African Payments Company Flutterwave closes $170 million funding

African payments company Flutterwave announced that it has closed $170 million in a Series C round, valuing the company over $1 billion.

The Series C round comes a year after Flutterwave closed its $35 million Series B and $20 million Series A in 2018.

This round, led by the US-based investment firms Avenir Growth Capital and Tiger Global Management, with participation from new and existing investors like DST Global, Early Capital Berrywood, Greycroft Capital, and Tiger Management, makes the five-year-old company one of the few African startups to have secured more than $200 million in funding and bestows on it the status of 'unicorn.'

A unicorn is a term used in the venture capital industry to describe a privately held startup company with a value of over $1 billion.

Founded in 2016, by Olugbenga

Agboola, who was on the list of Top 100 most influential Africans in 2019, Flutterwave helps businesses from around the world expand their operations in Africa and other emerging markets with a platform that enables cross-border transactions through one API. Businesses can use the platform to create customizable payment forms and collect that payment from customers and international businesses without having to sync with multiple payment systems. They can do so in 150 currencies and multiple payment modes including local and international cards, mobile wallets, bank transfers, Barter by Flutterwave.

Based in Lagos and San Francisco, Flutterwave says more than 290,000 businesses use its platform to carry out payments and has processed over 140 million transactions worth more than $9 billion. In 2019, it partnered with Alibaba’s Alipay to offer digital payments between Africa and China.

Flutterwave also helps businesses outside Africa to expand their operations on the continent and has an impressive clientele of international companies, including Booking.com, Facebook, and Uber.

With this funding, Flutterwave is looking to expand past the 33 countries it already operates in, into North Africa. It wants to become a global payments company and this funding serves to propel it towards that.

The company will extend its operations to Egypt, Morocco, and Tunisia and will be live there by the middle of the second quarter, according to the CEO Agboola says. Flutterwave might then set up a physical presence in those countries, he says. He also wants to expand into francophone Africa as “our network needs to be everywhere” on the continent.

The digital payments market in North Africa and the Middle East is set to grow at a compound annual rate of 13.3% until 2026, driven by mobile phone and Internet penetration, according to Mordor Intelligence. It’s “crucial for the region to have an underlying real-time infrastructure in place to enable these payments”, Mordor says.

Flutrerwave's massive funding comes just months after Nigerian payment startup and competitor Paystack, was purchased by US payments giant Stripe last year. The widely celebrated deal was worth more than $200 million and brought a lot of visibility to the African fintech space. DPO Group, a Nairobi-based payment service provider for African businesses, was also acquired last year by Network International, a Dubai-based digital payment company, in a deal worth $288 million.

It was rumored that Flutterwave might also take the exit route but if anything, this Series C win suggests that the company is not looking to exit at the moment. However, if the YC-backed company indeed does, it might be through an IPO. (Initial Public Offering)

'The goal is to be ''IPO ready'" Agboola said. 'Like every other startup, we’re thinking about ways to create exit tools for our investors. So, a listing is very much in our plans, but for now, we’re focused on giving the best value to our customers.' He adds.

Africa’s electronic payment industry is hardly fluent, and sending money from one point to another is challenging. This has proven to be a problem for businesses across the continent as payments have to be made through hundreds of banks/mobile wallets and businesses are forced to integrate their systems with numerous different service providers and banks, which is very expensive.

Flutterwave provides a payment infrastructure for global merchants and payment service providers, making it easy to send money from one point to another. It serves as the center which connects various payment services. Their service is currently live in 20 African countries with an infrastructure reach in over 33 countries on the continent and costs about 1.4% processing fee per local transaction.