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Stripe acquires Nigeria’s Paystack for $200M+

213 points by 0xedb 6y ago

sixhobbits 6y ago
https://outline.com/AkJsKv https://outline.com/AkJsKv to get past TCs ever increasing popups
keiferski 6y ago
While applying to YC recently, I came across their application: https://paystack.com/blog/company-news/paystacks-y-combinator-application https://paystack.com/blog/company-news/paystacks-y-combinato... They applied in 2015 and their revenue at the time was $1,300. Inspiring stuff!
luckylion 6y ago
I never understood why startup wait that long to branch out internationally. I imagine that you need some local presence and need to adjust to local customs and requirements quite a bit, but it should be cheaper to enter other markets when you've "made it" and have solid funding. Instead, it seems they often wait for years while local copy cats develop the market and then pay a heavy premium by buying them. Is that simply because they don't want to divert attention from building the business? Are VCs more skeptical if you want spend money on international growth?
- bmh 6y ago
  How exactly would Stripe branch out to Nigeria? It might be less risky and cheaper to just buy a local team with a proven track record, than trying to transplant yourself into a culture that you know nothing about.
  - kaladin_1 6y ago
    yeah, good move by Stripe. Paystack is already battle-tested in the payment fight
  - luckylion 6y ago
    I'd guess you could also hire local people. They'd cost money too, but $200M? Similar things happened with eBay in Germany, the clone was named Alando (then sold for $43m in 1999 after running for a few months).
    - TechBro8615 6y ago
      Stripe is a multi-billion dollar company and will likely have one of the biggest IPOs ever within 1-2 years. $200M is a bargain price to acquire the market leader in an emerging market like Nigeria.
      - lkbm 6y ago
        It is a very good deal for Stripe, but I do wonder if would it have been a better deal to buy 2-3 early stage Nigerian startups five years ago. Maybe the winners aren't willing to sell early/cheap. Should Stripe be investing in seed/Round A start-ups? Having Stripe as a resource could be big -- funding, advice, and potentially infrastructure.
        brianyu8 6y ago
        You're right about that -- Stripe led Paystack's series A and has also led other series A rounds like Fast's.
        ayewo 6y ago
        If you look at Stripe’s strategy, they tend to ride certain horses rather throw stuff at the wall to see what sticks, so it wouldn’t have made sense for them to buy 2-3 when they only need to buy 1 that’s really good. And that’s what they did when the led Paystack’s $8m series A funding 2 years ago when they were almost 3 years old. https://techcrunch.com/2018/08/28/paystack-with-ambitions-to-become-the-stripe-of-africa-raises-8m-from-visa-tencent-and-stripe-itself/ https://techcrunch.com/2018/08/28/paystack-with-ambitions-to...
    - lkbm 6y ago
      They spent 200M for the one they now know is successful. It does seem likely they could've had > 10% chance of success for under 20M, but that might just be me being way too optimistic / not understanding the expenses of trying to deal with a banking system.
  - rockostrich 6y ago
    Yea, banking/PoS and travel are the two industries where you can't just expand internationally without having some sort of physical presence. Mostly due to local regulations around both industries.
- estsauver 6y ago
  If you treat other markets as being cookie cutter versions of your own market, you're going to fail. Nigeria has a fundamentally different set of payment institutions in the norms. Even within European countries, there are really different processes and flows. Going to The Netherlands? You'd better setup iDeal or you're going to have lower conversion. Are you setting up a retail grocery store in Austria? Get ready for MaestroCard (which is owned by mastercard but is a totally separate platform.) Let's take the country I spend the most time thinking about: Kenya. Do you want to support M Pesa, the most common digital payment method by a mile? Great, you'd better get ready to set up and integrate against a baroque set of XML apis that require a specific VPN configuration to access. Oh, you want to use the new rest api? That's fine, except that after you go live you find out that it doesn't support all the flows you need and that actually in some weird edge cases the transaction totally falls apart and you have no idea what happened to the money. You can access the MPesa portal to get a giant excel file of all the transactions on your account that are at least a few minutes old, but you can only access that on a few specific machines that have a root certificate installed for the telco and use internet explorer 6 on windows. Also, the excel file format changes... occasionally. But how long do you wait to get the excel spreadsheet? There's retry logic built into the platform, and ... Or, if you're a product manager who's working at Stripe you could look at your CRM and see that if you can implement these 3 types of reporting features you can go and steal an extra 10% of Netflix's business and pick up a whopping 2 billion $ of revenue. If you add payment support for Mpesa, you've added support for one payment method, but the entire GDP of Kenya is 90B$. Which one would you prioritize?
