No SPACs for Africa yet
Total summary: Africa isn't ready for SPACs yet.
Hi friends 👋🏻,
Welcome to another episode On Today’s Episode (sorry we’re not talking about movies, no pun intended:)
source: Techcrunch
I started this newsletter to be a place I tell startup stories in Africa and trends influencing actions in different markets. Today’s post was supposed to be about SPACs and why no one is targeting Africa. Well, a SPAC is an abbreviation for a Special Purpose Acquisition Company. It is a shell company set up to acquire another company through an IPO.
After doing some research, I found two solid reasons why no one is targeting Africa:
There are not many companies with big valuations; Flutterwave only just became a unicorn after the likes of Jumia, Fawry and Interswitch had been struggling to break even in the market
Companies are not mature; it’s often said that most SPAC companies just need enough cash to stimulate the market as they operate in high tech, speculative markets. Many of them are space-related startups and are causing the enthusiasm for a slew of new people to issue SPACs.
Another group of people believe that SPAC sponsors would lose interest in mature markets and come to emerging markets like Africa. I honestly believe that it will take a long time to diminish the enthusiasm for ambitious, exploratory and ground-breaking projects undertaken without any expectation of near-term profitability.
For this reason, I considered it not as interesting or urgent a need to dive deeper into the African context seeing that our startups are young and not yet ready for such a “speculative” method of financing that has a proven track record of failure.
So yes, that’s it for today’s newsletter. A sudden abrupt realisation that what African businesses are solving are bigger and more serious without the need for fanfare and gambling comes with SPACs.
Before you go:
In our last two essays, we discussed Flutterwave and how it is only just getting started in payments and e-commerce dominance (You can check it here: Flutterwave: To infinity and Beyond). Well today, they released a press briefing of a multi-year partnership with the Basketball Africa League. Basketball Africa League and Flutterwave Announce Multiyear Partnership
What caught my attention was the statement that said the company was committed to driving economic growth across Africa and guess the next thing that popped in my head…
You sure guessed it…STRIPE💡!
It is going to be an intriguing next few years to see how Flutterwave evolves and I sure can’t wait to see it.
If you enjoyed this piece, please try to share it with your friends, Boss, journalist, co-worker and anyone else that can benefit from this piece.
Also, if you’re an early-stage startup in Africa in the seed or pre-seed stage that wants to share your story to a wider audience and also bag some extra deals :), I’d love to hear about what you’re working on. You reach out to me on kamsonwani@yahoo.com or Twitter: @gerald_wan
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Thanks for reading and see you on the next episode,
Kamso.