A tale of two fintechs
For two Nigerian fintechs, "it was the best of times, it was the worst of times"
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Storytelling makes a difference
Last week, TeamApt, a fintech startup that says it is Nigeria's “largest business payments platform,” raised $50 million from investors. Even at a time when the biggest media publications are not obsessing over fundraising news, TeamApt’s “pre-series C” round made headlines. Of course, it helps that this is a time when funding rounds have slowed; so raising $50m is definitely big news.
The recent fundraise took me back to TeamApt’s Series B raise in 2021. At the time, the overwhelming reactions were: “what is TeamApt?” “what do they do?” “do you know anyone who works there?” For most people who work outside of tech, TeamApt was a relative unknown and these sentiments carried over into 2022.
Why is TeamApt not as well known as Flutterwave, considering the relative similarity of both startups? One answer is that for the first few years of its existence, TeamApt mostly serviced banks and other businesses, not individuals. But then, you can say the same for Flutterwave. The difference between both companies is that, from the jump, Flutterwave focused a lot on storytelling. This brand story of how the company solves payments problems and (of course a robust business) eventually led to Flutterwave becoming Africa’s fourth unicorn.
Flutterwave understood the importance of storytelling and how to appeal to different power players. This is clear from its original structure where Iyin, the popular founding CEO who had Zuckerberg's backing at Andela mostly handled investor relations; GB's antecedents as an engineer at Stanbic and Access Bank were an important note, and Leke's institutional understanding of compliance made the trio formidable."
It feels like Flutterwave’s unicorn status sparked some thinking at TeamApt; how did a competitor with comparable numbers beat them to coveted unicorn status? Whatever the answer was in-house, today, TeamApt is now doing a lot more talking.
For instance, you might find micro-influencers posting videos from the company’s team off-site hangouts. Or you’ll find videos like this talking about how the startup processes payments worth $7bn every month. It might even be a video of the comedian, Sabinus talking about MoniePoint, the company’s banking solution for small businesses. All in all, TeamApt’s focus over the last couple of years has been to weave stories that match the size of their business.
While the endgame may not have been solely to get to unicorn status, there must have been a feeling that a $1 billion valuation was there for the taking. Yet, last week’s fundraising suggests that TeamApt’s valuation fell short of $1 billion, but depending on who you ask, it’s still somewhere in the region of $910 million. It’s super close, but it falls short of what I imagine would have been a “nice-to-have” status. It may take an IPO for TeamApt to get that valuation, but it’s unclear when that will happen.
On the road to IPO, storytelling may not suffice
Last week, a Bloomberg story on Flutterwave focused on the troubles the company is running into as it plans an IPO for the near future. Allegations of creating a toxic workplace culture hang over the head of the company’s CEO, Olugbenga Agboola. The company has denied the charges, but the outcome of a lawsuit by one former employee over stock options and compensation may very well open the door to more lawsuits.
On the African front, the company is facing investigations in Ghana and South Africa and a lawsuit in Kenya will determine whether or not it is guilty of breaking money-laundering and compliance regulations. Changes to the company’s CFO and CTO may well have happened with an eye to the future, but it needs to ride out the present challenges for it to even matter.
One thing is clear, the reporting on Flutterwave and the company’s refusal to exhaustively address the issues have done a number on its image. Some sensational reporting has questioned the credibility of the company and it will take a determined reporter to untie many of the complex issues. On one hand, there are allegations that the company cheated employees out of stock options, and there are other allegations regarding the company’s penchant for cutting corners in order to make a quick buck. These are issues that will only continue to receive more scrutiny as an IPO becomes more of a reality.
Flutterwave’s damaged reputation coincides with a drastic shift in the capital market, where even having a big brand, decent growth and influential backers isn't enough to sway new money to come in, not least in the tricky African market. The company needs to make a massive turnaround. It allegedly has bad relationships with some former employees, investors, regulators and financial partners. It would need to clean up its act quickly and restore confidence in its brand. How it will do this is unclear, but we can take a guess.
For now, we can only speculate and listen as observers say that Flutterwave’s CEO may be “pushed upstairs” as Chairman while a new CEO is named in his place. Storytelling may have gotten the startup this far, but for its next stage, it may need to prove, through talking and not silence, that it doesn’t have skeletons in the wardrobe.
See you next Friday!
Edited by: Abubakar Idris
I agree that employees take the biggest hits.
I think that many organizations like FB forget that their employees also make up stakeholders.
Like investors, employees fund start ups with their time and talent in exchange for pay, etc.
When investors get pissed, shit hits the fan. Employees leak confidential information to the media or worse, revolt publicly.
I wonder if the poor leadership + brilliant product IPO pipeline will remain sustainable.
I’m biased but it’s high time tech startups stop relegating comms and PR to press releases and funding announcements functions.
Reputation building should be a foundational part of building a startup. But what do I know? 🙂
Interesting and coincidental, I was mulling sending in another submission on this topic, after I read the Bloomberg article linked here, and Victoria Crandall's follow up to it, but guess I can just comment here instead.
A question I've been trying to find answers to in light of a potential Flutterwave IPO is:
"Did the ecosystem gain anything from Uber's IPO, or did everyone just provide exit opportunities for investors and a founding team who had burned a rocket ship, and all wanted to just get off"
I believe this is an important question at this stage because Butterfly company, is at that same stage Uber was in 2018/2019, and it honestly feels like de ja vu from where my observation desk.
The PR pieces all look the same. Rather than tell and show what is being done from a compliance and an operational clean up point of view, it seems almost everyone and their grandma is focused on selling the IPIO narrative.
Looks like everyone "invested in" and praying for a butterfly IPO and success for the absolute wrong reasons. These PR pieces further justify that, and it all seems pretty calculated to sell the IPO narrative rather than the sustainability narrative that I believe is better for the ecosystem in the long run.
I fear that we are letting early investors and PR teams sell us that an IPO is the best possible scenario for the industry in this butterfly fiasco. Its almost as if they have all resigned to collecting their returns and outsourcing the hard line leadership and management decisions to unsuspecting retail investors and the market.
I believe more work is to be done from an industry point of view to make sure another *bad* company isn't dumped on the markets, while founders and early investors ride out their proceeds and sever ties with the company, leaving a new CEO and management team to fight for their lives.
Its been 4 years since Uber IPO'd. The uber like clones we were promised did not materialise. Investors fled the sector in general, and only Travis and Benchmark were winners.
Do we want a repeat of this again? I know it'd make for good TV though whenever the time comes.