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Foreign investors’ appetite for Nigerian startup grows



Flutterwave and PayPal


Despite the sharp drop in Foreign Direct Investments (FDIs) into Nigeria, startups in the country have remained attractive to foreign investors with its huge consumer market, optimized business environment and innovation capabilities.

It would be recalled that the National Bureau of Statistics (NBS), had in a recent report, said the FDI that flowed into the country dropped to $77.97 million in Q2 2021, from $154.76 million recorded in Q1 2021, the lowest in 11 years.
However, technology based startups, particularly in the areas of agritech, education technology, e-commerce, IT, legal tech, fashion, gifting, QSR, mobility, digital freight and payment platforms, among others, have turned out to be outliers.

The Nigerian-owned startups have been in the news lately for raising huge funds from international investors to grow and continue their business innovations.

Some of the startups that have gained the interest of foreign investors, Business Hallmark findings revealed, include Flutterwave, Opay, Andela, ToLet, iROKOtv,, Paystack, FarmCrowdy, Kuda Bank, Decagon, Healthplus, Chicken Republic, Fawry, Interswitch, Jumia, Wakanow, PathCare, Autochek, Mono, among many others.

Flutterwave, founded in 2016 by Messers Iyinoluwa Aboyeji and Olugbenga Agboola, helps businesses build payments applications through its APIs.

According to the company, more than 290,000 businesses use its platform to carry out payments in 150 currencies and multiple payment modes including local and international cards, mobile wallets, bank transfers and barter.

It led the way in 2021 when it secured $170million in Series C funding from a consortium of firms, including U.S based investment firms, Avenir Growth Capital and Tiger Global, as well as DST Global, Early Capital Berrywood, Green Visor Capital, Greycroft Capital, Insight Partners, Salesforce Ventures, Tiger Management, Worldpay FIS and 9yards Capital.

The firm had earlier in 2020 and 2018 secured $35 million Series B and $20 million Series A funding from foreign investment firms, bringing the total to $225million.

Another Nigerian startup with strong foreign involvement is OPay. Founded in Lagos, Nigeria in 2017 by Chinese billionaire entrepreneur Zhou Yahui, OPay secured Series C funding of $400m in August 2021 in a round led by Softbank at a valuation of $2bn.

OPay had earlier in 2019 announced two funding rounds of $50 million (Series A) in June and a $120 million Series B in November.
Following on their heels is digital banking startup, Kuda Bank, which raised $55 million in August Series B funding at a valuation of $500 million. The capital investment was raised by Valar Ventures and Target Global, with participation from Strategic Business Investor and past angel investors.

Founded in 2019 by its current CEO, Babs Ogundeyi and Musty Mustapha, the fintech startup in March 2021, raised $25 million in a Series A round in its drive to provide a modern banking service for Africans and the African diaspora.

The bank currently has 1.4 million users on its mobile money application.

Speaking on the collaboration, the General Partner at Valar Ventures, Andrew McCormack, said his firm decided to support the bank because it believes Kuda’s transformative effect on banking will scale across Africa.
“Kuda is our first investment in Africa, and our initial confidence in the team has been upheld by its rapid growth in the past four months.
“With a youthful population eager to adopt digital financial services in the region”, McCormack stated.

Also in 2021, IT startup, Decagon, raised $26.5 million and $1.5 million financing deals packaged by Kepple Africa and Timon Capital, backed by Tokyo-based UNITED Inc.

The IT firm had earlier secured a $25 million student loan financing facility from Sterling Bank and the Central Bank of Nigeria (CBN).
Likewise, in September 2021, Andela, a company that identifies and develops software developers, raised $200 million from investors international investors led by SoftBank Group Corp., a Japanese tech investor, backed by Whale Rock Generation Investment Management, Chan Zuckerberg Initiative, and Spark Capital.


An auto-tech startup, Autochek, also raised $13.1 million seed funding round in last month from TLcom Capital, 4DX Ventures, Golden Palm Investments, Enza Capital, Lateral Capital, ASK Capital and Mobility 54 Investment SAS, the venture capital arm of Toyota Tsusho Corporation.

E-commerce retail startup, Alerzo, secured a $10.5 million Series A round in August 2021. The financing was provided by London-based Nosara Capital, FJ Labs and other investors from the U.S., Europe and Asia.

Other startups that secured funding from abroad, include Appxone, a fintech software provider, which raised $10 million in August; Mono, a financial data startup $17 million; Lidya, an SME finance fintech $8.3 million; Edu-tech startup Edves $575,000; HealthPlus, Nigeria’s leading retail pharmacy and beauty outlet $18 million; Chicken Republic $3.02million and Jumia, over €400million in investments.

In the first 10 months of 2021 alone, foreign investors invested $992 million (about N412 billion) as direct investment in 35 Nigerian-owned startups.

Explaining the recent surge in the scrambling for Nigerian startups by foreign investors, a leading startup ecosystem map and research center, StartupBlink, in its 2021 Global Startup Ecosystem Index, said Lagos has overtaken Nairobi to become Africa’s top startup ecosystem.

Also speaking on the development, a techpreneur, Abi Mustapha-Maduakor, Series A, B and C stage funding have seen an explosion of interest in Africa from around the world over the past five years owing to its huge growth and potentials.

“This success is demonstrated by the near-daily headlines about African entrepreneurs and startups raising funding from international investors to grow, scale and continue innovating.

“Though, there is no question that VC and PE investors are well-positioned to play a critical role in addressing the early-stage funding gap, regulatory and political risks remain a top concern for investors”, Mustapha-Maduakor noted.

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