  - franciscop 6y ago
    Incidentally I went to a great Stripe talk where they talk how they homogenize the "incoming purchases" at some point early in their stack and then they can use the same API internally for any of them no matter the location in the world or the payment processor. I don't recall the specific examples but it was definitely like the Netherlands example you pointed out.
  - luckylion 6y ago
    > Which one would you prioritize? I'd absolutely prioritize doing three easy things if I'm strapped for cash, can't hire new developers and need all focus on my initial market. I totally understand why nobody immediately starts offering their product globally. But when your product has matured, you've secured the next $10m (or $50m or $100m) in funding, you no longer have a single product manager, you can rent offices in Nigeria and hire locals who know the market and the requirements, and you can hire additional developers to deal with local quirks etc, why wouldn't you? Is the attention at the C-level spread so thin that even choosing someone who will set up a local team is taking too much away from growing the core product? I have no doubt that it's easiest to wait, have somebody else develop the market and then buy them. But it also costs a lot of money. Is not having to figure out how to work with M Pesa worth $200m?
- wil421 6y ago
  Banking and the payment industry have a lot of different compliance and laws to adhere to. Much easier for startups who’s business model is sign up and use my web app. At my previous job there were conference rooms converted into mini-libraries for the legal/tax teams to review for the 170+ countries they did business in. It was so hard in some places that they would just outsource everything to 3rd parties and resellers to get over the headache.
- bastawhiz 6y ago
  Stripe is live in dozens of countries. Not sure why you think they're waiting.
cvhashim 6y ago
Good job Paystack team
sprsimplestuff 6y ago
i wonder if $200mm+ is a bargain - long term?
- AlchemistCamp 6y ago
  I suspect it is. Nigeria is a huge country and it's really starting to boom. It's a small data point, but I'm amazed at both the number of people in Nigeria going through my Elixir tutorials and the rate individual learners are progressing through them.
  - sprsimplestuff 6y ago
    and Nigeria is only one country on the continent
    - AlchemistCamp 6y ago
      Ghana is another that's starting to really pick up some traction in my audience. Smaller than Nigeria in size but growing even a bit faster.
snovv_crash 6y ago
For those interested in how that compares to local market conditions, this is a value of $1 per citizen of Nigeria, which has a GPD/capita of $2k. If we assume the penetration doesn't extend beyond the main city Lagos and it's metropolitan area, that is more like $10/person with roughly the same GDP/capita.
skc 6y ago
This has completely rejuvenated those of us struggling along in the African tech startup scene. And quite a contrast to the #EndSARS protests that have been ongoing in Nigeria, where young men exactly like this are being brutalised and killed by a corrupt policing unit that pretends to assume any young person with a laptop and iPhone is an internet fraudster. So happy for these guys.
CPLX 6y ago
This article on the same news is also well written and detailed: https://www.ft.com/content/beb9a517-ea27-4d52-8544-43c8fdfa2f1d https://www.ft.com/content/beb9a517-ea27-4d52-8544-43c8fdfa2...
eurekasurveys 6y ago
$3K per user?
ike0790 6y ago
Nigeria is on the come up. I love it...
hnarn 6y ago
I'm not sure what's going on here but when I click the link[1] I don't actually end up at techcrunch but advertising.com[2] which is blocked in my DNS. [1]: https://techcrunch.com/2020/10/15/stripe-acquires-nigerias-paystack-for-200m-to-expand-into-the-african-continent/ https://techcrunch.com/2020/10/15/stripe-acquires-nigerias-p... [2]: https://guce.advertising.com/collectIdentifiers?sessionId=#_cc-session_uuid_here https://guce.advertising.com/collectIdentifiers?sessionId=#_...
blackswan101 6y ago
Phenomenal news! Lots of interesting startups in Africa are starting to get recognition. Wouldn't be surprised if Jumia is on someone's radar
deleted 6y ago
[deleted]

