When does a Nigerian startup become a company?

by | Aug 30, 2017

When Mark Zuckerberg was launching Facebook, he did so from his dormitory as a student at Harvard University. Of course, his platform Facebook, was barely “starting up” so he couldn’t afford to rent an office space let alone afford a team of highly experienced people. Today, Facebook has transitioned into a powerful company and it’s not so hard to see why.

But what do we make of a country like Nigeria where the word “startup” appears to be a buzzword and loosely defined? For instance, when Iyinoluwa Aboyeji was launching Flutterwave just last year, its position as a startup could barely be contested.

However, having processed over 14 million transactions worth $1.5 billion within just months of its existence, it has become quite hard to say with precision whether Flutterwave is a startup or a company.

To make it a harder decision, Flutterwave went on to raise over $10 million in a Series A funding round very early in the month of August 2017. This is in spite of the fact that many startups in Nigeria struggle to raise funding.

Advertisement

VentureBeat correspondent, Paul Sawers once argued that a startup is no longer in the startup phase “when it has been operating for seven years, generates $2 billion in revenue, is valued at $50 billion and has over 2,000 employees overseeing a global user-base of 600 million people”.

Going by that, Flutterwave and many other Nigerian startups do not qualify as a company. For instance, the likes of Konga and Jumia do not have a global user base of 600 million people neither have they existed for up to seven years. In fact, they are struggling to get to profitability. Yet, they have done virtually enough to jumpstart the startup phase. Both are undisputedly the biggest players in the Nigerian eCommerce. Between themselves, they raised investment of nearly $300 million combined, according to CrunchBase.

While they might not have a global reach like Facebook or even command a billion-dollar valuation just yet, their strong influence in Africa is enviable. Branding these companies a startup would be a completely disrespectful thing to do.

Interswitch, the company founded by Mitchell Elegbe has 15 years of operation to its name and, yet only came close to becoming the first billion-dollar company to emerge from Africa.

However, none of that takes away the company’s achievements in the payment scene. In 2015, Interswitch launched a $10m investment fund for African startups in the payments sector and, a year after acquired VANSO for a whopping sum of ₦15 billion in cash, to mention but a few achievements.

While big companies like Google fit into Paul Sawer’s description of a startup that has transitioned into a company, the same can’t be said of the biggest players in Nigeria. This comparison makes one wonder whether the rules should be set differently for Nigerian businesses.

So, in the interest of finding what suitable yardstick to measure Nigerian startups by, should the number of years be the deciding factor or is it something based more on growth, profitability, staffing levels, or even valuation? These questions are seriously begging for answers.

We’d like to hear your thoughts on this.

Advertisement

Ifeanyi Ndiomewese
Ifeanyi Ndiomewese

Ifeanyi is a desk reporter-turned administrator. Outside of work, I love to read and travel.


Are you in tech and you are looking at getting a foreign remote job or you want to move abroad? Fill this form and you will get the BEST resources to help you get that high paying remote job as well as japa easily! WAGMI!

Subscribe
Notify of
guest
3 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Tessa
Tessa
4 years ago

Profitability and sustainability are two important factors to look at.

Ifeanyi Ndiomewese
Ifeanyi Ndiomewese
Reply to  Tessa
4 years ago

Sustainability I understand Tessa, but profitability i’m still trying to wrap my head around especially as the likes of Konga are yet to become profitable.

Tessa
Tessa
Reply to  Ifeanyi Ndiomewese
4 years ago

That’s probably because of overhead cost.

If that staff was more compact, they would be making more money.

Recent News

TikTok on a “Branded Mission”

TikTok on a “Branded Mission”

On #TechpointDigest, we discuss Autochek’s new acquisition, TikTok’s Branded Mission, Bamba’s $3.2 million seed, and Jumia’s report for Q1 2022.

[PODCAST] Tax evasion in Nigeria to get harder

[PODCAST] Tax evasion in Nigeria to get harder

Using data mining and machine learning, Nigeria’s Federal Inland Revenue Service plans to make it harder to evade taxes. Listen to today’s episode of #TechpointAfricaPodcast to learn how it plans to do that.

Subscribe to Techpoint Digest!

A daily 5-minute roundup of happenings in African and global tech, sent directly to your email inbox, between 5 a.m. and 7 a.m (WAT) every week day!

Please check your email to confirm your subscription.

Subscribe to Blockchain Explorer

Analysis oninnovation, regulations, and trends inthe blockchain sector, as it concerns Africa

Please check your email to confirm your subscription.

Subscribe to The Experts

A bi-weekly where tech career specialists take us on their journey from newbie to expert, and how they became successful in the industry.

Please check your email to confirm your subscription.

Subscribe to Founder's Table

A monthly series, where we catch up with founders in the startup ecosystem, learn about their failures, successes and a few tricks of the trade

Please check your email to confirm your subscription.

Copy link
Powered by Social Snap