Unicorns are becoming less rare globally and in Africa too

Africa now has five tech companies valued at over $1B, not including the "hidden unicorns." Here's a look at who they are and who's next up.

Afridigest provides ideas & analysis for startup founders, operators, and investors across Africa and beyond. 
This essay explores Africa’s most valuable tech companies — those confirmed & those next up. It also takes a quick look at the hidden unicorns that often go unmentioned.

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In the 2013 Techcrunch article ‘Welcome To The Unicorn Club: Learning From Billion-Dollar Startups,’ Aileen Lee, then a year into her role as a founder and managing partner of Cowboy Ventures (after more than a decade as a Kleiner Perkins partner), coined the term “unicorn” to describe startups less than 10 years old and valued at $1B or more by private investors (i.e. VCs & strategic investors), acquirers, or public markets.

So, we wondered, as we’re a year into our new fund … how likely is it for a startup to achieve a billion-dollar valuation? … To answer these questions, the Cowboy Ventures team built a dataset of U.S.-based tech companies started since January 2003 and most recently valued at $1 billion by private or public markets… Here is a summary of what we’ve learned…about the ‘Unicorn Club.’” — Aileen Lee, Founder, Cowboy Ventures

Finding just 39 such companies in the US at the time, with an average of four new unicorns born per year over the previous decade, she added the following footnote: “Yes we know the term ‘unicorn’ is not perfect – unicorns apparently don’t exist, and these companies do — but we like the term because to us, it means something extremely rare, and magical.”

These days, the term ‘unicorn’ has been refined to refer in common parlance to privately-held startups worth $1B or more, irrespective of their founding date. And they have become significantly less rare.

The explosion of unicorns globally in 2021

According to data from CB Insights, there are currently over 800 unicorns globally, worth a combined ~$2.6 trillion. And, to quote from The Economist, they are “multiplying at a clip that is more rabbit-like,” with more new unicorns birthed in the first half of this year than in all of 2020 and 2019 combined.

Notably, three out of four of the world’s ~800 unicorns today come from the US, China, or India.

However, across Africa, companies worth $1B or more are becoming less of a rarity as well.

The rise of African unicorns

With OPay's $400M Series C earlier this week, a new unicorn was born in Africa, and the continent now has 3 confirmed private unicorns & 5 tech companies valued at over $1 billion, excluding telco mobile money subsidiaries.


Next up are likely:

  • Swvl, a shared mobility platform, that entered into a SPAC IPO agreement with Queen’s Gambit Growth Capital that would see it listed on NASDAQ at a valuation of $1.5B in Q4.

  • Chipper Cash, a cross-border payment platform with upwards of $150M in total disclosed funding, including a $100M May Series C round that saw CEO Ham Serunjogi tell TechCrunch, “we’re probably the most valuable private startup in Africa today after this round.” While this comment fueled speculation around Chipper Cash’s current unicorn status, direct questions about the company’s valuation were met with “cryptic” responses.

  • Paga, a digital/mobile payments platform, has raised upwards of $35M in total disclosed funding and according to Bloomberg, it “may be Africa’s next unicorn.” The company has 17M unique users, 27K agents, and processed $2.3B worth of transactions in 2020. CEO Tayo Oviosu told Bloomberg in June the company could reach a +$1B valuation “in the next year or two.”

  • Kuda, a digital bank, has raised over $90M in total disclosed funding, including a $55M Series B at a $500M valuation in August. The company disclosed that it had 1.4M registered users at the end of July, up over 2x from the 650K registered users it had just four months earlier.

  • TymeBank, a digital bank controlled by South African billionaire Patrice Motsepe’s African Rainbow Capital, has raised upwards of $160M, including a ~$109M round in February. At the time, the company told TechCrunch it onboards an average of 110K new customers per month.

Notably, the majority of these companies, both those currently valued at over $1 billion and those ‘next up’ are in the fintech sector — and in the payments space in particular. And when considering fintech & payments on the continent, one can’t ignore the value created by telcos via mobile money.

Unicorns in hiding: Africa’s mobile money subsidiaries

While telcos have largely conducted their mobile money businesses via controlled subsidiaries, telco monetization and/or spin-offs of mobile money assets are poised to accelerate in years to come — perhaps thanks in no small part to strong investor interest in African digital payments.

In March, TPG’s Rise Fund and Mastercard agreed to invest $300M into Airtel Mobile Commerce, the mobile money subsidiary of Airtel Africa, at a $2.65B valuation. And Airtel noted its aim “to explore the potential listing of the mobile money business within four years.”

And in April, MTN CEO Ralph Mupita told Bloomberg, “with similar [multiples] to that of Airtel, [MTN MoMo’s] valuation would sit at … about $5B. No decision has been made as yet, but listing will be an option considered if that will be the best approach to unlock value.”

And in May, when about the potential of spinning off M-Pesa, Vodacom Group CEO Shameel Joosub responded, “we are not in a position yet where we think the time is optimal to sell or even monetize a portion of the assets…It's too early to have that conversation now. Maybe 2, 3 years down the line, it will be … a different conversation.”

A bright future

Indeed the next three to five years should be particularly interesting. While today, Africa’s most valuable tech companies are largely payments-focused & concentrated in Nigeria, as Africa's startup/tech ecosystem continues to come of age, there is sure to be more variety as various upstarts create value at scale by addressing the continent's key challenges & lack of infrastructure, not only in financial services but across a variety of sectors.