Exclusivity is unique. It elevates you. It creates an aura of superiority around you. It bamboozles others so that non-members of an exclusive club wonder what goes on in the club. And they ask the question: Who are the members? Many exclusive clubs abound. One of them was exposed in the book The Presidents Club by Nancy Gibbs and Michael Duffy.
According to the authors, The Presidents Club was founded by George Washington at the inauguration of John Adams in 1797. It was an exclusive club of two members. In 1953 Harry Truman and Herbert Hoover re-established The Presidents Club firmly with rules and regulations. It has an unofficial code of ethics. The code of silence forbids former presidents from openly attacking another member.
In Nigeria, the National Council of State is not an exclusive club for past presidents. It is populated by former Nigerian presidents, the incumbent, chief judge of Nigeria, state governors, leaders of the national assembly and other notable Nigerians. Yet, when the affairs of state are on the table, you are not invited. When the Council makes decisions that affect your life you are not considered. When the ship of the state needs to be steadied, and the Council sits you are, aha, not on the agenda. It is a closed meeting.
But we cannot say that because there are still more grounds to cover, more work to do and more sectors are waiting to feel the Fintech magic. This means if you are a start-up you have the opportunity to join the billion dollar club. To join simply innovate.
On the contrary, the billion dollar technology club is not a closed one. It is not open either. It is not a club you need to apply before you join. You have to labour to merit an invitation. You have to show you have arrived. You have to earn the rights to join. That is why most exclusive clubs have high entry barriers.
The billion dollar technology club is filled with technology firms that have reached the $1 billion dollar milestone. Or a technology start-up that has got a $1 billion valuation. These Fintech firms are called unicorns. As a unicorn it does not mean you have arrived. It means you have the growth potential to “disrupt the market or create a new market”.
One of the venture capitalists told me that having a $1 billion valuation does not mean a start-up has $1 billion in revenue. It is a price tag venture capitalists fix on the company. It is for the purpose of investments. In summary, a unicorn is made by venture capitalists.
Here are some of the club members. The popular social media audio app, Clubhouse raised $100 million in the first round of valuation. Virtual events platform Hopin hit a $2.1bn valuation one year after launch. It raised $125 million in the second round of funding.
You know, Fintech is in a continuous state of growth in Nigeria. As such, it is throwing up more unicorns. The first unicorn is Interswitch. It reached that status when Visa acquired a 20 per cent stake in 2019. Mitchell Elegbe established the company 18 years ago. Another company that is riding the unicorn wave is Flutterwave.
After he left Andela in 2016, Iyinoluwa Aboyeji founded Flutterwave with Olugbenga Agboola. Aboyeji invested $150,000 in Flutterwave. He also invited some angel investors. “Not because we didn’t have enough cash from foreign venture capitalists but because I wanted to give Africans the opportunity to create wealth for themselves by investing in Flutterwave.”
He said this when he told the story of Flutterwave. Its valuation was aided by its third round of fundraising. It raised $170 million through Avenir Growth Capital and Tiger Global. These two US-based private equity firms are focusing on Africa.
Another club member is Paystack. It was acquired for $200 million by Stripe in 2020. The grade is not yet complete because your own start-up is not on the list. That is because there are other unicorns brewing in the technology laboratory. The world is waiting. The world would not wait forever. But the more challenges we have as a nation, the more we require innovation to surmount those challenges.
That is why different Fintech firms are innovating. Some have revolutionised payment wallets, remittances, processing, merchant service providers and lending. Others have modernised infrastructure, wealth management and savings. But we have more work to do. We have more Flutterwaves to discover.
According to the study by the Digital Frontier Institute, Kenya is ahead in terms of growth and innovation. Nigeria is second. Tanzania is third. South Africa is fourth. To close the gap, we cannot doze off. We cannot rest. We have not arrived. Because we have not scratched the surface yet.
Granted that Fintech firms are redefining how we perform payments, that they have brought an ease and absolute convenience to banking and made it borderless. Aside from this fact, Fintech activities in Nigeria still hover around payments. That is why we have more payment solutions. This trend will continue unless we innovate in other sectors.
Note that there are territories to conquer in consumer lending, agriculture and asset management. Fintech firms have not covered the insurance and healthcare sectors. A 2020 report by McKinsey & Company on harnessing Nigeria’s Fintech potential noted that consumer lending has 30 per cent coverage. If we can increase this to 50 per cent then we can say we are on the way to paradise. On the flip side, if we can cover 30 per cent of the insurance and healthcare sectors then we can say “keep it up”.
Anyway, judging by the rate of growth and innovation in the Fintech ecosystem, we are likely to see a new member of the exclusive billion dollar club this year. That is a piece of exclusive news.
But we cannot say that because there are still more grounds to cover, more work to do and more sectors are waiting to feel the Fintech magic. This means if you are a start-up you have the opportunity to join the billion dollar club. To join simply innovate. Why is Kenya ahead of Nigeria? What is Kenya doing right that we cannot do? Where have the Kenyans got it right?
Okay, I understand. We have a dearth of infrastructure. The total lack of infrastructure has slowed our upward movement. Many start-ups are being snowed under by the huge cost of operations. Unstable power supply has led to an increase in the use of diesel-powered machines. Poor internet connectivity brings the burden of subscribing to many service providers. High cost of real estate means colocation with strange bedfellows.
But in spite of these challenges, some Fintech firms have raised their games. They are innovating. That is how to attract the attention of the global equity firms from the USA, Europe and Asia. That is how to join the billion dollar club. That is how your own start-up can join the club. Anyway, judging by the rate of growth and innovation in the Fintech ecosystem, we are likely to see a new member of the exclusive billion dollar club this year. That is a piece of exclusive news.
*Olaegbe ([email protected])
