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.
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.
Nigerian startups raised $17.6m in Q1 2019, 8.5% higher than they did in Q1 2018. Find out more in the latest quarterly edition of the Nigerian Startup Funding Report here.