Paystack’s Acquisition is Only Part of the Story: Lessons Learned from Gozem and Pick n Pay
In the wake of the monumental news of Stripe’s acquisition of Paystack at $200 million, the largest startup acquisition to date from Nigeria and Stripe’s single largest acquisition, it is very easy to focus singularly on all the wins associated with this deal. And there are plenty of fantastic, necessary features to point out. The acquisition, coupled with several other recent fintech acquisitions in Africa, serves to hammer yet another nail in the narrative that African startups are not only ripe for investment, but that there are also active and high valued exits taking place. The maneuver also serves to strengthen Nigeria as a major player in the global tech ecosystem. One might even go the route of speculating on Paystack’s trajectory if Stripe had not acquired the Nigerian payments startup. Given that at the time of acquisition, Paystack’s customer reach of 60,000 represented only a small portion of the potential Nigerian customers, and an even smaller portion of potential customers in west Africa and beyond, it’s a reasonable guess that Paystack stood a strong possibility of expanding to become the “Stripe of Africa”, as per its motto.
But beyond all of these points of analyses, the Paystack success is one piece of a larger discussion to be had. Just days after the Stripe/Paystack announcement, west African “super-app” Gozem announced its acquisition of Togo-based delivery app Delivroum. Later that same day, southern Africa grocery store chain Pick n Pay announced its acquisition of Bottles, South Africa’s first dedicated alcohol delivery service. The two deals are both Africa-Africa acquisitions, each one representing different aspects of the African startup ecosystem and the successes available outside of the continent’s major players.
Nigeria and Ghana tend to dominate the discussion regarding startups in west Africa. However, as pointed out by Fayelle Ouane, co-founder of francophone Africa-focused entrepreneurial platform Suguba, the region of francophone Africa is a vibrant entrepreneurial ecosystem with vast potential for regional growth among startups. Gozem’s acquisition of Delivroum is proof of that playbook in action. Delivroum, founded in 2018, grew its way to become the most popular food delivery service in Togo, with customer access across the capital. Its ability to access the densest part of Togo proved enough to meet Gozem’s overall goals of expanding its array of delivery services into Togo, further strengthening Gozem’s reach into an eighth country. The fact that Gozem’s strong growth across the region is partly fueled by targeting the right francophone startups for acquisition should be a clear indicator to observers that there is plenty of room for investor support to entrepreneurs throughout francophone Africa.
In the southern part of the continent, grocery store chain Pick n Pay swooped up Bottles, cementing a partnership the two entities formed in 2018. Bottles made headlines in 2016 for its ability to deliver alcohol to consumers in under 90 minutes. At the onset of Covid-19, Bottles pivoted its business model in a record four days to provide grocery essentials to customers. Pick n Pay, the second largest grocery store chain in South Africa, is publicly traded on the Johannesburg Stock Exchange (JSE), boasts a market cap of roughly $1.6bn USD, and has presence throughout the Southern Africa Development Community (SADC) including plans to expand into Nigeria and Ghana. Suffice it to say, Bottles being acquired by the grocery store giant is big news for the four-year old startup company.
Both the Gozem/Deliveroum and the Pick n Pay/Bottles deals demonstrate that underpinning the tremendous cross-border deals illustrated by the Paystack acquisition and previous deals of similar size (such as the $288 million acquisition of DPO Group or the $500 million acquisition of Sendwave) are a regular series of Africa-Africa deals that boost the entrepreneurial ecosystem and propel economic development throughout the continent. Those whose ears are piqued because of the Paystack news, should also find themselves salivating at the Delivroum and Bottles stories as well.
