services around its payment products.
Flutterwave’s latest funding brings the company’s total investment to $55 million and follows a year in which the fintech venture announced a series of weighty partnerships.
As a sector, fintech gains the bulk of dealflow and the majority of startup capital flowing to African startups annually. VC to Africa totaled $1.35 billion in 2019, according to WeeTracker’s latest stats.
In July 2019, the startup joined forces with Chinese e-commerce company Alibaba’s Alipay to offer digital payments between Africa and China.
The Alipay collaboration followed one between Flutterwave and Visa to launch a consumer payment product for Africa, called GetBarter.
Why The Investors Invested
A key take-away from this latest investment is that Greycroft Partners, the lead investor in this round is further affirming its confidence in the Nigerian startup. The VC led its first investment in the startup in 2017 when it invested over USD10 million in the startup.
“Greycroft is scouring the world for exciting SAAS companies, and FlutterWave is one of the fastest growing software companies we have seen,” says Ian Sigalow at Greycroft Partners on the occasion of Flutterwave’s fundraising in 2017. “Flutterwave built a lightweight, developer-friendly tool that provides key elements of a modern banking core, and they have quickly displaced legacy solutions across Africa. In Nigeria alone they are already processing a few percent of GDP from a cold start at the beginning of last year.”
The new round makes Flutterwave the payment provider for Worldpay in Africa.
“With this partnership, any Worldpay merchant in Europe or the U.S. can accept any African payment. If someone goes to pay Netflix with an African card, it just works,” Olugbenga Agboola said.
In 2019, Worldpay was acquired for a reported $35 billion by FIS, a U.S. financial services provider. At the time of the purchase, it was projected the two companies would generate revenues of $12 billion annually, yet neither has notable presence in Africa.
What Flutterwave Does
Launched in 2016, Flutterwave allows clients to tap its APIs and work with Flutterwave developers to customize payments applications. Existing customers include Uber, Booking.com and e-commerce company Jumia.
In 2019, Flutterwave processed 107 million transactions worth $5.4 billion, according to company data.
Flutterwave did the payment integration for U.S. pop-star Cardi B’s 2019 performances in Nigeria and Ghana. Those are two of the countries in which the startup operates, in addition to South Africa, Uganda, Kenya, Tanzania, Zambia, the U.K. and Rwanda.
Flutterwave’s platform has served the increased B2B business payment needs spurred by the decade of growth and reform that has occurred in Africa’s core economies.
With This Round Of Financing Flutterwave Is Further Diversifying
This means Flutterwave will provide more solutions around the broader needs of its clients.
The Nigerian-founded startup’s main business is providing B2B payments services for companies operating in Africa to pay other companies on the continent and abroad.
“Our business goes beyond payments. People don’t want to just make payments, they want to do something,” he said.
“We don’t just want to be a payment technology company, we have sector expertise around education, travel, gaming, e-commerce, fintech companies. They all use our expertise,”
“If you are a charity that wants to raise money for cancer research in Ghana, or you want to sell online, or you’re Cardi B…who wants to do concerts in Africa…we want to be able to set up payments, write the code and create the platform for those needs,” he added.
To that effect, Agboola said the company will hire more business development staff and expand its developer team to create more sector expertise, according to Agboola.
That also means Flutterwave, which built its early client base across global companies, aims to serve smaller African businesses, including startups. Current customers include African-founded tech companies, such as moto ride-hail venture Max.ng.
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.
He could be contacted at udohrapulu@gmail.com
Indeed Flutterwave is looking at China’s population of 1.4 billion here. It has just announced it is going into a landmark partnership with Chinese payment solution Alipay, which overtook PayPal as the world’s largest mobile payment platform in 2013, and is today the world’s number one mobile payment service organization and the second-largest mobile payment service organization in the world.
The Flutterwave/AliPay connection is probably the biggest thing to ever happen to African tech if we understand the full implication. China is in play guys. Over One BILLION users are in play. I have always said, don’t build for Africa…..alone! Victor Asemota✔@asemota, a social commentator.
Here Is The Deal
Payments is partnerships and we’re happy to announce that we have partnered with @Alipay to create even more avenues for our merchants to seamlessly receive payments from customers all over the world, Flutterwave noted on its Twitter handle
What this means is “ that all our merchants can accept or install Alipay as a payment type to accept payments from its billion users,” Flutterwave CEO Olugbenga Agboola said in an interview.
“There’s a lot of trade between Africa and China and this integration makes it easier for African merchants to accept Chinese customer payments,” he noted.
The partnership is crucial because Flutterwave will earn revenue from the partnership by charging its standard 3.8% on international transactions. Flutterwave currently has more than 60,000 merchants on its platform, according to Agboola.
There’s also a catch for Flutterwave, as being integrated with Alipay now gives all of its merchants access to more than 1 billion users on the Alibaba product.
“Alipay is available in addition to card, Barter, Mobile Money and other payment channels on the Rave checkout modal,” Flutterwave said in a statement.
“We’ve set out to provide the complete payment solution for Africans to thrive in the global economy. The complete payment solution would first require interconnectivity within Africa, then connectivity from Africa to the world,” says Flutterwave.
Flutterwave is a Lagos and San Francisco-based fintech startup. The Nigerian B2B payments platform allows African companies to send out payments to other firms around the world.
Access To Chinese And African Markets
This partnership with Alipay which has a large network in China will help Alibaba capture payments activities between Africa and China, whose volume has been put at USD 200 Bn.
“Because of that I was in China to do meetings with Jack Ma and the only ask I had from that trip is ‘I want to be the Africa payment infrastructure that plugs directly into Alipay,’ ” Agboola said.
Flutterwave has been able to connect African countries such as Nigeria, Kenya, South Africa, Ghana, Uganda and Rwanda with one another. This makes cross-border payments easy for several companies.
“So it was about time we connected Africa to the world. We started with the U.S already, but you can’t connect Africa to the world without China”. @Honcho_Honips
With this partnership, there is a high probability that you’ll be able to pay your Chinese import agents directly with your naira.
I know #WaverSZN sounds like an empty boast or just a fun term but to us, it means a lot. It’s about living our dreams. Our dreams of building out a platform that empowers everyday African merchants to meaningfully partake in global trade.
Alibaba founder Jack Ma has made several trips to the continent and this March announced the $1 million Africa Netpreneur Prize for African startups and founders. Chinese company Transsion — a top-seller of smartphones in Africa under its Tecno brand — operates an assembly facility in Ethiopia and announced its IPO this year.
Earlier this year, Flutterwave entered a collaboration with Visa, and the team-up launched GeBarter, a consumer payment product for Africa.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
