In an interview in 2023, the co-founder and CEO of Flutterwave, Olugbenga Agboola, noted that forging ahead with its planned Initial Public Offering (IPO) was very crucial to realizing its targets. Assuredly, Africa’s most valued tech company is taking its time before venturing into this path.
IPOs have always made a grand entry into the financial sector, and it has been a bond that binds potential together for all the players in a company. It should be said that many companies have benefited from an IPO in different aspects.
While the intricacies of the tech industry remain, several giants, like Google in 2004, Rakuten in 2000, and Mark Zuckerberg’s Facebook IPO announcement in 2012, have marked the tech IPO landscape with sporadic moments of innovation and spectacle.
Amidst these milestones, there is also Alibaba’s headline-grabbing IPO in 2014, which sent shockwaves through the industry and ushered in a new era of technological revolution after it raised over $20 billion.
It was not much of a success for Jumia. Things have not gone right for Africa’s largest e-commerce operator after it became the first major African-focused tech company to list on the New York Stock Exchange (NYSE) in 2019.
Jumia’s listing was a big deal for Africa’s tech scene. The company started in Nigeria in 2012 and grew to operate in 14 African countries, offering various services. When it went public on the New York Stock Exchange (NYSE), investors were excited, and the stock price soared, raising $196 million.
However, within a year, things changed dramatically. The stock price plummeted below its initial price, and Jumia lost its status as a “unicorn” company. Now, its stock trades much lower, around $3, with a market value of about $250 million.
What’s Wrong With Going Public?
One of the most important benefits of an IPO is its ability to open a business up to more investors and, by extension, more capital. But with the current funding crunch and investor scrutiny before investing, Nigerian startups are still not looking toward the IPO path.
Despite Nigeria’s vibrant stock exchange, which has been operating since its founding in 1960 and boasts a substantial market capitalization of 8.5 trillion, the anticipated influx of technology companies opting for the tech IPO route has not materialized. It’s surprising considering the immense potential inherent in such a robust financial market.
The emergence of a “new wave” of startups, spearheaded by young Nigerians, offers a glimpse into the country’s entrepreneurial landscape. These startups are uniquely positioned to address millennial challenges, leveraging innovative solutions to cater to modern needs.
Given this promising scenario, one might reasonably expect tech success stories akin to those of Microsoft, Amazon, and others to seize the opportunity presented by the stock exchange. However, to date, this expectation remains largely unmet. Despite the success stories of similar ventures abroad, Nigerian tech companies have been hesitant to embrace the tech IPO path.