213 points by 0xedb 6y ago

https://outline.com/AkJsKv https://outline.com/AkJsKv to get past TCs ever increasing popups

While applying to YC recently, I came across their application: https://paystack.com/blog/company-news/paystacks-y-combinator-application https://paystack.com/blog/company-news/paystacks-y-combinato... They applied in 2015 and their revenue at the time was $1,300. Inspiring stuff!

luckylion 6y ago

I never understood why startup wait that long to branch out internationally. I imagine that you need some local presence and need to adjust to local customs and requirements quite a bit, but it should be cheaper to enter other markets when you've "made it" and have solid funding. Instead, it seems they often wait for years while local copy cats develop the market and then pay a heavy premium by buying them. Is that simply because they don't want to divert attention from building the business? Are VCs more skeptical if you want spend money on international growth?

bmh 6y ago
How exactly would Stripe branch out to Nigeria? It might be less risky and cheaper to just buy a local team with a proven track record, than trying to transplant yourself into a culture that you know nothing about.
- kaladin_1 6y ago
  yeah, good move by Stripe. Paystack is already battle-tested in the payment fight
- luckylion 6y ago
  I'd guess you could also hire local people. They'd cost money too, but $200M? Similar things happened with eBay in Germany, the clone was named Alando (then sold for $43m in 1999 after running for a few months).
  - TechBro8615 6y ago
    Stripe is a multi-billion dollar company and will likely have one of the biggest IPOs ever within 1-2 years. $200M is a bargain price to acquire the market leader in an emerging market like Nigeria.
    - lkbm 6y ago
      It is a very good deal for Stripe, but I do wonder if would it have been a better deal to buy 2-3 early stage Nigerian startups five years ago. Maybe the winners aren't willing to sell early/cheap. Should Stripe be investing in seed/Round A start-ups? Having Stripe as a resource could be big -- funding, advice, and potentially infrastructure.
      - brianyu8 6y ago
        You're right about that -- Stripe led Paystack's series A and has also led other series A rounds like Fast's.
      - ayewo 6y ago
        If you look at Stripe’s strategy, they tend to ride certain horses rather throw stuff at the wall to see what sticks, so it wouldn’t have made sense for them to buy 2-3 when they only need to buy 1 that’s really good. And that’s what they did when the led Paystack’s $8m series A funding 2 years ago when they were almost 3 years old. https://techcrunch.com/2018/08/28/paystack-with-ambitions-to-become-the-stripe-of-africa-raises-8m-from-visa-tencent-and-stripe-itself/ https://techcrunch.com/2018/08/28/paystack-with-ambitions-to...
  - lkbm 6y ago
    They spent 200M for the one they now know is successful. It does seem likely they could've had > 10% chance of success for under 20M, but that might just be me being way too optimistic / not understanding the expenses of trying to deal with a banking system.
- rockostrich 6y ago
  Yea, banking/PoS and travel are the two industries where you can't just expand internationally without having some sort of physical presence. Mostly due to local regulations around both industries.
estsauver 6y ago
If you treat other markets as being cookie cutter versions of your own market, you're going to fail. Nigeria has a fundamentally different set of payment institutions in the norms. Even within European countries, there are really different processes and flows. Going to The Netherlands? You'd better setup iDeal or you're going to have lower conversion. Are you setting up a retail grocery store in Austria? Get ready for MaestroCard (which is owned by mastercard but is a totally separate platform.) Let's take the country I spend the most time thinking about: Kenya. Do you want to support M Pesa, the most common digital payment method by a mile? Great, you'd better get ready to set up and integrate against a baroque set of XML apis that require a specific VPN configuration to access. Oh, you want to use the new rest api? That's fine, except that after you go live you find out that it doesn't support all the flows you need and that actually in some weird edge cases the transaction totally falls apart and you have no idea what happened to the money. You can access the MPesa portal to get a giant excel file of all the transactions on your account that are at least a few minutes old, but you can only access that on a few specific machines that have a root certificate installed for the telco and use internet explorer 6 on windows. Also, the excel file format changes... occasionally. But how long do you wait to get the excel spreadsheet? There's retry logic built into the platform, and ... Or, if you're a product manager who's working at Stripe you could look at your CRM and see that if you can implement these 3 types of reporting features you can go and steal an extra 10% of Netflix's business and pick up a whopping 2 billion $ of revenue. If you add payment support for Mpesa, you've added support for one payment method, but the entire GDP of Kenya is 90B$. Which one would you prioritize?
- franciscop 6y ago
  Incidentally I went to a great Stripe talk where they talk how they homogenize the "incoming purchases" at some point early in their stack and then they can use the same API internally for any of them no matter the location in the world or the payment processor. I don't recall the specific examples but it was definitely like the Netherlands example you pointed out.
- luckylion 6y ago
  > Which one would you prioritize? I'd absolutely prioritize doing three easy things if I'm strapped for cash, can't hire new developers and need all focus on my initial market. I totally understand why nobody immediately starts offering their product globally. But when your product has matured, you've secured the next $10m (or $50m or $100m) in funding, you no longer have a single product manager, you can rent offices in Nigeria and hire locals who know the market and the requirements, and you can hire additional developers to deal with local quirks etc, why wouldn't you? Is the attention at the C-level spread so thin that even choosing someone who will set up a local team is taking too much away from growing the core product? I have no doubt that it's easiest to wait, have somebody else develop the market and then buy them. But it also costs a lot of money. Is not having to figure out how to work with M Pesa worth $200m?
wil421 6y ago
Banking and the payment industry have a lot of different compliance and laws to adhere to. Much easier for startups who’s business model is sign up and use my web app. At my previous job there were conference rooms converted into mini-libraries for the legal/tax teams to review for the 170+ countries they did business in. It was so hard in some places that they would just outsource everything to 3rd parties and resellers to get over the headache.
bastawhiz 6y ago
Stripe is live in dozens of countries. Not sure why you think they're waiting.

