The word ‘unicorn’ is by no stretch a new word neither was it coined by tech companies. However, the first person to use the word to describe a startup company valued at over $1 billion was Aileen Lee, founder of Cowboy Ventures, a seed-stage fund that backs entrepreneurs.
The use of ‘unicorn’ to describe tech companies valued at over $1 billion by private and public investors was to represent the statistical rarity of such successful ventures. As Lee puts it, “Unicorns don’t exist, and these companies do. But we like the term because to us, it means something extremely rare and magical.”
In 2013, Lee identified 39 of these ‘unicorn’ companies. By 2017, there have been 223 unicorns identified across many countries according to a report by TechCrunch.
The growth of technological innovations in Africa and the attendant growth in investment have seen some local companies being regarded as potential unicorns on the continent. Companies like Jumia and Africa Internet Group are already in pole position in this regard.
Nigeria is one of the countries on the continent that is said to have the potential to produce the first unicorn on the continent. Despite a difficult business environment, tech start-ups in the country have managed to stay among those attracting the most investment in Africa.
Nigerian fintech firms in particular, have led the list of tech companies getting the most money from investors. Last year, Flutterwave, a fintech firm secured over $10 million representing the most funding from a startup in Africa in 2017 according to Disrupt Africa’s latest Tech Ecosystem report. SureRemit, a global non-cash remittance service, closed $7 million from an initial coin offering (ICO).
Last week, SureRemit also announced that its token Remit, has been listed on the Coinmarketcap.com. Coinmarketcap is by far the most prominent global index of cryptocurrency prices. It is also the most dominant checking site in the cryptosphere, with Alexa making it the 83rd most popular site in the US. For all its might, over-reliance on a centralise data repository has its drawbacks, and goes against the very principles of the decentralised ecosystem.
Listing a coin on Coinmarketcap has become almost critical to its survival.
SureRemit may be young in the remittance global landscape but there is a reason why its claim to unicorn status should not be taken for granted. The company is aggressively making impressive steps to addressing a problem that affects a segment of the global market hungry eagerly awaiting a solution.
According to the World Bank, remittances to emerging markets represent a $441 million opportunity. Incumbents are already feeling the heat from new comers such as WorldRemit and Transferwise. In 2017, Transferwise re-entered the Nigerian remittance market citing renewed confidence in the central bank’s handling of the naira.
Kelechi Nwokocha, a VC investor, observed in a recent post that the ability of SureRemit to capture a mere 0.1 percent of this market can throw into the arena of companies with $100 million valuation based on comparable revenue multiples.
“The company’s customer base and market opportunity makes it a comparable asset to the likes of WorldRemit and Transferwise. These two comparable companies command valuations of $650m to $1.5bn with revenue profiles of $57m and $93m respectively. In other words, this represents a comparable revenue multiple between 11x to 16x. We can then comfortably conclude that SureRemit needs to capture 0.6 percent of the emerging market remittance opportunity in order to remit over $2.6bn and earn over $79m in revenue (Assuming they can successfully charge local merchants 3% on each transaction),” Nwkocha noted.
SureRemit’s leverage on blockchain technology could be its biggest advantage. The ICO offer and the listing of Remit on Coinmarketcap open up an alternative source of finance that does not encumber its shareholders in the long term. With Remit on the global index and ICO finance secured, SureRemit is capable of funding its growth ambition over time.
Hence, 2018 might possibly welcome the first unicorn in Nigeria.
