Paystack: The post-acquisition story.

Ezra and Shola selling a company for over $200m after total financing of $10.2m dollars is a successful exit. That’s more than 20x multiple.

The News

On the 15th of October 2020, it was announced by several media outlets and via social media that Stripe, an Irish American company had acquired Paystack, a company founded by Ezra Olubi and Shola Akinlade, for a deal worth $200m. It was reported as the deal for the decade for the then 5 year old company.

What led to the acquisition?

Stripe is an Irish American company, founded in 2009, with headquarters in California. A financial services and software as a service company fixing payment infrastructure for the internet. Before 2020, it had a presence in all the continents except Africa and Antarctica. Earlier in 2020, Stripe had raised $600m and one of the reasons for the fundraising, according to tech crunch (Stripe acquires Nigeria’s Paystack for $200M+ to expand into the African continent | TechCrunch) was to expand its API-based payments services into more geographies.

Paystack, on the other hand, desired to build “Stripe for Africa”. The mission was to help businesses and individuals get paid by anyone, anywhere in the world. The tech company had become the toast of the town having top clients like MTN, Bolt, and Domino, and was facilitating more than 50% of the entire country’s payments.’ As at the time of the announcement, Paystack was live in Nigeria, Ghana (2018), and South Africa ( 2020) providing new integrations for the emerging markets.

Indeed, the acquisition was a round peg in a round hole as Stripe had wanted to launch in the African market.

The Acquisition:

The acquisition did not come as a rude shock as Stripe, including Visa, had earlier invested in Paystack in their $8m Series A in 2018. Early investors like Doctor Ola Brown, Director at Greentree company, Olumide Soyombo, Managing Director of LeadPath, JASON Njoku, CEO of Irokotv and Kola Aina, founding partner at Ventures Platform Fund, etc. were early investors too and cashed out big time as the return of investment (ROI) was in the north of 1000%. Context: For every 1 dollar Invested, the return was 1000 dollars. Olumide Soyombo described the ROI as “you won’t make as much money on the odds at a roulette table”. Mad!

Ezra and Shola selling a company for over $200m after total financing of $10.2m dollars is a successful exit. That’s more than 20x multiple.

What next

Paystack had just launched its pilot phase in South Africa before the acquisition but the acquisition gave the necessary boost to launch fully in 2021. The tech company was in the news a few months ago after receiving Payment Service Provider (PSP) license from the Bank of Ghana.

The business also continues to support and engage its community via several means such as the “Decode Fintech Podcast”, and “ How tech changed my life” in collaboration with WiiCreate and a host of others.

The first Nigerian Y-Combinator-backed company continues to power a new generation of businesses in Africa. Paystack has continued to operate as a business on its own rather than becoming a division under Stripe.

Founders:

Ezra and Shola were recently conferred the Order of the Niger by the President of Nigeria for their involvement in the tech space. 5 Nigerian tech entrepreneurs to receive national awards (benjamindada.com). Shola has been in the news for starting a football club in Nigeria called Sporting Lagos. Shola Akinlade launches Sporting Lagos Football Club | Pulse Nigeria. It is quite evident that these two admirable founders love to dare new things.

They have started contributing to the ecosystem by backing new startups with funds. The latest in the bag is Earnipay Earnipay announces $ 4 million seed raise (benjamindada.com). Altogether, they have funded more than 7 startups across different industries over the last 3 years.

The Ecosystem

The acquisition story changed a lot of narratives about startups in Nigeria. More investors are now willing to invest in early-stage companies. It raised the possibility of a 5 year old company, if boot-strapped properly, can be acquired by another company for a huge amount. The acquisition of Mainone Cable by Equinox for $320 million in 2022 supports this claim. The market has significantly grown since the Paystack acquisition. Although, some believed the company was sold too early. It is my desire to see businesses in Africa scale rapidly.

Do you think the founders should not have sold the company? Are we going to see more acquisitions/mergers in the tech space? Do you think the market is ripe for these moves?

While trying to answer all these questions, let’s toast a two-year congratulations for the Stripe for Africa.