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  • Papama Nyati

A butterfly in the Unicorn club

With the recent announcement of their Series C round of a whopping US$170 million, Flutterwave is now valued at $1 Billion - making it a new member of the exclusive Unicorn club. Some may argue that Flutterwave is Africa’s first credible “unicorn”. Nevertheless, their new found status and global footprint in a span of half a decade speaks to Africa’s ability to innovate for the world.

The Butterfly Effect is a concept invented to highlight the possibility that small causes may have momentous effects in the future. Flutterwave was founded on the same premise - that the flapping of a butterfly’s wings in one location, transcends into a tornado in another. The Nigerian fintech company is flying high on its mission to simplify and aggregate Africa’s fragmented online payments landscape, and their ascension into a billion dollar valuation validates their footprint in global payments.

We are still on the Paystack-Stripe acquisition buzz, and again Africa’s fintech sector strikes a head-turning deal. The popularity of fintech solutions has spiked in recent years, and this is reflected in the sector’s consistency in attracting about a quarter of equity investment deals in the continent year-on-year. Zooming further into fintech funding in Africa, Nigeria has consistently received the largest portion of the pie year-on-year - capturing 38% of the total funding that went into fintech startups in 2020 according to Partech findings.

Economies have become increasingly digital, and this has been accelerated by the pandemic and its effect on face-to-face interactions and physical touch points. The digital economy in emerging markets sees deeper internet penetration, smartphone usage and improved digital infrastructure - such developments that favour startups like Flutterwave (who are already agile by necessity) to quickly adapt and expand financial services in an array of creative ways. The proliferation of fintech services and the investment into those providing such services across Africa is earmarked by the vast number of people that are still “unconnected” in the digital economy.

It makes sense - where there are challenges, there are opportunities.

According to Datareportal, Nigeria has over 118 million people “unconnected” to the Internet - that’s about 58% of the population. In a market where physical cash is king, this became burdensome once the pandemic and subsequent lockdown came. Mom-and-pop stores across Nigeria (and indeed across the world) saw their small business decline as a result of less foot traffic and monetary exchanges. Flutterwave, among other fintech providers, soared their wings to the rescue with an array of value-added services around their payment solution.

But let’s take a step back.

In 2016, Flutterwave was founded to tackle the fragmented payment systems in Africa through a single-wide infrastructure that connects the various payment systems - basically, “making it easy for a merchant in Lagos to receive payment from a customer in Nairobi”, says co-founder & CEO Olugbenga Agboola. During its early stages, Flutterwave was bootstrapped for 18 months while building its minimum viable product (MVP). By the time they secured their Series A, CEO, Agboola, acknowledged that his experience working in the payment and technology space brought a lot of credibility into the venture. In addition to the CEO’s work experience in the sector, the initial team at Flutterwave consisted of engineers that were colleagues in previous related jobs. This collective experience in the space allowed the initial team to hit the ground running in developing their product with limited capital spent on tech development.

Of course, no business venture exists without having challenges. A major pain-point in the growth of Flutterwave, as admitted by the CEO, is when “technology fails”. “Financial systems are almost nothing without technology - technology pretty much scaled financial systems everywhere. There are those times when technology fails without warning and everything crumbles,” says Agboola. However, despite the occasional failure of technology, rejection by potential clients, the heavy regulations imposed in the financial services sector, Flutterwave has battled on to raise over $225 million to date from around 40 investors, including Y Combinator, MasterCard, CRE Venture Capital, 4DX Ventures and more. Their new Series C round of $170 million is led by Avenir Growth Capital and Tiger Global Management.

The new round of capital will help Flutterwave improve their technology, product, customer support, expand to new frontiers and continue to provide support needed for everyday mom-and-pop shops to sell to global markets.

Markets across Africa benefit from technological advances in financial services, particularly in helping reduce the cost of providing services, making it possible to reach more people, and reducing the need for face-to-face interactions, essential for keeping up economic activity during the pandemic. Flutterwave certainly capitalised on the opportunities presented by the pandemic. In 2020, Flutterwave was at the forefront of deploying e-commerce services on top of their core payments solution (through the Flutterwave Store). They expanded from specializing in digital cash registers to hosting digital storefronts, helping previously offline small businesses suddenly without foot traffic set up online shops, receive payments and arrange delivery options.

To date, Flutterwave has processed 140 million transactions worth more than $9 billion, and currently services 290 000 merchants, with an infrastructure reach in over 33 countries on the continent. Flutterwave also helps businesses outside Africa to expand their operations on the continent, and has an impressive clientele of international companies, including, Facebook, Flywire and Uber.

Agboola says, “We had a goal: to unite Africa through payments. We needed to make the continent feel like a country.”

What started initially as a business helping other businesses build customizable payments applications through its APIs, has evolved into a whole ecosystem tailored to helping businesses of all sizes become present and competitive in the digital economy - those butterfly flaps in a small office in Lagos in 2016 have surely caused a global tornado.


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