Silicon Valley investor, Derek Distenfield writes about his visit to Lagos and his thoughts on Africa's fastest-growing tech hub.
Entrepreneurship is a journey that I am excited to embark on with the people of Lagos. It takes a village to catalyze a city and I hope to be one piece of the Nigerian tech revolution puzzle needed to build lasting companies from Africa.
I visited Lagos, Nigeria on behalf of GSD Venture Studios for nine days where I hosted an event called “Hacks from Silicon Valley”. I was thrilled to find an eager attendance of over 100 local entrepreneurs and a city ripe for growth.
For those who don’t know, Lagos, Nigeria is the fastest growing city in Africa home to 20+ million people. It is also one of Africa’s major financial centers. Interestingly, Lagos is one of the world's top ten most populous cities and the smallest by 452.23 square miles. Lagos also has the third highest number of millionaires in Africa. In Lagos, you can see compelling sites including Oba’s Palace, Christ’s Church Cathedral, Glover Memorial Hall, National Museum of Nigeria and Central Mosque. Lagos has one of the busiest ports and is the birthplace of many styles of music including afrobeat. This bustling city has a vibrant nightlife that fuels a robust music scene.
“We know that Africa is one of the fastest growing regions in the world and we want to create a corridor to help leaders #GoGlobal”
According to Forbes, Africa is the next frontier for the internet. Even though Lagos is exploding with growth, internet connection can be patchy and faces frequent outages. Internet availability and connectivity in Africa can be likened to that of the United States and other developed nations circa 1997. As such the booming e-commerce market is still in its infancy there. Despite these circumstances, innovation is rampant in sub-Saharan Africa, partly because the younger demographic is chomping at the bit for the adoption of new technologies. Compared to aging populations in developed countries, the median age in Africa is just 19.2 years old. According to a study by Pew Research, adults younger than 30 in six sub-Saharan African countries are more likely to use the Internet. Nigerian startups Andela, Paystack and Flutterwave have also shown that the region has the technical know-how needed to explode onto the innovation scene.
GSD Building Bridges to Nigeria - SpottR Fixes Traffic (& Crypto)
Through GSD Labs, our premier accelerator we are thrilled to be working with two companies from African Nigeria - SpottR and South Africa's Prim-U. SpottR is an e-commerce platform that operates on top of google maps.The platform utilizes AI to make personalized recommendations for users, helping them easily find everything to a haircut to a best-selling book. Spotter also facilitates delivery and financing- users can finance items with crypto-backed loans and have them delivered using geolocation. Users initiate and fulfill supply and demand queries in as few as 3 - 5 steps. Spottr's services have proven to be a much needed solution during the COVID-19 pandemic. The platform not only helps reduce the horrendous traffic in Nigeria but also the adoption of crypto-currency. Merchants can list not only the product but the currency they accept.
Another notable technology bringing crypto-currency to Africa is the Patricia App. Founded in Lagos, Patricia is a technology-driven alternative payments platform where merchants and consumers can transact with new digital currencies like bitcoin, gift cards and perfect money. Their mission is to welcome Africa into the digital age with technology, innovation and modern payment solutions. Patricia harnesses the power of cryptocurrency to create alternative solutions to financial infrastructure, digital payments and global E-commerce.
As I mentioned, the traffic in Nigeria is a major issue. Fortunately, there is one startup that has created a modern solution for the area of commerce and delivery. Kwik, founded by ex-French diplomat Romain Poirot-Lellig is dedicated to solving problems in Africa. His latest creation is a last-mile delivery platform called Kwik Delivery which connects African businesses to independent delivery riders called ‘Kwiksters’. Kwik offers a simple solution for businesses in Lagos to transport and deliver their products to customers. A wide range of shipping options are available catering to different sizes packages for delivery. Launching in 2019, Kwik caught the attention of users and investors and in March secured $1.7-million in Pre-Series A funding round from undisclosed institutional and high net worth investors.
Nigeria’s Exploding Fintech Space
The “Fintechization of Everything” movement is real. Experts say that crypto, p2p financial services, regulatory harmony, and more are on the horizon in 2021. Currently US startups are trying to unbundle services from large infrastructures however in Nigeria startups are building the infrastructure from scratch, which is an advantageous head start.
"Nigeria alone has more than 200 fintech companies, with the sector attracting global interest from companies such as Mastercard and Visa" - CNN
Perhaps we can look to some of the first major Nigerian startups and unicorns as the pioneers when it comes to the tech ecosystem in Africa. The first that come to mind are Flutterwave, Paystack and Paga.
