Flutterwave is going public

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Now, let’s get into this week’s Tech Safari Take.

Two weeks ago we made the case for the African Tech IPO.

And it seems to be coming true - this time, it’s for Africa’s biggest payment startup, Flutterwave.

The company’s CEO, Olugbenga Agboola, recently confirmed they’re going public soon.

They’ve hired a few executives, snagged some licenses, and will list on NASDAQ.

If this happens, we’ll have Africa’s second global tech IPO since Jumia.

And as African tech’s poster child, a lot is riding on Flutterwave.

The Story

An IPO is a dream for any startup.

You raise money, grow, and you and your investors get a payday when you go public.

Global African IPOs are rare, and Flutterwave’s listing will make it Africa’s second ever.

And this is no standard IPO - Flutterwave is not just any company.

It’s the biggest, loudest, and most documented startup on the continent.

• It has raised $509 million to date and is valued at $3 billion.

• It powers 1 million businesses and has processed over 400 million transactions worth $25 billion for clients like Uber, Wise and Microsoft.

• And notable startups like LemFi, SendSprint, and Mira were started by ex-Flutterwave employees.

For an African tech outsider looking in, Flutterwave is the golden goose.

And for the ecosystem, it’s the company to look up to.

So when this company decides to list its shares on the world’s biggest stock exchange, everyone pays attention.

But should Flutterwave go public now?

The Context

Flutterwave is a mature company with a mature cap table.

Its last raise was a $250m Series D round, with global investors like Avenir, Visa Ventures, and Mastercard.

These guys want to get their money back in multiples, and the best way out is through the public markets.

Flutterwave chose the biggest technology exchange, NASDAQ, to do this.

It houses companies like Tesla, Amazon, Meta, and Microsoft, and has a market cap of $23 trillion.

If Flutterwave lists there, there’s a lot of liquidity waiting for it.

If things work out, Flutterwave can do a lot for Africa’s tech ecosystem:

• Flutterwave can now go after global clients - helping it get even bigger.

• It shines the spotlight on African tech, positively shaping the narrative.

• It restores investors’ confidence in the African opportunity - which is waning.

There’s also a chance that this opens the door for more IPOs on the global stage for African startups.

But it all hinges on a successful IPO.

And at its last public valuation of $3 billion, success means hitting a bigger number on the public market.

So, will Flutterwave have a successful listing?

The Tech Safari Take

Probably not.

Unlike in private markets, the public markets try to find out what you’re worth all the time.

So, a great story and huge vision aren’t enough - you need the financials to back them up.

Historically, most payment companies listed on NASDAQ have been valued at five to eight times their revenue.

For example, dLocal - a Uruguayan payments company - raked in $650 million in 2023.

It’s valuation today? $4.1 billion.

This means a startup worth $3 billion would need to bring in ~$500 million in revenue to keep its valuation.

Can Flutterwave beat their valuation on the stock market with their revenue?

We doubt it.

While it’s been estimated that Flutterwave made $100 million in 2022, we don't think they’re at the $500 million mark.

And there’s added weight on this IPO.

Our first tech IPO, Jumia, didn’t turn out great.

Despite a successful opening day, Jumia’s shares have fallen 70% from its IPO price.

And with investor confidence in Africa counting on this IPO, it begs the question - “Is Flutterwave ready to go public?”

One flop is bad, but two flops are a pattern - and a Flutterwave flop is bad for everyone.

This IPO should take Flutterwave in one direction: up.

Do you think Flutterwave is ready for an IPO?

Hit reply and let us know.

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