A history of Nigerian superapps

Swoop is starting from an interesting angle

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Super app dreams

If you go to a VC today and tell them you’re looking to raise money for a food delivery startup in Nigeria, you might get walked out of the room. They have seen and heard it before and may be understandably jaded.

While Chowdeck and Glovo are giving the sector some hope, you cannot miss the issues. Restaurants do not want to pay commissions, so they pass the costs to customers who also underestimate what it truly costs to get a meal to their doorstep. A recent Substack essay about Chowdeck went viral because it captured customer frustration. Delivery fees and service fees are trending upwards, while conditions around subscription fees are changed without notice.

If a startup is constantly adding costs and changing terms under the feet of its customers, it is unlikely that unit economics are great.

Francis Dufay, Jumia’s CEO, gave the best soundbites about this business when Jumia shut down its food delivery arm in 2023. At the time Jumia killed food delivery, the business accounted for about 11% of Jumia’s GMV in the first nine months. It had also been Jumia’s fastest-growing category for years.

Dufay’s argument was that food delivery was difficult everywhere, with “challenging economics and big losses.” In Africa, the business has high costs, heavy competition, downward pressure on commissions, and rising marketing costs because everyone is fighting for the same customers.

So “we are building food delivery in Nigeria” is probably not the story you want to tell investors, and as I’ve said before, fundraising is storytelling. What’s your alternative story?

You can say food delivery is the first wedge into a much larger consumer platform, and that restaurants are really merchant acquisition, riders are logistics infrastructure, and the payment flow is really the beginning of a wallet. Repeat lunch orders are frequency and customer data is credit underwriting.

Basically, you could tell a story about a superapp.

Super apps are seductive because they turn a difficult first business into a larger constellation of businesses. The first business may have thin margins, difficult customers, operational stress, and unclear profitability. The other businesses improve the story with a theoretically larger addressable market.

Some start from payments, banking, logistics, messaging or even e-commerce. The broad ambition is to own one high-frequency relationship, then stretch it into many others.

There’s nothing better than a look at some of Nigeria’s super app dreams to understand where the next thing is.

GTCO (Habari)

GTBank launched Habari in 2018 as Nigeria’s largest platform for music, shopping, lifestyle content, and more. Segun Agbaje said the app was “less about us as a bank and more about our customers and everything they need to enable their lifestyle.”

GTBank had one of the strongest consumer banking brands in the country, and the thinking was that if fintechs were going to attack the bank from the customer experience point, GTBank could play that game too.

A customer can trust you with their salary and still not want it to be their music app, shopping mall, and cultural companion.

OPay (ORide, OFood, OEverything)

OPay had ORide, OCar, OBus, OFood, OExpress, OMall, OTrade, OKash, and the wallet at various points. OPay was building a Nigerian super app with restaurant delivery, logistics, B2C and B2B commerce, and ride-hailing, all centered around the payment product.

When Lagos restricted motorcycle ride-hailing, OPay got smaller, and well, it’s on its way to an IPO, so we know how that went.

Jumia (Marketplace)

If any African internet company could argue that one activity would reinforce the others, it was Jumia. You could buy an item, pay with JumiaPay, order food, and at some points, book hotels or even find flights.

Yet, all the verticals were spun off until we ended up with this new lean version of Jumia, which has exited, cut, and narrowed its way to this entity that now expects to break even in 2027.

MTN (Ayoba)

MTN had SIM cards, airtime, billing relationships, data, agents, and presence across African markets. It wanted to be an African answer to WhatsApp and WeChat.

Free data can make people try an app, but can it make people move their church groups, school chats, family arguments, vendor relationships, office gossip, and football banter from WhatsApp? Ayoba has now shut down.

Swoop

Swoop is a food delivery business that does not see itself as a food delivery business. The founder, Niederhoffer, references Kaspi in Kazakhstan and WeChat in China, platforms that turned a single high-frequency consumer behaviour into the rails for everything else. Food delivery is the start, with payments coming next.

“In Africa, there’s no legacy banking infrastructure. Essentially, you’re not competing with credit cards. Those are not popular, and there’s a huge opportunity.” - Niederhoffer

I don’t fault whatever you have to say to raise money.

Each of the four companies above with superapp ambitions started from a stronger position than food delivery.

Swoop’s thesis is that the destination (a payments and financial services layer) is a vacuum waiting to be filled. Of course, startups change their destination and pathways all the time, but this is certainly worth watching.

In any case, Swoop has $7.3 million and a really good story. Game on.

See you next week!