Maxwell Obi and Segun Adeyemi teamed up whilst Entrepreneurs in Training (EITs) at the Meltwater Entrepreneurial School of Technology (MEST) in the year 2015.
During the time they launched Amplify — a fintech startup with a social banking solution and a payment gateway that enables subscription-based businesses accept recurring payments — as their primary offering.
After the training at MEST ended months later, both young individuals decided to focus on Amplify full time. But little did they realise something bigger than them was about to happen and that it would change their lives.
One Finance and Investment Limited (OneFi), the company behind consumer lending app, Carbon (formerly Paylater) came knocking with capital and acquired Amplify.
Five months have gone by since then and the acquisition has brought different fortunes for both Maxwell and Segun.
There are not so many documented startup mergers and acquisition in the Nigerian technology space.
To this end, Techpoint caught up with Maxwell, who is now part of OneFi’s active workforce, to share with us what life during and after an acquisition has looked like.
How did the acquisition by OneFi happen?
OneFi had been interested in Amplify from the get go. They believed in our vision and gave us their business even when we were in beta.
Since launching the payment gateway side of the business in 2016, OneFi had tried to invest in the company for an equity stake twice before settling for a full acquisition.
They were our first major client and were intrigued that we could solve recurring payments seamlessly and provide innovative solutions under fierce competition. They had long seen payments as a strategic driver in providing quality digital financial services to their customers.
In our various conversations, it became clearer that OneFi’s goals in becoming a neo-bank feeds well into our vision of a growing economy through simple payment solutions, we got back to the negotiating table and the rest is history.
Did Amplify envisage the acquisition?
No we did not. We had just launched mTransfers — a keyboard banking solution that gave customers access to financial services within the context of social media conversations.
We had partnered and launched this product with some of the biggest banks in Nigeria (e.g. Zenith bank’s Qwerty Banking, Fidelity Bank’s Flashkey) and processing thousands of transactions.
We however understood that OneFi is solving a really important challenge with technology, one that is paramount to the growth of our economy which is access to credit and quality financial services.
We have always admired their boldness and audaciousness in tackling these challenges and had a great relationship with the founders. Chijioke and Ngozi were on an endearing mission and consolidation made perfect sense for us.
What has changed in terms of Amplify’s structure and outlook since the acquisition?
The most notable change is the shareholding and management structures. This was a full acquisition. Amplified Payment Systems Ltd is now fully owned by One Finance and Investments Ltd.
For someone who has been part of a merger process, what does it feel like?
It was a great experience, one that came with a lot of learnings, excitement and anxiousness.
The process leading up to acquisition is more like courting before marriage, it takes time and is very deliberate. There was a lot of back and forth, investor alignment, due diligence and audits. It’s never an easy process but you have to keep sight of the bigger picture.
How would you describe life after the acquisition?
The journey has been interesting so far. Our vision to be the top digital bank in Africa is an endearing one hurdled with its own unique challenges that keeps the grind interesting. As Ngozi would put it, “we’re in a competitive space, but whoever serves the customer best will reap the rewards”.
That’s been the thinking behind our product evolution. We are nimble and very entrepreneurial in culture and I have the best colleagues ever. Best place to be!
Your co-founder, Segun has had to move on, is this remotely associated with the acquisition?
Segun wanted to take time off to rest and plan his wedding and for personal development as well, before exploring other opportunities.
Entrepreneurship is not a smooth sail, it requires constant toil and many sleepless nights. It’s okay to want to take a break after an exit. I on the other hand wanted the action and was excited about jumping in immediately.
Would you say mergers and acquisitions are good for the startup ecosystem?
Absolutely. I am a big advocate for strategic alliances. Strategic mergers and acquisitions is a forte in mature ecosystems like Silicon Valley which bolsters startup growth and chances of survival. The total addressable market for various sectors in Nigeria is really small to compete aggressively at scale.
In some cases, startups should consider consolidating and combining forces to expand their reach and gain market share. The fintech space in the continent is still growing and the acquisition is proof that finechs are solving real problems that have huge positive impact on people’s lives.
This also goes to show that the tech/entrepreneurial ecosystem in Nigeria is becoming more mature and encouraging.
Any other thing we should know about this acquisition?
Leading up to the acquisition of Amplify by OneFI, the financial services space, specifically online payments, was very different 3 years ago from what it is today.
Payment gateways were expensive, with very shoddy user experience, and quite difficult for businesses to integrate. The worst of this gap being that there was no way to efficiently process automatic debits/recurring type transactions without going to submit paperwork to your bank.
The fragmentation was deeply rooted in legacy systems and businesses who had a subscription-based business model were suffering for it.
This was what we set out to solve, since then, we built two market-leading products, Amplify Pay and mTransfers, helped hundreds of Nigerian merchants accept one-time and recurring payments worth billions of naira, partnered with the biggest banks in Nigeria to launch ground-breaking products and assembled a great team of talented individuals.
The acquisition amount was never disclosed, do you mind telling us how much?
(Laughs) I’d like to keep that out. However, I can say that it was less about the amount involved, and more about the strategic thinking and new vision for the company.
Which is why mergers or acquisition should be about value partnerships; whether it’s between startups or startups and large corporates.
Nigerian startups raised $377m in 2019, more than twice what they did in 2018. Find out more when you download the full report.