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Flutterwave in $1bn valuation, proposes New York listing

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AFTER securing 170 million dollars from investors to expand its customer base, Africa-focused Flutterwave has been valued at 1 billion dollars, putting it in the class of unicorn start-ups. 

“We are thrilled to share news of our 170 million dollar #SeriesC funding which will be crucial in improving our technology, product, customer support, and expansion drive,” Flutterwave said on its Twitter handle on Wednesday.

“The company’s valuation is now more than 1 billion dollars. The fundraise brings the total investment in Flutterwave to $225 million,” the company said in a separate statement seen by The ICIR on Wednesday.

It explained that the 170 million dollars would be used to execute an ambitious growth strategy to become a leading global payments company, empowering small and medium enterprises (SMEs) and multinational brands by connecting the highly fragmented African digital payments landscape.

“Flutterwave will invest the new capital in accelerating customer acquisition in existing and international markets, as well as develop complementary and innovative products such as the newly launched Flutterwave Mobile, an app to help accelerate e-commerce growth as a result of the success of the Flutterwave Stores,” it said.

The payment company said the fundraise was coming when Covid-19 had accelerated the shift to digital payments in Africa, contributing to Flutterwave’s exceptional revenue growth of 226 percent compound annual growth rate (CAGR) from 2018-2020.

Olugbenga Agboola, founder and CEO of Flutterwave, said success would not be possible without his team, investors, customers, and regulators.

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The San Francisco-based fintech is also mulling listing in New York Stock Exchange, Agboola had told Reuters in a telephone interview on Tuesday.  The payment processing firm is also eyeing the North African market, particularly Egypt, Morocco and Tunisia, by the second quarter of this year, Agboola said.

Read AlsoAmid COVID-19, Nigerian start-ups secure big-ticket private equity investments

New York Stock Exchange (NYSE) listing is important for businesses because the market has leading innovators, and its model leads to lower stock price volatility (fluctuations). The Exchange says that listing on its platform helps reach a worldwide audience, enabling firms to get insights into the markets and their shares.

According to Flutterwave, the Series C funding was raised from investors such as Avenir Growth Capital, Tiger Global and PayPal. Other venture capitalists who participated in the deal included Early Capital Berrywood, Green Visor Capital and Greycroft Capital and Paypal.

Jamie Reynolds, a partner at Avenir Growth Capital, said Flutterwave was at the forefront of innovation in payments technology.

Reynolds said Avenir was excited to support the Flutterwave team as they built the last available payments infrastructure frontier in the world – connecting merchants and consumers intra-Africa and globally.

Scott Shleifer, a partner at Tiger Global Management LLC, said, “We are excited to partner with Flutterwave as they continue building a world-class payments platform. We were impressed by Flutterwave’s focus on customer success and believe the company is well-positioned for sustainable long-term growth.”

Flutterwave has processed over 140 million transactions valued at over 9 billion dollars to date, serving more than 290,000 businesses, including  Uber, Flywire, Booking.com, Facebook, among others, the company said.

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The firm said its key advantage was international payment processing in 150 currencies and multiple payment modes, including local and international cards, mobile wallets, bank transfers, Barter by Flutterwave, among others.

Why unicorns matter

A unicorn is a private firm whose valuation has hit 1 billion dollars and above. According to CBN Insights, there are 500 unicorns around the world as of March 2021. Economists say unicorns enjoy economies of scale, meaning they enjoy advantages larger businesses have over smaller ones.  Such include low cost of operations and unit prices, efficiency and low costs of production factors such as land, labour and capital.

“Larger companies are able to produce more by spreading the cost of production over a larger amount of goods,” said Will Kenton, a behavioural economist and Any Drury, former CEO of OnPoint Learning, both of Investopedia.  This is one advantage of facing Flutterwave.

Economists and management experts say unicorns are popular with investors and guarantee them good returns.

#EndSARS: Why I ordered suspension of Flutterwave’s payment platform- Tunde Lemo

Jonathan Low, partner and co-founder of Predictiv and PredictivAsia, explained that unicorns would always draw in eager investors and consumers.

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The Road to $1bn valuation

In 2017, the payment processing company raised 10 million dollars in Series A funding. As of that time, it had   10 banking partners across Africa, processing over 14 million transactions worth 1.5 billion dollars, just 12 months after commencing operations. In 2018, the fintech galvanised another 10 million dollars in extended Series A funding.

The fund came mostly from Green Visor Capital, Greycroft Partners, Mastercard, CRE Ventures, Fintech Collective, 4DX Ventures, and Raba Capital. It further raised 35 million dollars in Series B venture capital raise in 2018. In addition to 170 million dollars raised in the Series C round, the firm has galvanised 225 million dollars in funding (in total).

A company’s valuation often involves aggregating its revenue, assets, and cash flow, subtracting them from liabilities such as debts, wages, and taxes.  The 1 billion dollar valuation means that Flutterwave’s assets and cash flow/ revenue are at least equal to the valuation.

Ezra Olubi (left)and Shola Akinlade (right), co-founders of Paystack, Credit: www.finextra.com

Fintech boom.  

Fintech business in Nigeria is becoming larger by the day.  In October 2020, Stripe, a US fintech firm, acquired Nigerian fintech business Paystack for 200 million dollars. In 2019, Visa acquired a 20 percent stake in  Interswitch, a Nigerian payments company. A 2020 Mckinsey report  disclosed that between 2014 and 2019, “Nigeria’s bustling fintech scene raised more than 600 million dollars in funding, attracting 25 percent (122 million dollars) of the 491.6 million dollars raised by African tech startups in 2019 alone—second only to Kenya, which attracted 149 million dollars.”

“At the same time, a youthful population, increasing smartphone penetration, and a focused regulatory drive to increase financial inclusion and cashless payments, are combining to create the perfect recipe for a thriving fintech sector,” the report said.

“Nigeria is now home to over 200 fintech standalone companies, plus several fintech solutions offered by banks and mobile network operators as part of their product portfolio.”

 

 

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