Last month in Harvard Business Review, I shared a small window on how I examine companies. I am proud that more companies and people are using the One Oasis and Double Play Strategies. More than five VCs have reached out and like a happy village boy with blessings, one paid me $$ to explain the constructs deeper.  When I look at companies, I examine its momentum (in physics, mass x velocity). A company must have velocity (not just speed) which is speed with direction to become exciting to me. 

As I noted when I wrote on Flutterwave, I explained that except Zenith and GTBank in the Nigerian Stock Exchange, that its $1 billion valuation was more than any of the trading banks there, using N480/$ black market rate. A commenter disputed the basis of that call; I responded thus, using Access Bank.

• UBA – N239 billion
• Access –  N275.475B
• Stanbic – N444.240B
• First Bank FBH – N260.241B
• As it stands today, at N480/$, Flutterwave is more than all those. Except Zenith and GTBank, FLW is ahead. (Source: Nigerian Stock Exchange)

If NSE investors said Access is worth N275.475B and FLW investors said it is worth $1billion, everything else is irrelevant. That one is public and one is private cannot change the numbers. In short, if FLW goes public now, it would be worth more. If Tesla is not public, people will still argue that it cannot be worth twice  of Toyota because it sells less than 10.5 million cars to what Toyota sells.

Those valuation models you quoted are modelling Needs and Expectations; great companies are modelled on Perception. Revenue, income, etc are great but industry trajectory and momentum (mass x velocity) are key. If you have speed instead of velocity, you have no direction as a firm. FLW has velocity and most banks run on speed!

Velocity brings the edges of the smiling curve while speed keeps you at the center. Extra value is captured at the edges. It is the same thing which makes Paypal ( $282.93B) more valuable than Goldman Sachs ($117.59B).

It comes down to this: new basis of competition and the ability to turn your consumers to customers, and those customers to FANS. Yes, velocity makes consumers become Fans, and fandom unlocks Perception during valuation, as huge leverageable factors emerge. 

During a Tekedia Live session last week, Akintunde said it brilliantly” “Beatitude of Business – Blessed is the business that converts its customers to fans.” Build at the edges even if you have things at the center.

A unicorn is born and it has to find a home to rest. Yes, Flutterwave is an Africa-born unicorn, valued at excess of $1 billion, after raising $170 million. It is not necessarily surprising when you see how the company has integrated the disparate African countries. When others were working on needs and expectations, Flutterwave moved to perception. In his class note at Tekedia Mini-MBA, the company’s CEO, Olugbenga GB Agboola, explained his view of Africa and the world, and used his company to explain how they are tackling the opportunities. There is no way you will read that document and will not admire his firm.

“The company’s valuation is now in excess of $1 billion. The fundraise brings the total investment in Flutterwave to $225 million,” the company said in a statement.

“We may consider the possibility of listing in New York or a possible dual listing in New York and Nigeria,” Flutterwave CEO and co-founder Olugbenga Agboola told Reuters on Tuesday.

And the company will open its war chest now for acquisitions because the Flutterwave Treasury with new $170 million can do great things: “We believe in payments in partnerships as you have to partner to scale. So, if in the course of making partnerships and scaling and we identify promising companies with a similar ethos and have our vision in mind, that is in making Africa a country, an acquisition isn’t off the table,” he said.

Yes, I am expecting Flutterwave to make its major acquisition before the end of Q4 2021. Any fintech with core value provision will become a natural suitor because the company has the capacity to unlock more resources for deals. I also expect the firm to move vertically, using its resources to fund more feeders into its ecosystems. That means, it could dedicate 5% of its revenue to support ecosystem players that would feed transactions into its platforms. 

Flutterwave’s biggest competitor is not the banks, Interswitch or Stripe (Paystack), but OPay. OPay which processed $2 billion worth of transactions in December 2020 has eclipsed every fintech in Nigeria. In comparison, “Flutterwave has carried out more than 140 million transactions worth more than $9 billion since it was founded in 2016”. So, OPay and Flutterwave are the dominant forces to battle this out as OPay begins its expansion out of Nigeria. 

Opera controls OPay, and from Opera’s earnings call, “In December OPay processed a gross transaction value of $2 billion on its platform compared to $1.4 billion in October, or a 43% increase in just over two months. Further, OPay’s revenue is increasing quite rapidly while the company is able to achieve profits right around breakeven despite the growth. We expect this growth to continue as OPay continues to scale in Nigeria and expands to an additional country in Africa.” Yes, OPay, the fintech company, which has Nigeria as its main base grossed $2 billion on transaction value in December 2020, hitting 43% growth from October numbers.

