Flutterwave Raises $170M, Reaching $1B+ Valuation

Flutterwave Secures $170 Million, Surpassing $1 Billion Valuation

The expansion of financial technology services throughout Africa continues at a rapid pace, fueled by strong investor confidence in the sector’s potential. A significant milestone has been reached with African payments firm Flutterwave announcing the successful completion of a $170 million funding round, resulting in a company valuation exceeding $1 billion.

Investment Details

Avenir Growth Capital, a New York-based private investment company, and Tiger Global, a U.S. hedge fund and investment firm, jointly spearheaded the Series C funding round. Participation also came from both new and existing investors, including DST Global, Early Capital Berrywood, Green Visor Capital, Greycroft Capital, Insight Partners, Salesforce Ventures, Tiger Management, Worldpay FIS, and 9yards Capital.

This Series C round follows Flutterwave’s previous funding achievements: a $35 million Series B round completed last year and a $20 million Series A round secured in 2018. To date, Flutterwave has amassed a total of $225 million in funding, establishing itself as one of the few African startups to surpass the $200 million funding threshold.

Company Overview and Growth

Established in 2016, Flutterwave operates as a payments technology company with a dual base in Nigeria and the United States, maintaining offices in both Lagos and San Francisco. The company empowers businesses to develop tailored payment solutions through its Application Programming Interfaces (APIs).

Previously, Flutterwave had processed over 107 million transactions totaling $5.4 billion. Currently, these figures have increased substantially to more than 140 million transactions, with a combined value exceeding $9 billion. The company extends its services to businesses seeking to expand into Africa, serving a prestigious clientele that includes prominent international organizations like Booking.com, Flywire, and Uber.

Platform Usage and Reach

Flutterwave reports that over 290,000 businesses utilize its platform for payment processing. The company’s statement highlights the ability to facilitate transactions in 150 currencies and through diverse payment methods, encompassing local and international cards, mobile wallets, bank transfers, and Barter by Flutterwave.

While its website indicates an active presence in 11 African nations, CEO Olugbenga Agboola, also known as GB, has revealed that Flutterwave is operational in 20 African countries, with infrastructural coverage extending to over 33 countries across the continent.

Impact of the Pandemic and Future Plans

The past year proved to be a transformative period for the five-year-old company. The second investment round arrived shortly before the onset of the COVID-19 pandemic in Africa, which negatively affected some businesses, but not payment companies such as Flutterwave.

Agboola attributes a revenue increase exceeding 100% over the past year to the pandemic, though specific figures were not disclosed. This growth contributed to a compound annual growth rate (CAGR) of 226% since 2018. The company benefited from increased activity in sectors positively impacted by the pandemic – including streaming, gaming, remittance services, and e-commerce – which Flutterwave refers to as “COVID beneficiary sectors.”

Furthermore, Flutterwave’s introduction of the Flutterwave Store during pandemic-related lockdowns proved crucial. This product, launched across 15 African countries, enabled over 20,000 merchants to establish online storefronts and facilitate sales.

Global Ambitions and Product Development

Flutterwave aspires to become a leading global payments company, and the Series C investment is intended to accelerate progress toward this objective. The company intends to allocate the funds to enhance customer acquisition in its existing markets and refine its current product offerings, including Barter, which boasts over 500,000 users. New products are also planned, such as Flutterwave Mobile, designed to transform merchants’ mobile devices into point-of-sale systems for accepting payments and completing transactions.

Acknowledgements and Regulatory Environment

In a formal statement, Agboola expressed gratitude to Flutterwave’s team of over 300 employees, its investors, customers, and regulatory bodies, including the Central Bank of Nigeria (CBN), for establishing a solid foundation for the company’s success.

Some observers found it noteworthy that the CEO specifically acknowledged the CBN, given recent unfavorable and debated regulations imposed on fintech companies in Nigeria.

However, Agboola maintains a positive outlook, asserting that the CBN, under its current governor, has consistently provided a supportive regulatory framework that has enabled fintech companies like Flutterwave to flourish. He emphasized that Flutterwave was launched during the governor’s tenure and benefited from a conducive environment for licensing and scaling its operations. He also highlighted Nigeria’s pioneering role in payments innovation, citing the Bank Verification Number (BVN) and the Nigeria Inter-Bank Settlement System (NIP) as examples of forward-thinking CBN policies.

