MAHLATSE TOLAMO | OCTOBER 29, 2020
Silicon Valley’s most valuable private company, Stripe, which is an online payment platform has decided to expand into the African market for the first time by acquiring Paystack, a Lagos-based Fintech company that helps businesses in Africa get paid by anyone, anywhere in the world.
This acquisition is an indication that the Nigerian Tech ecosystem is ready for more VC funding because this is the biggest investment aside from Flutterwave which is valued at around $600m while Paystack’s deal is valued by more than $200m.
Paystack which was founded in 2016 by Ezra Olubi and Shola Akinlade is used by more than 60,000 businesses in Nigeria and Ghana to collect online and offline payments, launch new business models and deepen customer relationships. According to Shola Akinlade, they started Paystack with the belief that better payment tools were one of the most important things that African businesses needed to unlock their explosive potential, therefore, Paystack is an amplifier of the incredible work that African business owners are already doing. With better technology tools, African businesses can be better equipped to play an impactful role in the global economy. In 2016, this Fintech company was the first Nigerian startup to become part of the world-famous incubator, Y Combinator. In 2018, Paystack raised $8million in Series A funding from global payment leaders, Stripe, Visa and Tencent. Its evident that Paystack has been on Stripe’s radar for some time before the acquisition.
Nigeria Inter-Bank Settlement Scheme (NIBBS) showed that digital payments are expanding in Nigeria and growing by nearly 500% in 2019 and that people from Nigeria transferred N149 bn from their mobile devices in December 2019, up from N28,14bn in December 2018. Experts say that Paystack’s deal signals Nigeria as being one of Africa’s biggest fintech destination for VC money. Stripe is looking into expanding in emerging markets of Africa as there is enormous opportunity for the future of its own growth.
In an interview with TechCrunch, Stripe’s co-founder and CEO, Patrick Collison said ‘In absolute numbers, Africa may be smaller right now than other regions but online commerce will grow about 30% every year and even with wider global declines, online shoppers are growing twice as fast’ . This is an opportunity for Paystack to grow and change the African tech ecosystem.
An acquisition like this will bring enormous visibility to African entrepreneurs and new capital injections.
Mahlatse Tolamo is the Ecosystem Enabler at 22 On Sloane
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