By Rarzack Olaegbe
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. The Presidents Club by Nancy Gibbs and Michael Duffy exposed them.
George Washington founded the President’s Club 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 other members. It is a closed club.
On the one hand
The billion-dollar technology club is not a closed one. It is not open either. You do not apply to join. You have to merit an invitation. You have to show you have arrived. You have to earn the right to join. That is why most exclusive clubs have high entry barriers.
The billion-dollar technology club has technology firms that have reached the $1 billion dollar milestone. Alternatively, a technology start-up that has a $1 billion valuation. These Fintech firms are 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. Venture capitalists fix the price tag on the company. It is for the purpose of investments. In summary, the venture capitalists made the unicorn.
On the other hand
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.
Fintech is in a continuous state of growth in Nigeria. 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.
Flutterwave and Paystack are club members. Stripe acquired Paystack for $200 million in 2020. The grade is incomplete because your own start-up is not on the list. That is because there are other unicorns brewing in the tech 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. However, we have more work to do. We have more Flutterwaves to discover.
A study by the Digital Frontier Institute shows 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, they have brought ease and absolute ease to banking and made it borderless. Aside from this, 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.
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. If we can cover 30 per cent of the insurance and healthcare sectors then we can say, “Keep it up.”
However, 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 that 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 did the Kenyans get it right?
We have a dearth of infrastructure. The total lack of infrastructure has slowed our upward movement. The huge cost of operations impeded some startups. Irregular power supply has increased the use of diesel-powered machines. Poor internet connectivity brings the burden of subscribing to many service providers. High cost of real estate has brought strangers together.
From the side
In spite of the challenges, some Fintech firms have raised their games.
I know. They are innovating.
Is that how to attract the attention of the global equity firms from the USA, Europe and Asia?
No. That is how to join the billion-dollar club. That is how your own start-up can join the club.
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 exclusive news.