Flutterwave Is Valued At Over $3b But Is It Really Worth More Than Top Nigerian Banks ?

Flutterwave became the most valued African startup this month after raising $250 million in a Series D financing round at a new valuation of more than $3 billion. Since then, the Lagos-based and San Francisco-headquartered unicorn has been on the lips of everyone. The startup which has done exceedingly well for itself and has provided useful products over the years is now being compared to traditional Nigerian banks over its recent success.

This is our story today! But before we delve deeper into it, let’s do a background check on Flutterwave. Flutterwave was founded back in 2016 by Olugbenga “GB” Agboola, Iyinoluwa Aboyeji and Adeleke Adekoya. Although the company is headquartered in San Francisco, it is based in Lagos, Nigeria. It operates on a continental and global business and is present in Nigeria, Ghana, South Africa and 31 other countries. Flutterwave has been recognized for achieving many feats and for building products that have transformed the African fintech space. In 2021, it secured $170 million in its Series C funding round at a valuation of over $1 billion and that was the largest ever raised by an African startup. That same year, it launched its popular product called Spend and signed Wizkid, a Grammy award-winning Nigerian artist as an ambassador, with the aim of pushing its brand to Nigerians in the Diaspora. Flutterwave boasts of big global investors backing it including Tiger Global Management, Y Combinator, MasterCard, Visa Ventures, etc.

In total, the company has raised $475 million. As of March last year, when the company attained unicorn status, it processed 140 million transactions valued at $9 billion. The fintech has seen rapid growth between its last round and now. Flutterwave which is currently present in 34 countries in Africa, now process 200 million transactions worth over $16 million. Users of its platform have also grown astronomically. As of March last year, it had a record 290,000 businesses on its platform but guess what! The figure has more than tripled to 900,000. These 900,000 businesses across the world use the platform to process payments in 150 currencies while using various payment options such as mobile wallets, transfers, cards, etc.

While Flutterwave may be the buzz right now, a handful of people think that the fintech is hype. By its valuation, the startup is more valued than every Nigerian bank individually, and still worth more than Nigeria’s two top banks after combining their valuation. But this doesn’t go down well with some, as they feel that mere valuation should not be the standard of comparison between Flutterwave and Nigerian banks.

That brings us to the question, “Is Flutterwave really worth more than Nigeria’s top banks?”


Comparing By Valuation

Worth over $3 billion means that Flutterwave is worth at least ₦1.7 trillion using a market rate of ₦570 to $1. As of December 2021, Zenith and Guaranty Trust banks were the most valued Nigerian banks listed on the Nigerian Exchange Group. As of the aforementioned date, Zenith bank was valued at ₦789.62 billion while GT Bank was valued at ₦765.2 billion. Together, they’re valued at ₦1.62 trillion, still less than Flutterwave’s valuation. When compared with the Stocks Worth Over One Trillion (SWOOT) list, Flutterwave is still worth more than a handful of the companies listed such as Nestle.

This is the basis of comparison for many – the valuation of Flutterwave and Nigerian banks. Well a school of thought thinks this shouldn’t be the basis for comparison as the valuation of the parties involved, most especially Flutterwave, does not give an indepth value of the company; that it only values such company at face value. This school of thought opines that the startup industry is one characterized and valued by “future’ earnings, potentials, and not-so-deep valuation instead of current revenue and gains.

Investors are mostly drawn to startups, especially fintech, because of one major reason – their ability to use technology to solve specific problems. Investors must at least see potentials for a startup to stay in the game for a specific time and the startup’s ability to churn out products that’ll bring an end to or at least alleviate the problems being faced in a peculiar area. In Flutterwave’s case, the startup is revolutionizing the payment space in Africa, which for long has been known to be inadequately taken care of by the traditional banking system. So investors see something there.

Investors want to make money! Currently, Africa’s economy stands at over $2 trillion of GDP and investors think that Flutterwave’s valuation still has the ability to double or may be triple, and this translates to them making more money from their investments in the startup. Investors believe that the largely uncovered African payment space can still be leveraged by Flutterwave (and others) and they’d do anything to get a piece of the cake including pouring in funds that push the valuation of the startup.


User Metrics

Then when it comes to numbers, Flutterwave currently serves 900,000 businesses. Nigeria’s top banks, Zenith and GT Bank have 1.6 million and over 8 million active accounts respectively, according to information from their official websites. This metric shows that Nigerian banks still have a higher user base (which is made up of both individuals, businesses and corporate bodies) than Flutterwave. As of 2019, there were 73.2 million active customers in Nigeria, according to Statista – both individual and businesses, etc. If we compare this to the businesses been served by Flutterwave, we see that the startup’s numbers is only but a tiny fragment of Nigerian banks. This, as described by some experts, should be the basis of comparison between Flutterwave and Nigerian banks.


Number Of Transactions Being Processed

On a second note, Flutterwave is processing 200 million transactions at over $16b, both individually and collectively Nigerian banks process way more transactions than Flutterwave. This is another metric one may choose to consider when comparing startups and Nigerian banks that have been around for longer periods.


Financial Services Being Offered

Flutterwave’s services are tightly wrapped around payments – providing e-commerce tools for business to receive payments in different currencies and across different countries. Nigerian banks offer wider financial offerings – accepting deposits, providing local and international transfers, operating payments and settlements systems, etc. Flutterwave’s limited offerings means that its sources of revenue are only from payment services it offers. Nigerian banks offer more financial services which automatically translates to more revenue outlets.

Although Flutterwave’s valuation may be higher than that of Nigerian banks, when other metrics are used to compare these banks are doing better. They have more users and carry out more transactions even as their valuation is less than that of Flutterwave’s. These banks have been there for longer and serve more functions and provide more financial services than Flutterwave whose business is only limited to payments.

Is Flutterwave really worth more than top Nigerian banks? We’ll leave you to decide that using the metrics stated above.

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