What can we say? We hope transaction fees drop to near-zero as that is what competition brings. In a class yesterday, Tekedia Beijing-based faculty, Dr Henry Chan, said it clearly: “Dr. Chan explained deeper why Alipay does more transactions than Visa and Mastercard combined. Alipay does $18 trillion while Visa and Mastercard combine for $16 trillion. He explained that a merchant will lose about 2-5% with Visa or Mastercard while Alipay will pick about 0.6%. With that construct, China went ahead of the West on the adoption of digital payment even though Visa has been around for decades before Alipay”.

Flutterwave Raises $170m in Series C Round, Becomes a Unicorn

Flutterwave, the African-focused Nigerian fintech startup taking the world by storm has raised $170 million in series C funding, shooting its value up to unicorn status.

The series C, which was led by New York-based private investment firm Avenir Capital and US hedge fund and investment firm Tiger Global, catapulted Flutterwave’s valuation to over $1 billion.

The latest round thus places the startup in the unicorn status alongside Interswitch and Jumia, the other African startups who have attained the status.

“The company’s valuation is now in excess of $1 billion. The fundraise brings the total investment in Flutterwave to $225 million,” the company said in a statement.

New and existing investors who participated in the round include DST Global, Early Capital Berrywood, Green Visor Capital, Greycroft Capital, Insight Ventures, Paypal, Salesforce Ventures, Tiger Management, WorldpayFIS 9yards Capital.

“We may consider the possibility of listing in New York or a possible dual listing in New York and Nigeria,” Flutterwave CEO and co-founder Olugbenga Agboola told Reuters on Tuesday.

The African-focused fintech said Tuesday the round will be used to further its customer base in existing and international markets and to develop new products. It also intends to improve existing products like Barter, which has over 500,000 users.

It explained that the growth has been spurred by COVID-19 pandemic which accelerated the shift to digital payments in Africa. Streaming, gaming, remittance and e-commerce are among the pandemic-induced activities which spurred Flutterwave’s growth within the last one year.

Flutterwave has carried out more than 140 million transactions worth more than $9 billion since it was founded in 2016, and has raised $225 million to distinguish itself with the few African startups that crossed the $200 million threshold. In 2020; it closed a $35 million Series B round having had a $20 million Series A round in 2018.

The company said more than 290,000 businesses use its platform to carry out payments, adding that they can carry out transactions “in 150 currencies and multiple payment modes including local and international cards, mobile wallets, bank transfers and Barter by Flutterwave.”

Agboola told TechCrunch that the company is live in 20 African countries with an infrastructure reach in over 33 countries in the continent. He said the startup grew more than 100% in revenue within the past year due to the pandemic without being specific on numbers. It also contributed to its compound annual growth rate (CAGR) of 226% from 2018.

The $170 million round underscores the high-flying state of the African fintech market which has attracted between 25% to 31% of the total VC funding last year from many sources.

In 2019, Interswitch recorded tremendous growth with its local-only verve debit card that it moved to internationalize it. The move attracted $63.3 million in debit-financing via bond placement with Securities and Exchange Commission of Nigeria (SEC). Visa bought a 20% stake in Interswitch for $200 million, pushing its value to $1 billion.

Paystack , another fintech startup in Nigeria also made headlines in October last year with $200 million acquisition by Stripe.

But despite its rapid growth, attaining the Unicorn status in less than 10 years after it was founded; Agboola said Flutterwave will not follow the acquisition trajectory but will likely go for listing.

“Like every other startup, we’re thinking about ways to create exit tools for our investors. So, a listing is very much in our plans, but for now, we’re focused on giving the best value to our customers,” he told Techcrunch.

But having been known for its partnership model, which was in play when it partnered with Visa to launch Barter, and Alipay to facilitate payment between Africa and China, and in 2020, Worldpay FIS for payments in Africa, Agboola does not rule out acquisition completely.

“We believe in payments in partnerships as you have to partner to scale. So, if in the course of making partnerships and scaling and we identify promising companies with a similar ethos and have our vision in mind, that is in making Africa a country, an acquisition isn’t off the table,” he said.

Agboola said the company’s next move will be to go live in North Africa, where it hopes to capture more market share even though it will face fierce competition from a local market leader, Fawry.