Stripe acquires Nigeria's Paystack in "deal of the decade"
The Nigerian fintech startup, Paystack has now
in partnership with FLUTTERWAVE, ENDEAVOR & UK TECH HUB 16.10.2020
Good morning. "Five years ago, we set out with the audacious goal to build a "Stripe for Africa" and we literally became Stripe, for Africa!" -Paystack's co-founder, Ezra Olubi In today's edition: -A big exit -The BackEnd -Food Index
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STRIPE ACQUIRES PAYSTACK
You've probably seen this pun twenty times since the news broke but here it is again: Paystack has earned their Stripes.... The What: The American fintech giant, Stripe has acquired the Nigerian fintech startup, Paystack in what one observer called the deal of the decade. Paystack and Stripe are similar businesses as they provide a way to integrate payments services into online or offline transactions with an API. It explains where the "Stripe of Africa" direction is from. At the time Paystack launched, the cost of processing payments in Nigeria was pretty expensive. But along with some other fintech startups, Paystack pretty much changed that. Disruption. The Why: In the last 18 months, Stripe has been expanding its global footprint. By acquiring Paystack, it now has an African presence. But there's a bigger picture: this acquisition points to a trend of the biggest fintech companies merging with or acquiring other fintech companies.
  • In 2016, Mastercard acquired VocaLink for $920 million
  • In 2019, Ant Financial acquired WorldFirst for $700 million
  • In 2019, Mastercard acquired Nets for $3.2 billion
  • In 2020, Visa acquired Plaid for $5.3 billion
How much are we talking here? The terms of the deal were not publicly disclosed but TechCrunch quotes a source as saying the deal is thought to be over $200 million. That would make it the biggest startup acquisition from Nigeria to date. Paystack will continue to operate independently though, ensuring that the founders can continue with their mission to solve Africa's payments problems. What investors are saying "It’s a significant exit for us; for a few reasons: the multiples are incredible as we got in super early and it validates the gospel we have been preaching for a while." - Kola Aina, Ventures Platform.
THE BACKEND
Reading this on a smartphone? You probably touch your phone at least 2,617 times a day... That's Alex's opener on this week's The BackEnd column. This week, Alex talks about those app permissions we agree to without ever thinking about it. Most of those app permissions allow apps to track us in ways that sometimes seem a little over the top. A fintech app might ask to have access to your contact list if they’ll lend you money, but why would they need your microphone? Alex says he did a quick check on his smartphone and found that 19 apps have access to his microphone and phone book. You can see the permissions apps have on your Android device by going to Settings, Privacy, and then Permission manager. On the iPhone, It’s Settings >> Privacy. This feels very much like a, "Big Brother is listening" type situation but it's a fascinating topic with a lot more nuance. Read all about it here.
Bonus: Sendcash, an online platform for direct Bitcoin remittances to your bank account is launching in Ghana. Catch Alex's take on what this expansion means for the company later today!
PARTNER CONTENT
At Catalysing Conversations, listen to Ire Aderinokun (BuyCoins), Ugwem Eneyo (SHYFT Power Solutions), and Temie Giwa Tubosun (LifeBank) share how they are disrupting industries as diverse as finance, healthcare, and renewable energy. Register here!
FOOD INDEX
What's the food delivery business like in Africa and what cities are leading the way in ordering online? According to the Jumia Kenya Food Index 2020, Nairobi, Casablanca and Lagos, Kampala and Abidjan are the top five cities for online food delivery in Africa. Three of those five cities also have the top mobile internet penetration rates in Africa.
  • Kenya - 87.2%
  • Tunisia - 66.8%
  • Morocco - 64.3%
  • Nigeria - 61.1%
  • Algeria - 58.3%
Will smartphone adoption prove to be the game changer? E-commerce is still in its early stages in Africa, with online retail accounting for only 2% of the retail market. It means that online food delivery businesses are still a labor of love for now. But with smartphone adoption expected to hit 67% by 2025, there's some potential for growth in the online food delivery sector.
EVENT
How often do people who start their careers in a beer company build a payment-processing company loved by 60,000 businesses in Nigeria? Not very often, you will agree. You’ll probably even ask "What are the odds?" For the next episode of Building From Ground Up on Friday, October 23, we’ll be having a conversation with one person who has conquered those odds. The event is powered by the UK-Nigeria Tech Hub. Shola Akinlade is co-founder and CEO of Paystack, a payments-middleman between ambitious African businesses and their customers in different parts of the world, that has raised over $11m in funding. Register for this session here.
WHAT ELSE ARE WE READING?
#EndSARS

- Olumuyiwa

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