How Africa has spawned eight unicorns in five years

How Africa has spawned eight unicorns in five years - Startup Lagos


The rarest creatures on earth’s face or the childish imaginations of grown men? Or, in Aileen Lee’s opinion, the perfect characterization of rarity and sudden flight?

The magical surreality of $1 billion

Yes. We speak not of mythical and majestic creatures, but of revolutionary startup companies valued at over $1 billion. Still, some pundits aver that just as unicorns are make-believe creatures of human imagination, the statistical rarity of business unicorns may just likewise be the products of imaginary business valuations. Relevantly, startup valuations are not intended to represent a real liquid value of money, but instead, are determinations of the market value of a given startup. These valuations are determined by how much investors and venture capitalists evaluate and estimate the growth and development of a given startup over a particular time.

Still, unicorns are proof of the vitality and growth of a startup ecosystem. However, it is important that startup founders are not simply focused on building unicorn companies, but rather are intent on the creation of value. It is through this means that the startup is able to grow and scale exponentially, even in the face of hiccups and challenges.

Africa’s unicorns – The enterprising eight?

Due to the relative factors upon which startup valuations are arrived at, there are often divergent opinions on the total number of unicorns globally, or even within continents. According to Eqvista, there are over 633 unicorns globally today, with the emergence of unicorns spiking upwards especially this year. Some reasons for this are given to the increased growth in emerging economies and the development in technology across the globe.

As fintech across Africa, and especially in Nigeria, continues its high-flying growth, TeamApt Ltd. is anticipating a Series C funding of about $150 million that should raise their valuation past the billion-dollar mark as Africa’s newest unicorn. Once this deal is sealed, Africa would be celebrating over nine unicorns, birthed within the space of five years. As a leader in agent banking, TeamApt would raise the bar for the subsector with its valuation rise. Presently, eight enterprising startups form the college of African unicorns.

Commentators regard the Africa Internet Group (AIG) as the first African billion-dollar tech company following investment from mobile telecoms heavyweight, Orange at over $85 million in 2016. AIG is a parent company to a network of about 10 consumer-driven tech initiatives, namely, Jumia (e-commerce platform), Zando (online sale of shoes and clothing), Hellofood (a food delivery service), Kaymu (online resale marketplace), Lamudi (a real estate classified platform), EasyTaxi (cab-hailing service), Jovago (hotel-bookings platform), Everjobs (jobs classified site) and Carmudi (a car-selling platform). Of the entire funds invested, Goldman Sachs dedicated $326 million to grow Jumia.

Jumia became likewise the first major African tech company to IPO on the New York Stock Exchange, enjoying the prominence of its rise within Africa’s tech ecosystem. However, hit hard by heavy losses, the company’s valuation dropped sharply, in 2020, taking it off the billion-dollar club ranks. Reports from management showed that the company was dealing with internal fraud of improper sales practices that were costing the company heavily, to the tune of over $18 million. The company is finding its feet, though, with its earnings report for the third quarter of 2021 showing operating losses for the quarter still up by 94%, even amidst a spike in its sales.

Interswitch, Africa’s foremost fintech company, is reckoned as the second company to reach the billion-dollar mark in valuation, in 2019. Visa had acquired a 20% stake in the dynamic financial services company at over $200 million. The company had been established as far back as 2002 and has dominated the industry as a heavyweight all these years.

Fawry, the pride of the MENA region, and Egyptian e-payments company, is said to have broken into unicorn status in 2020, a year after debuting on the Egyptian Stock Exchange. The company claims to service over 30 million customers across the continent. Fawry’s fortunes seem to rise significantly in the wake of the COVID-19 pandemic and the renewed demand for online payments across parts of the continent. Its revenue for the first half of 2020 shot up by 47% to over EGP 549 million, from about EGP 373 million in 2019.

This year, which has been phenomenal for startups in Africa, heralded the birth to unicorn-ship of Flutterwave, a Nigerian startup, that facilitates international payments for African and international businesses. A successful Series C raise of over $170 million saw its valuation shoot up, past the billion-dollar mark in March this year. Flutterwave’s recent acquisition of Disha, a Nigerian digital platform for content creators to easily curate and sell digital content, is quite the game-changer. It sets the tone for more acquisitions by unicorn-size companies of smaller and scalable ventures, within the industry.

OPay quickly joined the ranks of the big boys this June, with an astounding Series C raise of over $400 million, to push their valuation up to $1.5 billion. In what is reckoned as the largest raise this year, OPay’s successful entry into the unicorn ranks is one for the books. The company’s monthly transactions have reportedly grown by over 4.5 times their previous value as of the ending of last year, and are hitting close to $3 billion in volume.

Wave became Francophone Africa’s first unicorn with its successful raise of over $200 million. The company is said to have attained this coveted status within a groundbreaking two rounds, at a valuation of over $1.7 billion. Founded by Drew Durbin and Lincoln Quirk in 2014, the company is devoted to offering affordable services for African users to make payments with ease from wherever on the continent.

Chipper Cash, a borderless payments startup, founded by Ham Serunjogi and Maijid Moujaled, raised Series C funding of over $100 million in May this year. With the raise, the company was silent about its valuation, refusing to fully disclose if this funding raise had taken it within the rank and file of Africa’s unicorns. However, an additional $150 million in an extension round, recently announced has grown their valuation to over $2 billion, securing the coveted unicorn status. With partnerships struck with Twitter and FTX, Chipper Cash is keen on a future for its business that matches the global trends in cryptocurrency and seamless e-payments.

Andela‘s raise of $200 million in a Series E funding round, did the magic for them, taking their valuation to over $1.5 billion in September. Starting out in 2014 as a training hub for junior developers in Lagos, Andela has grown into a giant in the industry. As the only edtech unicorn, the company has set itself as a category king in its niche, ensuring that the best of tech talent is supplied to the ecosystem.

Africa’s spawning chamber

It has particularly been a year for fintech with so many successes within the sector. Nigeria especially has been at the forefront of these successes, capturing the bulk of the investments into the continent this year. While other sectors too are performing relatively well, there is still a lot to be done in balancing the disparities that exist with funding across the ecosystem. Fintech seems to be Africa’s unicorn spawning chamber, with the majority of unicorns emerging from within this sector. Only Jumia and Andela emerge from other sectors, namely e-commerce and edtech respectively.

Nigeria is leading the fintech revolution for Africa, with the bulk of unicorns from within Nigerian fintech

There is hope that as the African tech ecosystem continues to grow in leaps and bounds, the successes within the fintech space are able to cascade down into other sectors. A significant pointer to this is the acquisition of Disha by Flutterwave. Through these other means of exit, unicorns can offer the needed support for growth across many sectors. Undoubtedly, Africa’s ecosystem offers a lot of promise, and this is what is crystallizing increased interest of local and international investors in the potentials and scalable initiatives that startups have across the continent.

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