Paystack and Olumide Soyombo: Achieving Lift-off for Nigerian Tech

The African Angel Academy has developed a series of case studies to share the stories of African early-stage individual investors. These case studies aim to inspire and guide new angel investors across the continent. This case study was made possible by the generous support of the Southern African Innovation Support (SAIS) Fund.

Achieving Lift-off for Nigerian Tech explores the early-stage investment journey of the Nigerian fintech phenom Paystack after it catches headlines in October 2020 for its acquisition by the Silicon Valley-based payments company Stripe for a reported US$200 million – the largest exit in Nigeria to date.

The news sends an earthquake through the African startup community as angel investors realise returns as high as 1,400%, the company makes plans to expand to other parts of the continent, and employee alumni begin funding and founding their own startups. Above all else, the exit sends a clear signal to entrepreneurs and investors that Nigerian tech is prepared to compete on an international stage with the most successful fintechs in the world.

Following the experience of angel investor Olumide Soyombo, Paystack’s first local investor, the case demonstrates the strategic role angel investors can play in developing the tech startup ecosystem in Africa.

As the founder of a Lagos-based enterprise technology company, Bluechip Technologies, Olumide is already entrenched in the Nigerian tech ecosystem when he decides to become an angel investor in 2014 to help get more local tech enterprises off the ground. Modelling his investment syndicate on the prestigious Y Combinator accelerator in Silicon Valley, however, Olumide quickly realises that the local ecosystem is vastly underdeveloped in terms of venture capital, follow-on investors, and entrepreneur support organisations.

“We wanted to solve a problem in the larger market,” Olumide explained. “I’m a firm believer that certain companies just have to exist in certain ecosystems. An e-commerce player has to exist, a payments player has to exist, an education player has to exist, an API player for payments has to exist.”

Olumide therefore decides that he must take a more active role in populating the ecosystem by building networks between potential stakeholders and getting seed funding into the hands of as many entrepreneurs as quickly as possible. Eventually, Olumide’s strategy leads him to become one of Nigeria’s most prolific angel investors, with seed investments in 26 different startups by 2020. In 2016, it also leads him to become the first Nigerian investor in an exciting payments solution enterprise called Paystack, founded by Shola Akinlade, a talented software developer Olumide had partnered with on a business app project at Bluechip years before.

Exploring the big-picture mindset Olumide brings as an angel investor to one of the most successful startups on the continent, the case leaves readers to consider the importance of investor strategy in generating momentum for the ecosystem over the long term, and not just returns in the short term. As Olumide observes, large exits like the Paystack-Stripe deal are just the beginning for African tech.

“When Shola told me about the deal,” Olumide remembered, “the first thing I said was, ‘Now we have lift-off’.”