One of Nigeria’s biggest unicorns in the fintech space Flutterwave was founded in 2016 and has quickly become a leading player in online payment processing 60 million transactions worth over $2 billion. In 2021 they’ve secured a total of 170 million in cash injections from investors and are worth $1 billion. With a mission to “build a payments technology infrastructure that connects Africa to the global economy by making local and international payments seamless" it is no surprise they are one of only a very small number of African fintech companies to have raised significant funds in a period of widespread disruption and economic uncertainty.
According to a recent report from consulting firm McKinsey & Company, funding for Nigerian fintech companies between 2014 and 2019 topped $600 million.
In 2019, outside investment in Nigerian fintech startups accounted for a quarter of all funding for tech startups across Africa. One of the biggest deals took place last October, when American digital payment powerhouse Stripe acquired Nigeria's Paystack,reportedly for over $200 million. That makes it the biggest Nigerian startup acquisition as well as Stripe’s biggest acquisition to date anywhere. Paystack was founded in Lagos in 2015, and they now have more than 60,000 clients, and include corporations such as Domino's Pizza and telecom giant MTN. They work with organizations of all sizes from entrepreneurs to global brands, fintechs, educational institutions and online betting companies.
Paga was one of the first fintech companies to emerge onto the scene in 2009. Over 8 years, 200 employees,6 million users and 11,000 agents across Nigeria. Paga is easily one of the most successful financial services companies in the country. Similar to CashApp and in the US Venmo you can send and receive money right through the app. You can also create a unique link that allows you to receive money from anyone.
Nigeria’s Catalysts for Tech Growth
Where would startups be without the support and resources they need to grow and scale? The tech leaders at organizations such as Venia Group, GGC and AI Saturdays are all creating amazing catalysts for tech growth.
Venia group is a service-driven venture creation and development company. Their business interests cut across sectors, with a focus on disruptive ideas that can leverage technology, design and service to achieve both differentiation and cost saving. Venia Group also founded the ILX incubator which houses Nigerian Unicorn Flutterwave. They have amazing transformational leaders that do much more than provide a desk they are fighting “tooth and nail” to add value to their companies. Their vision is - “we enjoy building great brands, creating jobs, and making room for businesses and entrepreneurs to thrive along the way, through mutually beneficial partnerships.”
Vibranium Valley has a massive multi-purpose space that is going to house startups, the US state Department, venture capitalists, a coworking space, talent searching and FINTECH platforms. Together with the VGG, Vibranium valley make an ecosystem of technology companies with the unified goal of building the African unicorns. Member companies are leading innovation in multi-sectors of the economy. They will also host accelerators, hackathons and demo days in their 16,000 sq meter building with 4 meeting rooms and 2 training rooms.
AI Saturdays is a series of trainings Co-founded by Azeez Oluwafemi a Carnegie Mellon graduate who is teaching AI for free every saturday using a professional college curriculum.
Even though internet availability and connectivity has been slow to catch up to the rest of the world, this issue has not stopped the entrepreneurs of Nigeria from building and growing successful businesses along with solving the region’s most pressing issues and contributing to its booming economy. It was an honor to help motivate and lead the many promising entrepreneurs and build a bridge between GSD and Nigeria. I cannot wait to see what the future holds for this opportunity-rich region. I hope to be invited back, not only to enjoy the thriving social scene, delectable food and a city rich with culture and music , but also to help the startups of Lagos to #GoGlobal
Hacks from Silicon Valley
GSD Venture Studios recognize the opportunity to help talented Nigerian companies #GoGlobal. The major focus of my trip was throwing GSD’s first Nigerian event: Hacks from Silicon Valley. The event took place on Tuesday, March 23, 2021 at The iLx Center, Plot 8 The Providence Street, Lagos (right next door to the latest Nigerian Unicorn, Flutterwave).
Afterwards I joined a panel with Gerald Konwea and Jackie Churchwell where we fielded questions from the audience.My first visit to Nigeria was successful, I am looking forward to visiting more often and helping the next generation of Nigerian founders and entrepreneurs #GoGlobal and build unicorns!
We expected about 50 people to show up and were thrilled to have over 200 online participants and 100+ entrepreneurs in attendance. During my session I shared tips on developing a strong team, hiring best practices, managing company roles, vision, grit, raising capital, and lots more. You can tune into the entire talk HERE.
Stay tuned for our next trip and more importantly the incredible companies that will be built.