Over the past few years, startups around the world have faced challenges in attempting to exit due to factors such as a frozen IPO market and reduced attractiveness to buyers. Additionally, large mergers and acquisitions (M&A) transactions, especially those involving large technology companies and multi-billion dollar conglomerates, have come under increased regulatory scrutiny.
Notably, the decline in venture investment within the startup ecosystem is often linked to a lack of exit volume and value: in Africa, for example, the number of M&A exits peaked at 44 in 2021, when the continent attracted nearly $6 billion in venture capital, but in 2022 the number of exits fell to 29 and venture capital investment also fell to just over $3 billion.
Despite these challenges, local investors remain optimistic, saying M&A activity will eventually pick up as founders and investors seek liquidity in an increasingly tough market.
“We will likely see fewer IPO exits in 2024 given that many companies have scaled back growth to accommodate dwindling capital, but we will likely see more consolidation and M&A activity as capital-starved companies look to capitalize on value created on larger platforms,” Andreata Mfolo, partner at TLcom Capital, told TechCrunch in an interview last year.
However, debate continues as to whether Africa’s tech ecosystem has met or fallen short of expectations in terms of exit outcomes (M&A and IPOs) vis-à-vis the venture capital invested (over $20 billion).One perspective argues that the number of exits does not justify capital infusions, while another highlights that even some landmark exits are worthy of celebration given the relative newness of the ecosystem.
Expensya is one of Africa's landmark exit stories, demonstrating the potential for big returns even within the emerging tech ecosystem. The Tunis- and Paris-based expense management startup was acquired by private equity firm Medius after raising just over $20 million, resulting in a $10 million cashout for employees. The exit values the company at 1.5 times its last reported valuation of $83 million, according to PitchBook.
This acquisition is particularly significant in the context of Africa's technology ecosystem, where the terms of M&A deals are often shrouded in secrecy. The lack of transparency in these transactions makes it difficult to assess the true performance of the continent's technology sector. However, when details are disclosed or known, as in the case of Expensya, they can provide valuable insights that can inform valuation and pricing strategies and allow parties to better align expectations.
As we continue to monitor the growth of Africa’s tech ecosystem, it is important to take note of and analyze the biggest public acquisitions. These landmark acquisitions are often made public, providing a clearer understanding of the continent’s progress and potential to create value through M&A activity.
InstaDeep
Founded in 2014 by Karim Begil and Zohra Slim, enterprise AI startup InstaDeep uses advanced machine learning techniques to bring AI to applications within enterprise environments. Based in Tunis and Paris, the startup has raised over $108 million from investors including BioNTech, Alpha Intelligence Capital, Endeavor Catalyst and Google.
Acquirer: BioNTech (2023) Exit amount: €500 million ($550 million) in cash and stock.
Send Wave
Drew Durbin and Lincoln Quirke founded Sendwave in 2014 to provide remittance services from North American and European countries to emerging markets in Africa, Asia, and the Americas. Backed by YC, Sendwave has raised over $15 million in funding from Founders Fund, Khosla Ventures, Serena Ventures, and Partech.
Acquirer: Zepz (2020) Exit: $500 million in cash and stock.
Main One
MainOne is a data center and connectivity solutions provider serving a range of clients from technology companies to cloud service providers in West Africa, particularly Nigeria, Ghana and Côte d'Ivoire. Founded in 2010 by Funke Opeke, the Lagos-based Equinix subsidiary raised over $200 million in equity and debt prior to the acquisition.
DPO Group
Eran Feinstein founded payment gateway DPO Group in 2006. The Nairobi and Cape Town-based fintech provides payment services to thousands of merchants across multiple African countries. The company has raised more than $15 million from Apis Partners and other investors.
Acquirer: Network International (2020) Exit amount: $291 million in cash and stock ($228.6 million in cash).
Paystack
Shola Akinlade and Ezra Olubi launched Lagos-based Paystack in 2015 as a payment processing platform for African merchants to accept online payments via debit cards and bank transfers. The YC-backed startup was likely the first company on the continent to graduate from an accelerator and has raised over $12 million from Stripe, Visa, Tencent and Ingressive Capital.
Acquired by: Stripe (2020)
Exit: More than $200 million in cash and stock.
Expenses
Founded by Karim Jouini and Jihed Osmani, Expensya provides smart payment card solutions that automate expense management for businesses across Europe. The Tunis-based software company has raised $25 million from Bpifrance, ISAI, and Silicon Badia.
Acquirer: Medius (2023) Exit amount: About $120 million or more in cash and stock, according to sources.
Fundamo
Cape Town-based Fundamo was a platform that provided mobile financial services such as person-to-person payments, airtime top-ups, bill payments and branchless banking services to unbanked and underbanked consumers. Founded in 2000 by Hannes van Rensburg, the fintech had raised $5 million from South African investors including Knife Capital.
PaySpace
Bruce, Clyde, Warren Clarke and George Karageorgiades founded Johannesburg-based PaySpace in 2007. It is a cloud-based payroll and HR platform that streamlines payroll operations and back-up procedures. The bootstrapped startup first raised an undisclosed amount of funding last year from local payment solutions provider Netcash before being acquired.
Acquirer: Deel (2024) Exit: Approximately $100 million+ in cash and stock.
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