The season of investment exits for many Nigerian startups is just around the corner. Yes, there is an emerging trajectory which I expect to cement in 4-5 years: foreign companies acquiring indigenous African startups to have their feet on the ground in Africa. I have noticed that in the last 18 months, most South African ventures have exited through such acquisitions. If you are paying attention, most edutech (educational technology) startups in South Africa have sold to American bigger companies. South Africa seems to know how to build great edutech companies.
In a week full of surprises to the online education world, 2U announced it is acquiring GetSmarter, a South African startup that delivers short-term online certification courses to distance-learning students in partnership with many of the world’s top-tier universities. The price tag for the deal is $103 million in cash plus an earn-out provision of as much as $20 million in cash.
Today, Uber has joined the party, buying South Africa’s orderTalk via its UberEats brand.
Uber Eats, the food delivery business of ride-hailing giant Uber, has acquired South African-owned restaurant technology company orderTalk in what is being billed as a significant exit for Cape Town-based venture capital firm Knife Capital.
The deal, the terms of which have not been disclosed, will allow Uber Eats “to streamline workflows by directly integrating with leading point-of-sale systems”.
The company offers online ordering software solutions using proprietary remote-ordering software and mobile and social media applications. Proprietary software is integrated with leading point-of-sale systems.
In my model, the diffusion latency from South Africa to most parts of Sub-Saharan Africa is about 4 years. In other words, South Africa experiences most services ahead by four years, before big global firms begin to roll out such in other parts of sub-Saharan Africa. If they start buying these South African startups and they like what they have gotten, in 4-5 years, many Nigerian startups will be hitting exits through such ways.
Yes, I understand the challenges of infrastructures which affect business scalability and how we have not fixed them in Nigeria. Unequivocally, top-grade infrastructures matter in big ways. However, lack of infrastructures would not affect the promising trajectories of companies like Paystack and Cellulant if they seek to exit. Nigeria remains the crown jewel of Africa: our population and business laws make it easy for anyone to come in and make money. Foreign brands understand our positioning, and would certainly balance the challenges with the global transitional opportunities some startups in Nigeria would provide to them, to deepen their footprints in West Africa and beyond.
So, go out there and begin to take action, the opportunities are ahead. And when they start buying the bigger well-funded Nigerian companies, those founders would have money to invest in new generation of startups. That is how an ecosystem evolves. We are getting closer daily, just as I have already noted that 2022 is the magic year.
Simply, we’re entering the real ecosystem era – call it a virtuoso period where exited founders have cash to seed new generation startups.