Strategy Note /

OPay’s lesson to Africa’s budding unicorns: find strong sponsors and a big pond

  • OPay’s recent US$400mn funding round gives it a US$2bn valuation, making it one of a handful of African fintech unicorns

  • Wannabe African unicorns should focus on strategic partners, management expertise and building customer trust

  • Payments is the most promising area of fintech activity. Data protection is the biggest regulatory hurdle

OPay’s lesson to Africa’s budding unicorns: find strong sponsors and a big pond
Rahul Shah
Rahul Shah

Head of Financials Equity Research

Rabail Adwani
Rohit Kumar
Tellimer Research
31 August 2021
Published byTellimer Research

Last week OPay, a payments-focused fintech with operations centred on Nigeria, raised US$400mn in a Series C funding round, attaining a US$2bn valuation. OPay has thus joined the rarified ranks of African unicorns. In this note, we take a brief look at Opay’s operations and gauge what other African startups can learn from the firm’s experience.


Opera, a provider of browser, mobile payment, and artificial intelligence solutions, incubated OPay in 2018. Opera is headquartered in Oslo, Norway with additional offices in Europe, China and Africa. In July 2018, the firm listed its shares on Nasdaq; its market capitalisation currently stands at US$1.15bn. Opera services over 50mn registered users; 2020 revenues amounted to US$165mn. As of March 2021, Opera owned 13.1% of OPay. A related fintech asset is its 42% stake in Nano Bank, a provider of micro-lending services.

OPay is a platform that allows users to send and receive money, pay utility bills, save, and borrow money; it enables its customers to access smart financial services in a one-stop application. The company is based in Africa’s most populous nation, Nigeria, with a secondary office in Egypt, which also has a sizeable unbanked/ underbanked population. According to Bloomberg, the company’s monthly transactions volume now exceeds US$3bn (up from US$2bn in December 2020). The firm has a network of over 300k agents and 8mn active users.

Last week, the company raised US$400mn Series C funding, led by Softbank, taking its valuation to US$2bn and adding OPay to Africa’s small list of unicorns. OPay plans to utilise this funding to grow in Nigeria, Egypt and the Middle East. This is the largest fundraise of its type in Africa’s tech scene (on a par with Jumia’s Series C funding in 2016).

Key lessons for African startups looking to join the unicorn club

Last year we surveyed 101 emerging market fintechs (including 10 fintech unicorns) and supplemented this work with desk research into 2,650 emerging market fintechs (including 63 unicorns). We distil some of the findings from that research below, with a particular focus on the implications for African fintech startups.

Big fish need a big pond

It is no accident that the handful of fintech unicorns that currently exist in Africa are focused on Nigeria, Africa's largest and most populous economy. Within the global fintech sector, we see most unicorns are focused on the largest product segments, namely Payments and Lending/ Digital banking. In less developed markets, we think Payments holds the most promise as low per capita income limits the value that firms can generate from lending and savings products. The African fintech unicorn experience supports this thesis; all are payments-focused.

Global fintech unicorns: Mix by segment

Unicorns' success is driven by scale and expertise

When questioned about the reasons for their success, unicorn fintechs are more likely to cite the scale of their customer base and management quality compared to non-unicorns. Distribution networks, partnership agreements, competitive pricing and a favourable regulatory environment are also important enablers.

In this context, we note that international firms are increasingly partnering with local fintechs rather than competing directly. For example, Paypal has partnered with Flutterwave, while Visa has bought a 20% stake in Interswitch and has also partnered with Paga (a leading Nigerian mobile money provider). We think this could be because homegrown companies better understand the needs of consumers and merchants and are also better able to steer through the local regulatory landscape. We have seen similar trends in other emerging markets, such as India, Indonesia and Vietnam.

Unicorn vs non-unicorn fintechs: Success factors

Funding is the key strategic priority for fintechs

Fintechs are much more focused on securing funding than their non-unicorn peers. Funding can help firms achieve their long-term strategic goals, such as customer acquisition, product development or international expansion. Fawry’s experience indicates that this funding can also come from public sources. Interswitch has been planning its listing for over five years now, and Flutterwave has also indicated that it is open to taking this route in the future.

One area where African unicorns appear to differ from their international peers is their greater focus on geographical expansion. OPay, Flutterwave, Chipper Cash all have plans in this area.

Unicorn vs non-unicorn fintechs: Strategic priorities

Key growth constraints relate to connectivity and trust

Of particular relevance for Africa, our global emerging market fintech unicorns indicated that poor smartphone penetration and limited data connectivity are key constraints on their growth. Slow customer adoption may be related to this, but also likely reflects challenges in building up customers' trust.

Unicorn vs non-unicorn fintechs: Growth constraints

Data protection is the biggest regulatory hurdle for fintech unicorns

By developing close relationships with their customers, fintechs hope to generate insights that they can then monetise. Consumer and data protection regulations can erect barriers to this process. Fintech unicorns are much more sensitive to this issue than their smaller peers.

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Fintechs in Nigeria are gaining traction

The OPay announcement comes off the back of several large-scale Nigeria fintech funding rounds in 2021, some of which are shown below. Interestingly, these transactions have closed even as mainstream investors continue to fret about capital controls and potential NGN devaluation.

Selected Nigeria fintech funding deals so far this year