You’d be hard-pressed to find any young, Internet-using Nigerian living in Nigeria who doesn’t have at least one Fintech app on their smartphone. Depending on who you ask, there are over 100 fintech startups in Nigeria. Per Statista, 144 fintech startups existed in the country as of 2021. For The Fintech Times, the number is estimated to be 200+.
The point here is that Nigeria boasts the highest number of fintech startups in Africa, raising questions about the proliferation of such startups in the country. Little wonder that the fintech sector accounted for 73.5 per cent of the $1.09 billion raised by Nigerian startups in 2021, according to BusinessDay.
Naturally, these numbers will encourage upcoming players in the industry to build a fintech. However, experience has taught some founders who spoke at the Fintech summit that it is not easy to build a fintech.
In reality, it isn’t as easy as it looks on paper, as founders have to deal with several challenges in the early stage. So, how do you build a fintech? This came to the front burner of discourse at the Fintech Summit organized by African tech media company, Techpoint last Saturday, November 26.
One of the breakout sessions was tagged ‘Building a Fintech with Limited Resources’ and featured panellists such as Munachi Ogueke, Co-founder and CEO of Oneliquidity; Adeyemi Adegbayi, Investment Analyst, TLCom Capital; and Yvonne-Faith Elaigwu, COO, OnePipe.
Speaking on the question of why anyone should build a fintech, Adeyemi says there are still problems to solve in areas of payments and improving financial inclusion in Africa, citing the need to create new solutions to address different financial services on the continent.
Read also: Editorial: Are there really too many fintech companies in Nigeria?
‘Build a business as you build a Fintech’
Funding is perhaps the most significant problem in building startups — including fintechs — in any part of the world. For context, global fintech funding dropped by 38 per cent in the third quarter of 2022, according to the State of Fintech Report for Q3 2022 released by CB Insights.
For Munachi, every founder must ensure that whatever fintech they are creating is a business first before anything else. “If you don’t have a business that can create value, just forget about raising funds because you’re simply building your hobby. Once you have that figured out, you can now approach investors or a bank to take a loan,” he said.
Related article: Declining investment continues as global fintech funding drops by 38% in Q3
Finding the right people
Yvonne-Faith took the conversation on how to build a fintech with limited resources further when she harped on the need for early-stage founders to “sell” the business to their pioneer team, saying, “it is important to find people who key into the vision of what you’re creating”.
She also stressed that Nigerian founders, including but not limited to people who want to build a fintech, must look at ways to satisfy their staff, such as remote work and stock options. But Munachi says the startup must make money as a business, so their employees can be motivated to pursue the vision.
“I tell founders, ‘You are selling to three sets of people: your investors, your staff, and your customers’. You need to ensure that these people are buying what you’re selling, or else the business will fail,” the Oneliquidity CEO submitted.
Collaboration is key
Adeyemi believes Nigerian startups have been collaborating in different innovative ways, though the partnerships need to be more strategic and value-oriented to all parties involved.
“You see some decks with a lot of logos on them but those people aren’t affecting the bottom line.
Adeyemi Adegbayi
Your revenues aren’t growing but you are integrating every day. Why? It’s because you don’t have the symbiotic relationship you need to make things work. For instance, if I’m company X and I have a thousand companies integrated into me to help push their products, I will only prioritize companies that have the greatest value,” he said.
On ensuring partnerships work, Yvonne-Faith said many startups are more interested in building all the solutions by themselves instead of plugging into existing ones to consider the growth opportunities.
However, in the words of Munachi, the Nigerian tech ecosystem is notorious for hoarding ideas, and players often see innovations as some competition: “If you are a founder in any other market, everyone is willing to help by connecting you with others building similar solutions. The case is different here in Nigeria.”
He then advised early-stage founders to establish value-based relationships that can birth possible partnerships and collaboration, adding that working with an ethical company is essential.