Monday, August 03, 2020 /12:27 PM / OpEd by Dr. Israel Ovirih  / Header Image Credit: EkaterinaGerasimova / Shutterstock

As a serialentrepreneur with experiences of berthing both failed and successfulinvestments; I have had both an emotional and intellectual attachment to theconversations in and around the concept of unicorns and how it pertains to ourstartups in Nigeria and, indeed, Africa.

By the way,unicorns are startups that achieve a valuation of $1.0 billion and above. So,if I may ask, where are the unicorns in our startup space, despite the launchof internet-based companies in Nigeria, as far back as 1996, even at or beforethe birth of the almighty trillion-dollar internet-based companies of today,namely Google's Alphabet, Amazon Inc and upcoming Facebook Inc.

I always askedthis question and have noted that with the myriad of challenges, pains andopportunities in Africa, we have the potentials to deliver world class Unicornsin record time, just like it is done in America, Europe and Asia and notminding the porosity, lack of depth and the contradictions in African stockexchanges (compared to the boldness and bullishness in the West, for instance).

While Ireceived the news of the arrival of a Nigerian Startup Unicorn in 2015 withsome excitement, I was not particularly excited about the trajectory by whichthe said leading African-focused fintech became a Unicorn, only after some 15years after it had taken off as a startup. Of course, we shouldhave African unicorns birthed within 2 - 5 years of take-off, as we have in theWest. Why not?  Can it be impossible, because of our clime or theignorance of what truly works or how it should work...or the sheer absence ofclear roadmap?

Nonetheless, mynagging question is, when will all these BIG IDEAS and tech companies inNigeria be Unicorn-ized? I do know it is when they have gained traction. I doknow it is when they have had users and super users.  I do know it is whenthey have hit the one billion dollar mark in valuation...but really, when? Howsoon will they arrive at that glorious destination? What is the gestationperiod for such startups to grow into the Unicorns they are capable ofbecoming? Really, come to think of it, it is useless when a startup becomes a unicornonly 25 years after take-off, despite all the exponential and acceleratingtools available in the world today, which allows for scaling from big to biggerand the biggest!  When will our Paystack, Piggyvest, CashToken by CelD,Mines.io, Lifebank, ThriveAgric, Hotel.ng, wakanow.com and many others surpriseus all with a $1.0 billion valuation?

My newlifestyle as an investor is to be excited and go through the metrics thatshould deliver that Unicorn in these startups. Quite frankly, my guide to determiningthe next unicorn from this part of the world are the five (5) metrics below:

First andforemost, the problem and pain the startup is trying to solve -how big is thispain and how serious?  What are the products, services and derivativescreated by the startup to alleviate or eradicate the pain?  Are they beingproperly product-ized? Or service-tized? Is it in a creative and innovativemanner?

Secondly, theGRIT in the founding team and leadership, which dovetails into measuring theirunflinching commitments, smartness and, if you like, the do-or-die optimismwhich drives the dream and its execution.

Thirdly, theamount of traction they have gained and how clear or clearer their roadmap is,in the face of the various contradictions in our polity.

Fourthly, thepresent financial health of such startups and how healthy I think they willbecome, considering their Value Proposition and Execution Story to date

Finally, thestrength of their market; local, regional, continental and indeed global.

For me, thesefive metrics above will determine the Unicorn potential of the startups -  the ability of the companies to be worth $1.0 billion or more, eventually. Come to think of it, how many public companies or plc's in Nigeria is worth abillion dollar and could be so-described as a "corporate to watch", commandinglocal and international respects by local and foreign portfolio investors orbetter put, the international money-circuit?  This billion dollarvaluation by our knowledge should be "a piece of cake" and/or easily achievableby our tech-driven, easily scalable and exponential startups, the Nigerianfactor or circumstances notwithstanding. By the way, a piece ofcake indeed in the emerging Capitalist world, without capital!

I recentlyanalyzed to an audience in Lagos, how one 80+ year old Nigerian bank (with over500 locations worldwide) had a valuation of some $620.0 million as at January 30th,2020, in comparison to 5 year-old Revolut, the digital bank with less than 21operating offices worldwide (and yet, delivering the same cards and services asthe Nigerian bank) got a valuation of $5.5 billion as at January 30, 2020 andraised in excess of $350.0 million in fresh capital injection.

What does theRevolut founders know that the Nigerian bank team does not know?  Whatdoes 5-year old Revolut know and is doing that Paystack, Flutterwave,CashToken. Kudabank, Kuzari and Piggyvest do not know and not doing? Knowledgeis power and African startup founders and the startup community in Africa needto wake up and realize that the race is only won on the platform of knowledge,traction, deliverables and, indeed, valuation. 

For us in thisspace, I mean VALUATION from the investor's space is everything!

About theAuthor

Dr. IsraelOvirih is Lagos-based investment banker, serial entrepreneur andtech-evangelist. He can be contacted vide [email protected]

Related News

1.       The Thingabout Cycles - byMichael Eisenberg, March 2016

2.      PostCOVID-19: Remote Work To Become New Normal As Novel Technologies Redefine JobMarkets - Ashiru

3.      Citi Launches$150m Impact Investing Fund for US-based Firms Applying Innovative Solutions

4.      Singapore toBecome a Green Finance Hub With $2billion Programme

5.      EcobankPayHits N1 Billion in Transactions Value

6.      Jumia BecomesFirst African Start-up To List On NYSE; Raises $200m On Day 1, Now Valued At$1.5bn

7.      Industry 4.0:Audit Professionals of the Future

8.     FirstBankPartners the Nigerian Army to Deepen Financial Inclusion

9.      BerkshirePartners To Invest In Teraco Data Environments

10.  Seven Of The10 Largest Technology IPOs By Proceeds Raised Were Listed On Nasdaq In 2018

11.   Interested InAngel Investing? - Webinar For Nov 15, 2018

12.  Local VentureCapital Fund Formation Is On The Rise In Africa, Led By Nigeria

13.  SoftBank IsTaking Over Tech

14.  Nigeria toSign MOU with China on $328m Funding of NICTIB Phase II

15.  Fmr SEC andFDIC Chairs Join Advisory Board Of Omniex, A Crypto Investment and TradingPlatform

16.  An Explaineron a Game Changer: MultiChoice's Integration of Netflix and Amazon, DStv Streaming

17.   Shina BadaruTo Speak on Digitization and Industrialization In Nigeria Tomorrow on WebTV

18.  NCC Notifiesof the Development of a Policy For Deployment of 5G In Nigeria

19.  FacebookLaunches Messenger Kids across Sub-Saharan Africa

20. How AIControlled Paraphrasing Tools will Help Writers in 2020

21.  StakeholdersAssess The Role Of GC Index In Driving Digital Transformation

22. Leading EdgeConsulting to host Webinar on Digital Transformation on May 29, 2020

23. The Potentialof Technology to Reduce Human Error - FBNQuest

24. 12 TechnologyTrends that Will Change the World in 2020