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Paystack: The Nigerian Success Story Helping Businesses Get Paid
One of the stars of Nigeria’s recent startup success stories – fintech startup Paystack.
Paystack was admitted into Y Combinator’s (YC) accelerator programme in winter 2016, making them one of the first Nigerian startups to join the programme. This was no small feat and it ushered in an era of international exposure for Nigerian startups.
As a result of their participation in YC, which usually culminates in a demo day in front of choice investors, Paystack, founded by Shola Akinlade (CEO, left) and Ezra Olubi (CTO, right), raised $1.3 million in seed funding. Some investors that took part in this round of funding include Tencent (the owners of WeChat), Comcast Ventures and Singularity Investments.
In one sentence, what does Paystack do?
We’re a payments company. We help businesses accept payments from their customers.
What problem were you aiming to solve?
We realised that businesses [in Nigeria] still had to do a lot of work to accept payments. So we built Paystack because we could do all the hard work so businesses could quickly start accepting payments.
There are three big problems that we’re solving. The first one is making sure it’s very easy for businesses to get started. So if you wanted to accept payments today, you would accept payments with Paystack. Before Paystack, it was a very big problem – you had to know somebody in some big company and you had to do a lot paperwork. We wanted to solve that very quickly.
The second big problem was helping businesses get paid. So, at Paystack, we want to make sure that if somebody is trying to pay you, they can do that with ease. Right now, we’re so confident that if a customer’s card doesn’t work on Paystack, it’s never going to work anywhere else.
The third big problem is to provide merchants with additional tools like data, performance, and reconciliation. We’ll continue to innovate around that area and give merchants an incentive to digital payments.
So, in a nutshell, we help businesses get started, get paid and grow their businesses.
Do you have a particular target market/region that you focus on, or is it widely available across the world?
Right now, it’s just for merchants in Nigeria, but we’re about to open up in a few other countries. We’re already doing ground work in Ghana and Kenya.
How did Paystack get started – what’s your story?
Well, before we started, we’d done some work for banks. I was working on Precurio before Paystack, while Ezra was with Jobberman and then Delivery Science. But at some point, we realised we could do more. This is very technical information but I realised one day that I could charge a card from my system directly without even redirecting to Interswitch or any of those payment gateways. So I called Ezra and told him to come have a look.
I called a team of people and then realised there was scope, and if we can charge a card directly then we could solve all these other payment processes around it. That’s how the name Paystack came about – it’s a stack of tools to help merchants accept payments.
Who is the founding team, and how has that team grown so far?
The real Paystack started when we – Ezra and I – went to YC. Ope Aikomo joined us immediately and the three of us spent a lot of time building. I built Version 0, so three of us spent a lot of time building Version 1 from San Francisco. We launched it and started iterating. Now, we’re about 12 on the team and it feels like building the team never stops.
What is Y Combinator and how was the experience for you?
Y Combinator (YC) is a Silicon Valley accelerator. They pick the best teams from all over the world, give them funding and access to mentors. They basically help teams grow their businesses. A lot of big businesses have come out of YC – Stripe, Airbnb, Reddit, Dropbox. So we were lucky to be part of it, especially because of the great advice we got there.
Getting into YC and getting access to people that have built companies many times over made a lot of difference. We learned we had to focus on our business and talk to our customers, and it was very obvious that a lot of things were distractions. So we really just did that – focused on our business and got funding. And YC helped us raise our seed funding by giving us a platform.
Is there a difference between the advice you received from the Nigerian startup ecosystems and your experience in Silicon Valley?
Well, I think for startups, the things you really need to do are very counterintuitive. In Nigeria, for example, a lot of people will tell you, “Ah, you need to meet all the bank MDs. You need to be hustling. You need to have a chairman”. But when you go to San Francisco, they’ll tell you, “You know what? The way to network is to be impressive – to build something that is impressive. It’s to focus on building the good things, not going for the talking events”. And I think that’s the key difference.
So we said to ourselves, “Let’s build something cool. Let’s build something people want. Let people echo this. Keep figuring it out. And then at the right time, networking opportunities will come”.
That’s just one example of how advice is counterintuitive. There’s so many other examples around what an early-stage startup should be doing. Advice here is really tied to big businesses. So because you see Coca Cola putting billboards in Ikeja, you think that’s what you should do. But they’re putting up these billboards because they’ve already gone through the first stage; they already have a product that works that people like, and that’s just the next step.
Could you tell us a bit more about the experience of raising funding?
For us, the beginning was really demo day at YC where you have about three minutes to present your product to some of the top investors in the world. The investors have something like Tinder where they can swipe right if they like you. So after YC we got a list of investors that were interested in us. We started speaking to them and were able to raise $1.3 million from Tencent, Comcast Ventures, and a lot of angel investors.
If you were to give advice on how to raise funding, what would you say?
The advice for people who are trying to raise funding is really to be sure that you can articulate what is impressive about your business. Try to articulate three things that are very impressive, and just understand that the role of the founder is to really build a solid business.
Don’t get distracted by fundraising. Focus on your business, identify what is impressive about your business, communicate that clearly to investors, and try to get a quick decision from them.
It’s okay for people not to like you, but don’t waste time spending six months with somebody when you don’t even know if the guy likes you or not. You need to move that process on as fast as possible. Ask them what they need to make a decision, give it to them immediately, and get a decision out of them very fast.
What’s next for Paystack?
We think payments, or digital payments in Nigeria or Africa is still very early, so there’s a lot of building that needs to be done. There’s a lot of fixing that needs to be done. The next step for us is to make sure that we can solve these big problems, and we’re already solving them. Some of them we solved effectively, but we just want to make sure businesses don’t have to think about payments – they think about their business and we can continue to do more payments for them.
How does a business use Paystack’s service?
They simply go to our website to sign up and request to go live. We’ve built a lot of tools around making using our service simple. We have APIs if you have a developer, we have payment pages if you don’t have a developer – it’s super easy.
Finish this sentence: In 2020, Africa would be…
… a continent where African problems would have been solved by Africans.
Africans have stopped waiting for other people to solve their problems. We’re trying to solve our problems. See payments for example. We’re not waiting for Paypal, we’re not waiting for Stripe. Across other industries, a lot of young people are also trying to solve these different problems. And the good thing about solving problems ourselves is that we solve it very well.
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