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Investors say Flutterwave’s governance issues demand an intervention

A man counting a bundle of dollar bills in his hands
Reuters/Afolabi Sotunde
Flutterwave’s rise to startup stardom has been fueled by over $400 million from venture capitalists.
  • Alexander Onukwue
By Alexander Onukwue

West Africa correspondent

Published Last updated

When Flutterwave wanted to raise $100 million in Jan. 2021, it pitched a compelling set of metrics to investors. Its revenue had grown from $5 million to $55 million between 2018 and 2020. Gross profit was $26 million with a 48% margin. Its services were used in 20 countries, thanks to the hard work of over 270 employees.

Based on these numbers (as recorded in an investor presentation seen by Quartz), the licenses it had in six African countries, and plans to introduce new products, the company projected it would hit nearly half a billion dollars in gross profit by 2025 with a margin over 50%.

Tiger Global and other investors ended up giving Flutterwave $170 million in Mar. 2021, valuing it at a billion dollars for the first time. It capped a stunning rise for a startup that was worth $150 million 18 months earlier. Flutterwave has raised more and is valued at over $3 billion today, becoming Africa’s most valuable, talked about tech company.

Here comes African tech’s vibe shift 

But with talk this month being less flattering due to allegations of financial and personal misconduct against CEO Olugbenga Agboola, attention on Flutterwave—and African startups generally—is less on sugar rush valuations. For the first time in African tech, the dominant chatter between investors is on corporate governance, ethics and culture.

“The market needs a wake up call,” Eghosa Omoigui, founder and managing general partner of investment firm EchoVC, tells Quartz.

“All ecosystems go through this but we need to be aware when behaviors start to be corrosive. Mission, culture, integrity, ethics, [and] team building are all elements of great companies and founders.”

Omoigui cautions that some of the allegations against Flutterwave are yet to be substantiated. Negative conclusions about the company’s future would be premature. Still, the existence of some evidence and reports of poor work culture at other places “pose a real risk of putting a pall on the excitement about the greater opportunity set.”

Rebecca Enonchong, founder of AppsTech and a startup investor, believes a fix is necessary at Flutterwave. “Even if just parts are true, the only way to move forward is changes in management and governance,” she says.

What is Flutterwave’s board doing?

Those changes will have to come from the company’s board of directors, Omoigui and Enonchong say, as well as two former Flutterwave investors who have exited the business and spoke on the condition of anonymity.

Omoigui thinks the board should hire a third party to identify what parts of the allegations are true, and establish where ethical lines were crossed or illegalities committed. “How they respond to that will be key,” he says.

It is unclear how they are responding, so far. One person familiar with the company’s internal processes said Agboola retains the board’s confidence. It is likely that some of the things he allegedly did were already known and discussed before this week, the person said.

“They surely know more than we do. But it sends a poor message about their governance,” Enonchong says in response. “Perhaps the board also needs some shaking up if this all happened under their watch.”

Standing by Agboola could be understandable if the alleged issues have been corrected, and it would be useful to know what the corrections are, Enonchong says. A public statement by the board may be needed to cement their confidence in Agboola, she says.

Whether and when there will be such a statement remains to be seen. Flutterwave has yet to respond to two Quartz requests for comment.

Meanwhile, investors and other African tech enthusiasts say Agboola’s alleged actions should not taint Flutterwave itself, regarding this as more a Travis Kalanick Uber moment than a Theranos disaster. Two of the former Flutterwave investors suggested that Agboola could be replaced as CEO but believe the allegations won’t affect Flutterwave because the company is already an important part of Africa’s digital economy.

“I think we’ll find in the end that Flutterwave is a valuable company. They will likely need to make some management changes and improve governance but it’s still a unicorn,” Enonchong says.

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