The African Private Equity and Venture Capital Association (AVCA) noted in October that, within the first half of this year, African startups captured $3.5 billion in venture capital investment. The industry group further stated that the funding, raised by 300 different companies, represented a total growth of 133% compared to the same period last year.
According to a study by Mastercard, the global payments giant, on the state of fintech in African markets, startups within this sector boasted exponential growth in 2021. In terms of funding, the study showed that the continent’s fintech startups recorded 894% year-on-year growth in 2021.
CBInsights, a New York City-based market intelligence company, as of October 2022, there were over 1,200 unicorns in the world. Popular unicorns include the artificial intelligence (AI) company, ByteDance, from China that is valued at $140 billion; Elon Musk’s spacecraft engineering firm, SpaceX, valued at $127 billion and Chinese online fashion retailer, Shein, valued at $100 billion. Some former unicorns include Airbnb, Facebook and Google. Furthermore, according to the report, the total cumulative valuation of these rarified businesses is $3,871 billion.
In Africa, the rise of these mythical commerce creatures is not different.
A few years ago, the continent saw the emergence of its first unicorn with the pan-African online retailer, Jumia Group. The company had capitalized on a major gap in the virtual market building a customized platform where consumers in 14 African countries can order their groceries, shop the latest fashion or
order takeaway from their favorite restaurants online. In 2019, Jumia became the first brand from the continent to list on the New York Stock Exchange (NYSE), after commanding a valuation of $1.6 billion the previous year. Since then, six more businesses have entered this very elite club, illustrating that the rate of unicorns forming on the continent is fast accelerating.
Starting a business on the continent is not easy and is one that is riddled with a multiplicity of issues.
“Whereas I think in Africa, there is a perception that if you fail, it’s almost built for life, which I think is true, in terms of the stigma that comes with it. People almost don’t want to embrace failure. So I like to fail quietly. The only concern and a chance of failing quietly, is [that] for you to get assessed for business, you have to put yourself out there.”
Lessem further notes that one needs to remember that without meaning for it to happen, legislation and regulatory frameworks will always play a role in what businesses you invest in, particularly in Africa.
Today, ChipperCash is imbued with the spirit of its founders and has more than overcome initial hurdles. The company is highly-rated among investors, riding high with a $2.2 billion valuation after raising a total of $300 million to date with backing from noteworthy titans like Amazon’s Jeff Bezos and a roster of blue chip VCs. Their most recent funding round closed in late 2021.
ChipperCash employs 350 people spread across their San Francisco headquarters and Africa offices in Nigeria, Kenya and South Africa. Their impressive growth, over the last four years, has enabled them to support a growing client base of 5 million in seven African countries. In addition to low-cost money transfers, they have also expanded their product stable with a crypto-trading service and a platform where their continental customers can purchase US stocks. Last year, the company’s revenues were well over $75 million up from $18 million in 2020.
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However, for ChipperCash, reaching unicorn status was never the objective. While it remains a great vote of confidence from the market, signaling early success, the founders’ sights remain fixed on their initial motivations for founding the business, insists Serunjogi.
For Mitchell Elegbe, the journey to building one of Nigeria’s most respected businesses, Interswitch, was driven by the passion to solve a social problem. He encountered the problem years ago in his youth when he tried to withdraw money from an ATM while abroad when his card was seized and he was left stranded.
“I made up my mind that one day I would conquer this problem,” recalls Elegbe.
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