Regarding Exits, Acquisitions, and the Billion-Dollar Valuation Milestone

Interswitch stands out as a pivotal fintech company that has significantly advanced the payments landscape in recent years. Currently assessed at $1 billion following Visa’s acquisition of a 20% stake in 2019, Interswitch is joined by Flutterwave as the sole Nigerian fintechs to achieve this valuation level. This figure expands to four across the African continent when including Jumia, a publicly listed African e-commerce firm, and Fawry, an Egyptian payments processor.

Flutterwave’s substantial $170 million funding round and subsequent billion-dollar valuation signify a remarkable accomplishment for the African startup ecosystem. While the valuations of these companies are generally accepted, questions persist regarding the classification of some as true startups and the African origin of others.

For example, Interswitch was initially established in 2002, which doesn’t automatically qualify it as a startup despite its continued private status. Fawry commenced operations in 2007, but only reached a billion-dollar valuation in 2020, after becoming a publicly traded entity. Jumia attained unicorn status while still private in 2016, though its categorization as an African company is debated.

In contrast to these examples, Flutterwave embodies the characteristics of a quintessential billion-dollar African startup – founded by African entrepreneurs within Africa, and reaching a $1 billion valuation within a decade.

Many within Africa’s technology sector anticipated this outcome, though the timing proved to be sooner than expected. Following a $35 million Series B raise in 2020, few predicted Flutterwave would secure nearly five times that amount in the subsequent round and exceed a $1 billion valuation the following year.

However, these numerical values are not the primary concern for Agboola, as I inquire about his perspective on Flutterwave’s new growth metrics. He responds, “Valuation is a blend of art and science. We were once the most highly valued African company at YC, but it’s not a metric we prioritize at Flutterwave, as it fluctuates.” He adds, with a smile, “Our core metrics have consistently been revenue, customer acquisition, and retention.”

This is a pertinent observation, but as the company expands, inquiries regarding profitability and potential exit strategies will inevitably increase.

Paystack, a fellow Nigerian payments company frequently compared to Flutterwave, was acquired by Stripe for over $200 million last year. Rumors circulated regarding a similar path for Flutterwave, but this Series C funding indicates the company is not currently pursuing an exit. Should the YC-backed company choose to do so, an Initial Public Offering (IPO) appears to be a likely avenue.

“As with any startup, we are exploring methods to provide exit opportunities for our investors. A public listing is certainly within our plans, but our immediate focus remains on delivering maximum value to our customers,” Agboola states.

Throughout its journey, Flutterwave has consistently prioritized strategic partnerships. In 2019, the company collaborated with Visa to launch Barter and with Alipay to facilitate digital payments between Africa and China. Last year, a partnership with Worldpay FIS was announced to enhance payments processing in Africa.

While Flutterwave has forged alliances with established organizations, Agboola indicates the company will also seek collaborations with smaller entities, potentially leading to acquisitions.

“We firmly believe in the power of partnerships to drive scalability. If, through these collaborations and expansion efforts, we identify promising companies with aligned values and a shared vision for Africa’s advancement, an acquisition is not out of the question,” he explains.

Having established a strong presence across Sub-Saharan Africa, Agboola reveals Flutterwave’s next objective is to expand into North Africa. There, it will encounter competition from local leader Fawry, but this is not a deterrent. The African fintech market is sufficiently large to support numerous competitors.

This dynamic has also made it an attractive investment opportunity. The sector, favored by both domestic and international investors, accounted for between 25% and 31% of total venture capital funding last year from various sources.

Notably, this marks the first time that Flutterwave’s lead investors – Avenir Growth Capital and Tiger Global – have invested in an African fintech startup. While Flutterwave represents Avenir Growth Capital’s inaugural African investment, Tiger Global has previously invested in Nigerian media company iROKOtv and South African e-commerce platform Takealot.

Through their representatives – Jamie Reynolds of Avenir Growth Capital and Scott Shleifer of Tiger Global – both firms expressed their support for Flutterwave’s ambition to build a globally competitive and world-class payments company.

Looking ahead, Agboola emphasizes the company’s commitment to supporting its 290,000 merchants and empowering them to establish global businesses.

“We are eager to increase our investments throughout the continent and amplify the positive impact of our platform on lives and livelihoods, as we connect more African businesses to the world and simultaneously bring the world closer to Africa,” he concludes.