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Funke Okpeke, the founder and CEO of MainOne, upon her return from the United States, where she had worked with Verizon as executive director, discovered the poor internet service prevalent in Nigeria and took the risk of fixing the problem. Furthermore, the privatisation of NITEL had fallen through, leaving a huge void in the telecommunications and the Internet connectivity industry. Under her leadership, MainOne laid its 7,000km fibre optic cable network that stretched from Portugal to Nigeria in 2008. It launched two years later. The company went ahead to provide Nigerian homes, businesses and large telecom operators like Airtel and MTN with internet access. During the decade, it became a pan-African company providing telecom corporations with internet service, covering 10 countries. Eleven years down the line of operation, MainOne assets will be acquired by Equinix. The full ownership and operation of the California-based internet provider will begin in the first quarter of 2022. The assets to be acquired include three operational data centres and one other that is under construction, which will be completed by the first quarter of 2022. On the other hand, Funke Okpeke, a worthy asset, will continue in her role as CEO of MainOne. Okpeke’s MainOne, after a much bumpy ride of raising funds at the beginning of its operation, was able to vibe to life when it received $240 million from several Nigerian banks, the Africa Finance Corporation, and the Africa Development Bank (AfDB.). The scepticism about running a behemoth of a company was shared by stakeholders and investors. Many industry stakeholders and players have praised Okpeke for building an ecosystem upon which many startups sit and flow. It has, since its operations, provided 800 companies with internet service, and has partnered with industry giants, Co-creation Hub, and provided internet service to Decagon, a Lagos-based software engineering training institute, which ensures students have constant up-time. Asides this big acquisition of West Africa’s biggest internet provider, MainOne, last year Stripe, an Irish-American financial services and software, acquired Paystack, a similar venture, through a joint partnership for the sum of $200million (₦76.6billion). Before the acquisition, Paystack was valued at $11million. The Collision Brothers, co-founders of Stripe, Patrick (CEO) and John (President) had led the Series A funding for Paystack in 2018, with the sum of $8million (₦2.8billion). Paystack, which has always described itself as the “Stripe for Africa”, was privately launched in 2014, and publicly in 2016. The Nigerian-run company was incorporated in Delaware in 2015, the same year it joined Y Combinator Accelerator.
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The Lessons
The narrative between both acquisitions of MainOne and Paystack is the same. MainOne was valued at $200million before the acquisition, and Paystack was valued at $11million but joined Stripe in an acquisition that cost $200million. The percentage profit for the co-founders of Paystack, Ezra Olubi and Shola Akinlade, was approximately 5.5% and was more than 10x the profit compared to its pre-acquisition value. While MainOne valued at $200million made roughly 2x its profit. The CEO of MainOne believed that the Equinix acquisition will help the cable internet corporation attain its vision. The lesson for startups and industry players is to see Nigeria as a profitable space that incubates million-dollar ideas, which can attract foreign investment, acquisitions, and what-have-you. Further, founders must have in mind that their idea can only be global as MainOne and Paystack when there is a synergy from international investors, thus, should be ready, because an investor might be waiting close by to have your idea upscale to an international market. Also, founders must see Nigeria as a testing ground for new ideas and innovation, and must take advantage of Nigeria’s numerous problems to create solutions, which they must run for years as MainOne did. Additionally, Nigerian founders must understand that their startups can be sold to expand their product line. Startups in Nigeria must get their books ready, crossing their T’s and dotting their I’s, especially in this age of foreign investment boom. The acquisition of Paystack and MainOne by Stripe and Equinix respectively has served as a wake-up call for many people to consider startup equity as an asset class and no longer a risk. Between 2019 and 2021, the Nigerian startup industry alone has a total value of $2billion to $5billion alone. It would be folly for high net worth individuals and organisations not to take advantage of what is ongoing in the Nigerian startup industry.Got a suggestion? Contact us: editor@connectnigeria.com
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