We wake every day with new experiences, thinking we have seen all there is life has to offer. But, stories like the workplace’s impropriety claims against Flutterwave and co-founder, Olugbenga Agboola bring emotions like shock, sadness, smiles and hard laughs. It’s a cycle and it continues all through until we’re sand again.
When the most valuable startup in Africa, Flutterwave, got into the news, some people first thought they had raised some other funds and were surprised to know that the model Nigerian company was in the news for insider trading, workplace impropriety, etc.
David Hundeyin’s story caused discourses that grew into Twitter Spaces sessions, IG live sessions, and LinkedIn whisperings. But, these were coordinated by most people outside of the tech space. There was a subtle drawback and deafening quietness that came from the tech space.
Something else came with it.
People surmised that “Flutterwave is the market leader, and with this story, the tech space is going to fall from its high Horse and be drowned by alligators.” These pontifical newscasters looked like they had to post those comments since Africa’s tech space became indispensable in the global market.
There were Twitter threads and Instagram posts, some of them now deleted, that highlighted some of the expectations from the story, including investors drawing back on previous plans, shareholders rethinking their shares options, and tech companies who want to model after Flutterwave to pocket their ideas.
It was a flutter of waves, and they were quite exhausting.
Before the wave?
On February 16, 2022, Flutterwave made a big announcement that made the tech ecosystem smile like shy kids about to ride an artificial horse.
The company says it raised another $250 million in Series D funding, valuing the company at over $3 billion to transform the way Africans transact on the continent and worldwide.
The latest backers include investors led by B Capital Group, and with participation from Alta Park Capital, Whale Rock Capital, Lux Capital, among others.
Several existing investors who also participated in previous rounds also followed this round, including, Glynn Capital, Avenir Growth, Tiger Global, Green Visor Capital and Salesforce Ventures.
According to the company, the new funds will drive Flutterwave’s ambitious expansion plan to accelerate customer acquisition in existing markets and growth through M&A and develop complementary products while encouraging innovations in its products and services development.
Nigeria and Africa partied like wives happy for their husband’s promotion. But, the dancing did not last long.
The wave of allegations
Clara Wanjiku Odero, a former employee of Flutterwave, accused the company’s chief executive officer Olugbenga ‘GB’ Agboola of bullying and harassing her for years. She made the allegations in a Medium post and series of tweets that came after.
In the blog post, Odero recounted how a series of undescribed events led her to quit her job as Head of Implementation (Rest of Africa) in 2018 and when the time came for her to be settled, she claimed the company refused to do so.
“I asked for my dues multiple times, [I] got no response, in fact [I] was threatened and I responded accordingly,” said Odero, who is now CEO of Credrails, an open finance platform backed by SoftBank.
GB responded and we thought that was the end, until Journalist, David Hundeyin, published a story that presented issues of insider trading, unconfirmed workplace impropriety, employment ethics and shady deals were done during the start of the company.
The story caused outrage and gave room to opinionated individuals about what will happen to Africa’s tech industry after now.
If you were in on the conversation at that point, you would have seen flawed comments like, “this story will send investors away to other continents, and the tech space in Africa will be greatly affected.” A few Nigerians, Africans and black people abroad agreed with this and dropped their two cents too.
But, those cannot be true. They are grossly unfounded, and should not have left the drafts.
Are there similar stories?
There have been numerous cases of discrimination, fraud, misogyny, and favouritism in the Valley; and they happen more frequently than we would like to admit.
In an article in 2017, titled “The Ugly Side of Silicon Valley“, Reinaldo Normand says, “Silicon Valley prides itself on its work ethics, meritocracy, and progressive values, and I sincerely believe most people living here are doing good to the world.
“For instance, Theranos sold the story about a young Stanford dropout inventing a new painless blood test that would require only a drop of blood. Its founder, Elizabeth Holmes, was a media darling for many years and was often compared to Steve Jobs. Theranos attracted $700 million dollars in venture capital and, in 2015, was valued at $9 billion.”
Theranos was shut down three years later beleaguered by several scandals.
Similarly, in 2018, a Silicon Valley darling, Hampton Creek, founded by Joshua Tetrick in 2011, became embroiled in scandal and legal battles.
The company was accused of buying its own product to boost sales, and in 2017, Target removed the brand from its shelves on allegations of food safety concerns.
Hampton Creek has since repositioned itself as Just, Inc. and pared its portfolio to a fraction of the ambitious lineup previously offered.
Talking about convictions, in August 2020, the founder of a fraud prevention software company, NS8, Adam Rogas, pleaded guilty to a count of fraud in U.S. federal court in New York.
Rogas says that his actions were driven by a fear of his company failing. “The fraud happened because there was an inordinate amount of pressure,” he says, “both on myself internally, and just in general with having that many people dependent on what we were doing, and what we were building.”
NS8 shut down in 2020 after it filed for bankruptcy.
Another sad story is that of Daniel Boice, 41, of Alexandria, who pleaded guilty to one count of securities fraud and one count of wire fraud on December 3, 2020.
According to court documents, beginning in 2015, Boice fraudulently solicited investments in Trustify, an Arlington-based company that Boice promoted as the “Uber” of private investigator services.
