Launched in 2014 by Shola Akinlade and Ezra Olubi, Paystack sought to become the Stripe of Africa. Seeing how the world was moving online and Africa was being left behind, Paystack’s founding objective was to help revamp Nigeria’s payment system. Paystack works by seamlessly connecting all multi-channel payment options with merchants and enables the merchants to accept payments from around the world, via credit card, debit card, and direct bank transfer on web and mobile.
Merchants are required to sign up and sign in while consumers do not need to sign up to use Paystack, all they need is a Mastercard, Visa or Verve debit card to pay on Paystack merchant sites. The company currently operates in Nigeria and Ghana, where its payment API integrates with about 60,000 businesses. There are talks of the startup expanding to South Africa in the coming months.
Paystack has introduced a steady stream of innovations into the market, including recurring billing, automated chargeback resolution, and customer insights.
Deals and Funding
Before it was acquired by Stripe, Paystack had raised a total of $11.7M in disclosed funding over 5 rounds. Paystack kicked off operations with a series of pilots, while in private beta mode in November 2014, with financial support from friends and families. In January 2016, Paystack became the first Nigerian startup ever admitted into Y Combinator, the Silicon Valley incubator that has backed major global startups, including Stripe. It was from here that it received seed funding of $120K and access to global investors.
Paystack then raised a seed funding of $1.3M from Tencent, Comcast Ventures, Singularity Investments, Michael Seibel (the CEO of Y Combinator), Justin Kan, Jason Njoku’s SPARK.ng, Olumide Soyombo among other investors in December 2016.
In 2018, Paystack received $10.2M in series A funding, making everyone stand up and notice. Led by Stripe with participation from global payments company, Visa, this round also saw follow-on funding from Tencent and Y Combinator. Three years after launching, this brought the company’s total funding to a little over $10M. According to the startup’s SEC filing, this total amount was raised from more than 20 investors. Getting investment from Stripe and Visa was key for Paystack as it was significant validation for a fintech company.
On 15th October 2020, news broke that Stripe had entered into an agreement to acquire Paystack, in order to help increase Africa’s online GDP. Stripe initially led an $8M Series A funding round for Paystack in 2018 and has now decided to take advantage of the African market that has huge potential. The African e-commerce sector is growing 75% faster than the global average, 21% year-over-year.
Stripe is a global technology company that seeks to grow the GDP of the internet by building the economic infrastructure for the internet. Businesses of every size from new startups to public companies like Salesforce and Facebook use the company’s software to accept online payments and run complex global operations.
Stripe combines economic infrastructure with a set of applications for new business models like crowdfunding and marketplaces, fraud prevention, analytics, and more. Stripe navigates global regulatory uncertainty and partners closely with internet leaders like Apple, Google, Alipay, Tencent, Facebook, Twitter to launch new capabilities.
In August 2010, Stripe received seed funding from Y Combinator to kick start its operations, five and a half years before Paystack entered the accelerator. In May 2011, Stripe received a $2M investment from venture capitalists Peter Thiel, Sequoia Capital, and Andreessen Horowitz. Stripe launched publicly in September 2011 after an extensive private beta. In May 2020, Stripe expanded its services in 5 new markets in Europe: the Czech Republic, Romania, Bulgaria, Cyprus, and Malta.
Stripe is reported to have participated in two funding rounds for Monzo, a tech-startup bank based in the United Kingdom which also benefited from Y Combinator’s continuity fund in a series G funding round. Stripe has also invested in PayMongo, a Philippine company offering similar services. On June 6, 2019, Stripe led a $22.5M fundraising round for Step, a financial services startup offering fee-free bank accounts to teenagers. On March 26th 2020, Stripe led a $20M Series A fundraising round for Fast, a company creating a universal, one-click checkout service.
Matt Henderson, Stripe’s business lead in EMEA while speaking about the acquisition, praised Paystack’s progress. He said, “in just five years, Paystack has done what many companies could not achieve in decades. Their tech-first approach, values, and ambition greatly align with our own. This acquisition will give Paystack resources to develop new products, support more businesses and consolidate the hyper-fragmented African payments market. We can’t wait to see what they will build next and how their growth can turbocharge the African tech ecosystem.”
“Paystack is a growth engine for modern businesses in Africa, and we couldn’t be more excited to join forces with Stripe, whose mission and values are so aligned with ours, to nurture transformative businesses on the continent,” said Shola Akinlade, CEO and co-founder of Paystack. “We believe deeply that with the right tools, African creators, developers, and entrepreneurs can do incredible things. Leveraging Stripe’s resources and deep expertise, we’re excited to accelerate our geographic expansion and introduce more payment channels, more value-added services, and deeper integrations with global platforms.”
While this is Stripe’s largest acquisition to-date, and the biggest acquisition deal to come out of Nigeria, both companies will continue to operate independently. Paystack will continue to grow their operations in Africa and add more international payment methods. Over time, Paystack’s capabilities will be embedded in Stripe’s Global Payments and Treasury Network (GPTN), a programmable platform for global money movement that currently spans 42 countries.