cvhashim 6y ago

Good job Paystack team

sprsimplestuff 6y ago

i wonder if $200mm+ is a bargain - long term?

AlchemistCamp 6y ago
I suspect it is. Nigeria is a huge country and it's really starting to boom. It's a small data point, but I'm amazed at both the number of people in Nigeria going through my Elixir tutorials and the rate individual learners are progressing through them.
- sprsimplestuff 6y ago
  and Nigeria is only one country on the continent
  - AlchemistCamp 6y ago
    Ghana is another that's starting to really pick up some traction in my audience. Smaller than Nigeria in size but growing even a bit faster.

snovv_crash 6y ago

For those interested in how that compares to local market conditions, this is a value of $1 per citizen of Nigeria, which has a GPD/capita of $2k. If we assume the penetration doesn't extend beyond the main city Lagos and it's metropolitan area, that is more like $10/person with roughly the same GDP/capita.

skc 6y ago

This has completely rejuvenated those of us struggling along in the African tech startup scene. And quite a contrast to the #EndSARS protests that have been ongoing in Nigeria, where young men exactly like this are being brutalised and killed by a corrupt policing unit that pretends to assume any young person with a laptop and iPhone is an internet fraudster. So happy for these guys.

CPLX 6y ago

This article on the same news is also well written and detailed: https://www.ft.com/content/beb9a517-ea27-4d52-8544-43c8fdfa2f1d https://www.ft.com/content/beb9a517-ea27-4d52-8544-43c8fdfa2...

eurekasurveys 6y ago

$3K per user?

ike0790 6y ago

Nigeria is on the come up. I love it...

hnarn 6y ago

I'm not sure what's going on here but when I click the link[1] I don't actually end up at techcrunch but advertising.com[2] which is blocked in my DNS. [1]: https://techcrunch.com/2020/10/15/stripe-acquires-nigerias-paystack-for-200m-to-expand-into-the-african-continent/ https://techcrunch.com/2020/10/15/stripe-acquires-nigerias-p... [2]: https://guce.advertising.com/collectIdentifiers?sessionId=#_cc-session_uuid_here https://guce.advertising.com/collectIdentifiers?sessionId=#_...

blackswan101 6y ago

Phenomenal news! Lots of interesting startups in Africa are starting to get recognition. Wouldn't be surprised if Jumia is on someone's radar

deleted 6y ago

[deleted]