As Risevest Acquires Chaka, Nigeria’s $500M Startup Harvest Time Begins

The news today is that Risevest has acquired Chaka: ”Talks of acquisition began early in 2023 when a mutual investor in the two startups suggested the deal to Risevest co-founder Eke Urum. Informal talks began in March, and the deal was finalised in September. Urum and Chaka founder Tosin Osinbodu said they got along quickly and shared a similar vision for the future of fintech in Africa. The investors on both sides were also supportive of the deal”, TechCabal wrote.

Good People, Nigeria/Africa’s startup harvest season begins and by 2026, Africa will have many exits.  As I look at the industry, I can see emerging category-kings and category-winners. Those entities will absorb the smaller ones in a profitable way. Why? Africa’s heterogeneous markets make it nearly impossible for economies of scale to become an absolute competitive advantage across territories. That you are big in Aba does not mean you are in Sokoto because those markets are entirely different across many domains. So, acquisitions and mergers will happen.

From Jan 2024 to Dec 2025, we will see huge capital raise from many category-kings. Those war chests will be used to position  and consolidate many territories – and that would be exits for many firms. The consolidation will then trigger a season of mega harvest when we will see IPOs. Yes, Interswitch, Moniepoint, Flutterwave and a couple others will have to hit the big market. By the time these companies are done, I posit about $500M new funding available for the next class of startups and companies.

Yes, many young people will become rich and about $500 million will be available, and most will invest in companies. That would be the largest “investment fund” in Nigeria, higher than any fund managed by any foreign entity with Nigerian focus. That fund will then lead secondaries, enabling young companies to move to the next level.

If the most valued financial institution in West Africa is less than 10 years old, if the most valued logistics firm is less than 10 years old, if the most valued stock trading company is less than 10 years old, you will get the idea that Nigeria and indeed Africa are being structurally transformed by technology components, across sectors. The future looks very promising; begin to #build.

Register for Tekedia Mini-MBA (Jun 3 - Sep 2, 2024), and join Prof Ndubuisi Ekekwe and our global faculty; click here.