Boice raised more than $18 million from over 250 individual and corporate investors by, among other things, falsely overstating Trustify’s financial performance.
To secure investor capital, Boice inflated Trustify’s monthly and annual revenues in detailed fraudulent financial statements and investor presentations, and he fabricated large corporate business relationships to support his false statements about Trustify’s growth.
In addition, Boice created a fake email account to pose as a prominent potential investor, and he then used the account to send a fraudulent email to successfully convince an investment firm to invest nearly $2 million in Trustify.
Another painful case was that of Manish Lachwani co-founder of mobile app testing company HeadSpin, who was charged with fraud by both the U.S. Department of Justice and the Securities and Exchange Commission in August 2022.
The SEC says he violated antifraud provisions, and the civil penalties it’s seeking include a permanent injunction, a conduct-based injunction, and to bar him from serving as a corporate executive or board member.
Both the SEC and the DOJ say Lachwani — who led the six-year-old company as CEO until May 2020 — defrauded investors out of $80 million by falsely claiming that HeadSpin had “achieved strong and consistent growth in acquiring customers and generating revenue” when he was pitching its Series C round to potential backers.
HeadSpin has not been shut down.
There is a litany of other cases in on the US tech ecosystem, that include fraud, workplace impropriety, sexual harassment, gender imbalance and pay disparity, bullying, and insider trading. Yet, startups in the ecosystem have by January 2022 raised more venture capital funding than ever last year [2021].
A report further states that the U.S. accounted for about half of the world’s funding total – $621 billion – with startups in the country raising about $311 billion. The Silicon Valley region and New York retained their top spots for both the most money raised and the most deals completed.
Those tallies were helped along by a few big funding rounds for established companies. But the CB Insights data also show an uptick in early-stage deal activity for cities that are not traditional tech hubs.
The lesson? Misinformation is not a new concept and it can never be annihilated. So, we are not surprised the naysayers have opinions after that single case. We will, instead, act as godfathers of information.
About the value of Africa’s tech industry
Starting in 2019, there was already talk of Africa taking centre stage in the global tech ecosystem. Global players saw a beehive and did not hide their faces. It is estimated that close to $2 billion went into African tech startups in 2019.
Recall that 2019 saw Jack Dorsey’s visit Nigeria alongside now Twitter’s CEO, Parag Agrawal – who was impressed with the availability of technical skills in the country; Kayvon Beykpour, co-founder and CEO of Twitter’s video streaming application, Periscope, among others. It was a sign that phenomenal growth is underway.
But, the pandemic came in 2020 and slowed down investment activities from local and international investors. Yet, we cannot call it a bad year, knowing that African startups raised about $1.5 billion and saw a couple of exciting sales: Stripe-Paystack and WorldRemit-Sendwave.
2021 rode on chariots of fire and the ‘recovery’ the world was experiencing affected Africa’s tech industry, as reports place funds raised in 2021 between $2 billion and $5 billion.
Disrupt Africa says, “the year 2021 was a record-breaking one for African tech startups, with 564 companies securing over US$2 billion worth of investment. Briter Bridges says African startups raised $4.65 billion disclosed and about $300 million undisclosed – $4.9 billion in total estimated funding.
Partech says, “681 rounds of fundraising brought in a total of $5.2 billion. When we include debt, it’s even a total of $6 billion in 724rounds.” The Big Deal says African startups raised $4.33 billion from 820 deals, up from 155% from 2020 numbers of $1.65 billion. The World Economic Forum (WEF) says the number is $4.77 billion.
“This translates to an average of $1 million raised every two hours. As far as distribution is concerned, 30 African nations raised at least $100,000 in funding across the year,” WEF notes.
2021 also came with kickers like the normalisation of $100 million single-round raises led by unicorns like OPay, Flutterwave, Chipper Cash, Wave. You would think that sports stars Rafael Nadal and Cristiano Ronaldo are the only ones who can use the term: record-breaking.
In 2022, African tech startups raised more than US$1 billion in the first two months. As of March 1, 110 startups raised US$1,123,556,000, with nine months to go in the year.
The women
According to UNESCO, women represent 30% of professionals in Africa’s tech sector. This is above the global average of 28%. This growth comes from coordinated action to involve women and girls in tech and STEM fields on the continent.
Female-led start-ups have significantly raised much less funding than their male counterparts. A look into the investment book shows that female CEOs raised about 7% of 2021 tech investments in Africa. 2019 and 2020 saw much lower figures at 4% and 2%.
But, there is more participation by women and there are projections for more growth.
The supporting body
A report shows that Africa’s Internet economy has the potential to reach 5.2 per cent of the continent’s GDP by 2025, contributing nearly $180 billion to its economy.
“Driving this growth is a combination of increased access to faster and better quality Internet connectivity, a rapidly expanding urban population, a growing tech talent pool, a vibrant startup ecosystem, and Africa’s commitment to creating the world’s largest single market under the African Continental Free Trade Area.”
Conclusion
Africa’s tech industry is now bigger than all of us. It is puzzling to see people make unfounded statements about Africa’s tech ecosystem based on accusations directed at a company’s CEO, who can be separated from the company.
Africa is on a path to $7 billion raised in 2022, and we do not want to be blinded by unknown obstacles, that do not see the same light we see.
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