Startups globally have faced challenges over the last couple of years when trying to exit, due to factors like a frozen IPO market and reduced attractiveness to buyers. In addition, large mergers-and-acquisitions (M&A) deals have faced heightened regulatory scrutiny, particularly involving Big Tech or multi-billion-dollar conglomerates.
Notably, a decline in venture investment within any startup ecosystem can often be linked to a lack of exit volume and value. In Africa, for instance, the number of M&A exits peaked at 44 in 2021, when the continent attracted nearly $6 billion in venture capital. However, in 2022, the number of exits dropped to 29, alongside a decrease in venture capital investment to over $3 billion.
Despite these challenges, local investors remain optimistic, saying that M&A activity will eventually pick up as founders and investors seek liquidity in an increasingly tough market.
“We will continue to see few exits (IPOs) in 2024, given that many companies scaled down growth to adjust to the reduction in capital availability. But we will likely see more consolidations and M&A activity as undercapitalized companies seek to benefit from the value they have created on a larger platform,” TLcom Capital partner Andreata Muforo told in an interview last year.
Yet, the debate continues over whether the African tech ecosystem has lived up to expectations or underperformed regarding exit outcomes (M&As and IPOs) relative to the venture capital invested: over $20 billion. One perspective argues that the number of exits doesn’t justify the capital infusion, while another emphasizes that even a few landmark exits are commendable given the ecosystem’s relative youth.
Expensya stands as one of Africa’s landmark exit stories, demonstrating the potential for significant returns even within a young and emerging tech ecosystem. Having raised slightly over $20 million, the Tunis- and Paris-based expense management startup was acquired by the private equity firm Medius, resulting in a cash-out of $10 million for its employees. The exit was valued at 1.5 times its last reported valuation of $83 million, according to PitchBook.
This acquisition is particularly significant in the context of the African tech ecosystem, where the terms of M&A deals are often shrouded in secrecy. The lack of transparency around these transactions makes it challenging to gauge the true performance of the continent’s tech sector. However, when details are disclosed or found out, as in the case of Expensya, they provide valuable insights that help inform valuation and pricing strategies, allowing stakeholders to better align their expectations.
As we continue to monitor the growth of Africa’s tech ecosystem, it’s essential to highlight and analyze the biggest disclosed acquisitions. These landmark exits, often disclosed, offer a clearer understanding of the continent’s progress and potential in delivering value through M&A activity.
InstaDeep
Founded by Karim Beguir and Zohra Slim in 2014, enterprise AI startup InstaDeep uses advanced machine learning techniques to bring AI to applications within an enterprise environment. The Tunis- and Paris-based startup raised over $108 million from investors, including BioNTech, Alpha Intelligence Capital, Endeavor Catalyst and Google.
- Acquirer: BioNTech (2023)
- Exit: €500 million ($550 million) in cash and stock.
Sendwave
Drew Durbin and Lincoln Quirk founded Sendwave in 2014 to offer money transfer services from countries in North America and Europe to those in emerging markets: Africa, Asia, and the Americas. The YC-backed Sendwave raised over $15 million from Founders Fund, Khosla Ventures, Serena Ventures, and Partech.
- Acquirer: Zepz (2020)
- Exit: $500 million in cash and stock.
MainOne
MainOne is a data center and connectivity solutions provider serving clients from technology enterprises to cloud service providers across West Africa, particularly Nigeria, Ghana, and Ivory Coast. Founded by Funke Opeke in 2010, the Lagos-based Equinix subsidiary raised over $200 million in equity and debt before its acquisition.
DPO Group
Eran Feinstein founded the payment gateway DPO Group in 2006. The Nairobi and Cape Town-based fintech provides payment services to thousands of merchants across multiple African countries. It raised over $15 million from Apis Partners and other investors.
- Acquirer: Network International (2020)
- Exit: $291 million in cash and stock ($228.6 million cash).
Paystack
Shola Akinlade and Ezra Olubi launched Lagos-based Paystack in 2015 as a payment processing platform for African merchants to accept online payments via debit card and direct bank transfer. The YC-backed startup — arguably the first from the continent to graduate from the accelerator — raised over $12 million from Stripe, Visa, Tencent and Ingressive Capital.
Acquirer: Stripe (2020)
Exit: $200 million+ cash-and-stock.
Expensya
Expensya, founded by Karim Jouini and Jihed Othmani, provides smart payment card solutions to automate spend management for businesses across Europe. The Tunis-based software company raised $25 million from Bpifrance, ISAI and Silicon Badia.
- Acquirer: Medius (2023)
- Exit: ~$120 million+ cash and stock, per sources.
Fundamo
The Cape Town-based Fundamo was a platform that delivered mobile financial services, including person-to-person payments, airtime top-up, bill payment, and branchless banking services, to unbanked and underbanked consumers. The fintech, founded by Hannes van Rensburg in 2000, raised $5 million from South African investors, including Knife Capital.
PaySpace
Bruce, Clyde, Warren Clark and George Karageorgiades founded Johannesburg-based PaySpace in 2007 as a cloud-based payroll and HR platform to streamline payroll runs and backup procedures. The bootstrapped startup raised undisclosed venture for the first time last year from local payments solutions provider Netcash before its acquisition.
- Acquirer: Deel (2024)
- Exit: ~$100 million+ cash and stock.
