Letter 48 — The Growing List of African Exits

Hey,  <<First Name>>!

Trust you are keeping safe.

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For our 48th letter, we chronicle African startup exits. <<First Name>> Shall we?

🚚 Three of OPay's business units to pause operations

Last week Tuesday, OPay Digital Services Limited—a leading fintech startup in Nigeria—said it’s putting some of its business operations “on pause”. These are its bike-hailing service (ORide), ride-hailing service (OCar), and logistics service (OExpress).

OPay said it made the hard call because of "the harsh business conditions, which have affected many Nigerian companies, including ours, during this COVID-19 pandemic, the lockdown, and government ban".

Despite shuttering three arms, OPay still has six business verticals in operation. These include its online marketplace (OList), food delivery service (OFood), payday loan service (OKash), B2C online store (OMall), B2B online store (OTrade), and savings & investment (OWealth). And more importantly, its core business, “mobile money agency” and “online digital payment”, is still operational.

But ORide, OExpress and OCar were growth levers. They were used to onboard new users into the OPay ecosystem. According to OPay, however, there has been continued demand for its payment and mobile money service even during the lockdown (when movement was restricted).

Since the conditions that compelled OPay to put the three business verticals “on pause” might not change anytime soon, there could be a finality to the pause. If the OPay businesses said to be on pause were standalone, that would be three startups biting the dust.


OPay in Nigeria's Tech Ecosystem

"The fact that OPay could just close shop on four seemingly visible business models without being able to sell or merge with their competitors is a clear example that the Nigerian tech ecosystem is not as robust as it seems", Edmund Olotu, CEO of Tech Advance, said. And he’s somewhat right.

Olotu is right to the extent that the Nigerian tech ecosystem is indeed not as robust as it seems. The economics of Nigeria can’t support the business models of some startups. But saying OPay was not able to sell or merge with their competitors because the tech ecosystem is not robust is incomplete.

First, OPay may be sincerely hoping to relaunch ORide, OCar, and OExpress. Second, it could be that the buyers they approached were not offering a good deal. Or it could be that OPay investors prefer to lose money on these business verticals rather than merge with or sell to competitors and jeopardise their market dominance and bigger exit in the future. And lastly, it could because OPay competitors (MAX and Gokada) assessed the risk and found that ORide, OCar, and OExpress are dead weights or their own (new) business models do not support an acquisition or merger.

Meanwhile, Victor Asemota, a serial techpreneur and investor, response to Olotu is even more instructive. "I think this is more an indictment of external investors than local operators. The way Konga was sold for nothing still annoys me", Asemota said. "Konga and Jumia were in a battle for dominance that was largely unnecessary. Both could have grown on different paths and had different outcomes".

The battle between Konga and Jumia was a classic business war. While Jumia was fairly burnt, Konga was forced to sell in a "death is better than mockery" situation.

📈 Where are the African exits?

Underlying the conversation around the shuttering of three OPay startups is the agelong question: "Where are the African exits?" Or as Jason Njoku, Founder of irokoTV, asked: "Where are the $100 million African exits?”

While we are putting together a report that answers both questions in details, we want to share some snippets with you. (That’s the peck of being a BD Insider.)

The short answer to the first question, "Where are the African exits?", is that there is a growing list of African exits. In the last three years, more than 155 African exits were recorded. Some venture capital firms seem to have even mastered the art, with up to six exits under their belts.

And there are $100 million exits too.

  • Jumia IPOed and raised $196 million

  • Visa purchased a minority stake in Interswitch for $200 million,

  • Ethomed was acquired by Excellence Health Inc. for $175 million,

  • Experian acquired Compuscan and Scoresharp for $263 million,

  • Fawry was acquired by a consortium of investors for $100 million (Fawry later IPOed and raised  $22.3 million)

  • 2U acquired GetSmarter for $103 million

There might be more $100 million exits buried under undisclosed deals. We are assiduously working to disclose them in our final report. 

It is pertinent to note that a smaller exit could be better for many African founders. Because that means they would have a higher stake and make more money.

“We really do need a lot of small wins in the African tech ecosystem”, Dayo Koleowo, Partner at Microtraction, said. “$1m, $5m, $10m, $20m, and $30m acquisitions need to happen. If they are happening, please share”.

Next week, we will share as many small wins as possible with you. We will also dive deeper into the nitty-gritty of exits and their peculiar dynamics in Africa in our next letter.

📰 From

In the month of June, these are some of the articles most-read by our users:

1. The best digital bank in Nigeria. A comparison of six digital banks: Alat, Rubies, Kuda, Eyowo, Sparkle, and V by VFD.

2. A review of Keepwork WFH-300 by Benjamin Dada. Keepwork is a power bank that has the capacity to charge laptops and phones many times before dying.

3. Sparkle, by former Diamond bank CEO Uzoma Dozie, finally goes live. Here is all you need to know.

🚪Job Opportunities

1. Flutterwave is hiring a lead front-end engineer. And they are willing to pay $120,000 per annum.

2. Fliqpay, a Nigerian fintech startup building cross-border payment infrastructure for financial institutions and businesses, is hiring for three roles. Lead product designer, engineering manager, and senior software engineer.

3. Andela is receiving applications from across Africa for senior engineer

4. Apply for Seedstars World Competition

Thanks for reading

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