Paystack revenue was just $1,300 when Y Combinator, a U.S -based accelerator, accepted it and gave it about $120,000 in funding for a typical 7% equity. I have explained the numbers here. My focus in this short note is to point out how foreign investors look at things. Yes, when Paystack did this deal, the total revenue was less than N500,000 in Nigerian naira.

Yet, someone brought it home and wired $120,000 in equity funding. Today, that $120k is estimated to be at least $12 million after Paystack exited at $200 million via Stripe acquisition. Until we see things that way, even the promises in Lagos and across Nigeria will not come to us.

Do you have revenue?

Yes

How much revenue?

$1,300

Yup, this was literally everything we had made when we applied! Note that $1,000 of this came from a single transaction ?
I like to point this out when speaking to founders who have overblown assumptions about how much traction they need to have before applying to YC.

When that investor asks for a three year revenue traction in Nigeria, share this piece!

Y Combinator Wins in Africa, Gains from Paystack Cover ALL Investments in African Startups

Since 2014, Y Combinator, the popular U.S. based accelerator, has invested $120,000 for 7 percent equity in its companies. Paystack, the Lagos-operating fintech company which was acquired by Stripe in a deal north of $200 million, attended YC, post- 2014. If we assume that YC invested $120k for the 7%, we can conclude that Paystack was worth $1.7 million during the deal.

By looking at the multiples and the short time they created this value, Paystack is possibly the most successful Nigerian startup on value creation for investors for deals above $50 million.

With an exit of $200 million – a three digit-multiple- and considering the typical delusion, I estimate that YC will receive at least $12 million for its investment at that very early in Paystack. Yes, the Americans have turned $120k into $12 million in your neighborhood in Lagos. Sure, how you wish!!! Sorry, that is why one smart man wrote “Acres of Diamond”. That glory is everywhere if you seek it earnestly! But give it to the Americans; Paystack revenue was $1,300 when YC accepted it.

https://youtu.be/VIzhXzixENE

More so, YC has invested in about 40 African countries. If we keep the same $120k per startup, the total investments will come down to $4.8 million. For this analysis, I am discounting growth phase investments where YC joins other investors, post-graduation in its program.

Simply, YC has risked $4.8 million in all the startups, and one startup has returned at least $12 million. Yes, YC has already won in Africa.

Paystack Is The Most Successful Nigerian Tech Startup on Large Value Creation for Investors

He was a HR Manager for the Year from HR People Magazine Awards. He is an alumnus of Senior Management Program (SMP) at Lagos Business School (LBS), and Action Learning MBA at Business School Netherlands. He is an Associate of Chartered Institute of Personnel Management of Nigeria, Nigeria Institute of Training & Development, Nigeria Institute of Management (NIM), Institute of Business Management & Policy Development Nigeria, Learning & Development Institute, Nigeria and Project Management Institute (PMI).

An ex-Head of Human Resources – Commercial Business Group at Lafarge Africa Plc, he now serves as the COO of  Emerald Zone, a HR consulting and advisory firm. Oladapo Akinloye, a Tekedia Institute Faculty, will teach and speak during Tekedia Career Week Nov 2-7, 2020) on Career Planning within the theme, Nurturing Innovators.   This career week is not designed for finding jobs. Rather, it is structured to TRANSFORM professionals into business leaders and champions of innovation in their companies.

All past and current Tekedia Mini-MBA members, including those who have registered for Edition 4 (Feb 8 – May 3, 2021) attend free. We have 13 courses, videos, cases, etc on how we can plan our careers during this time of disruption. 

Join Dapo and other other Faculty.

Tekedia 2020 Career Week Is Set For Next Week

On Thursday, MultiChoice (DStv, GOtv) informed its customers thus: “Please be informed that Multichoice offices are undergoing a system upgrade from 11 pm Saturday October 17 to 4pm Monday, October 19, 2020.” Then, from October 17, many started writing that the DStv system had been hacked because most channels became available to everyone. Interestingly, Multichoice made a decision as the upgrade process would prevent some subscribers to temporarily NOT have access to their paid channels. In order to avoid that, the company opened all the channels to mostly everyone.

I recall the day we were doing an upgrade in the Tekedia payment system. The database migration possibly could prevent subscribers from not having access to the premium contents. I asked our team to make everything open even though non subscribers could have access. The real goal was to make sure that paid subscribers were never affected during the process. When the migration was completed, we switched back the paywall.

For these two scenarios, would you have approached the issues differently?

Comment on LinkedIn Feed

I think we need to learn from Telecom companies. I’m curious, how do they do it? Do they also open up their server so that everyone and anyone both subscribed and unsubscribed can have access to the pool of their data subscription and airtime?

I personally think if they go down this route, the debt they will accrue over that short space of time will be more than enough to set the company on a survival trajectory.

So, how do they get it done? Anyone with exact and factual details should help with that.

My Response: Actually, telcos do open up during some upgrades. There have been cases when people harvested bundles by luck. The key is making that call between annoying the paid users and t hoping the freebies will not break you. Yet, the real deal is to make sure you never have to make such calls. But some default to open especially when the risk is small over dealing with customer complaints on Twitter and Facebook.

The world is on pause (literally) as everyone waits for the details of China’s 14th five-year plan. With massive global dislocation triggered by Covid-19, China can exploit many comparative advantages to accelerate its ascension at a rate the world has not witnessed before. So, watch out how China begins to build an economy that does not need the world to thrive but would be indispensable for the world. As the world’s largest exporter, the world runs on China and this new five-year plan could push the equilibrium more to China’s favour.

China has churned out five-year plans since the 1950s, borrowing from the former Soviet Union. Accompanying subsidies have given direction to the economy, businesses, officials and investors. Over the decades, the plans have helped develop agriculture and industry. Technology didn’t figure prominently. In the 12th plan, which ran from 2011 through 2015, the economic growth mix changed as the break-neck pace slowed from the years after accession to the World Trade Organisation. The current one mentions “innovation” more than 200 times and pushes Made in China 2025, a policy that became a sticking point in the trade spat with the US Programs and projects range from high-end manufacturing, big data and smart grids to cyberspace security. These are all sectors that are top of mind for global leaders and are faced with increasing protectionism.

But as that happens, Nigeria is working on Agenda 2050, a new developmental initiative for the nation. Because 2050 seems like an eternity considering the rapid changes in our world as a result of technologies, breaking things into five years or at most ten years may be more strategic. The effectiveness of China’s five-year plan is iconic; Nigeria can learn from it, over our typical decades-long roadmaps which are usually abandoned. Of course, it goes beyond plans – we need to also execute!

AGENDA 2050: PRESIDENT BUHARI INAUGURATES NATIONAL STEERING COMMITTEE, SAYS NEW DEVELOPMENT PLAN WILL LIFT 100 MILLION NIGERIANS OUT POVERTY BY 2030

President Muhammadu Buhari Wednesday in Abuja inaugurated the National Steering Committee to oversee the development of the Nigeria Agenda 2050 and Medium-Term National Development Plan (MTNDP) to succeed Vision 20:2020 and the Economic Recovery and Growth Plan (ERGP) 2017 – 2020.

The National Steering Committee for the development of Successor Plans to Vision 20:2020 and ERGP will be jointly chaired by Atedo Peterside and Zainab Ahmed, the Minister of Finance, Budget and National Planning.

What is it that Nigeria wants to accomplish in the next five years? If you have no clue on that, do you think telling you a 2050 plan makes sense?