Opay is an African startup that is technically owned by Opera Limited since they have over 71% of the share after selling off 20% of their shares.
Opay recently raised $400 in a funding round and this increased their valuation to over $2 billion dollars. In this post, we will look at how Opay was able to penetrate the market and why they are valued at $2 billion. At least from my perspective.
How Opay Penetrated the Nigerian Market.
When Opay started operations in 2018 in Lagos, it was with a big bang as their penetration model was simple, give people access to something that everyone uses at a ridiculously cheap prize.
Their bike-hailing service was a big band and for sure, they lost a lot of money with that from all signs and indications, but with the loss of money was the gain of an insane number of customers in a short time. It is safe to say, they spent the bulk of their marketing budget on helping people and relying on them to do the word of mouth and yes it worked way more than magic.
Within the first few months most other cities in Nigeria were begging for Opay bring their bike hailing services to their states. I remember saving a lot of money of bike rides sometime in early 2019 when I had car troubles and was tired of using being swindled by mechanics here and there. Not only did I save money, I also enjoyed the comfort of being picked and dropped at my home without having to share the bike with anyone and having to pay about 30% of what the regular fare would have been.
Pivoting After Bike Service Shutdown
In January of 2020, Oride – Opay’s bike hailing service along with others were banned across Lagos state and this was bad for their business as they had invested a lot in the service and were just starting their taxi hailing service which was meant to compete with the likes of Bolt and Uber.
This impending doom made Opay look to where they could matter next and apparently looked at providing services that would appeal to micro, small and medium scale businesses. At this time they sought to bring banking services to everyone everywhere.
Opay started selling three different types of POS machines ranging from the cheap to the averagely priced to the slightly expensive Smar POS. They were also to get people to their side by making their charges the lowest in the agent banking industry. A lot of existing businesses were able to now included agent banking services as a way to generate extra cash for their businesses while still able to collect payments easily.
Fund Raising Rounds
According to TechCrunch, Opay in June of 2019 raised $50 million in funding. As at that time, Opay had over 40,000 active agents with over $5 million in daily transactions.
In November of the same year, Opay went on to raise another $120 million from Chinese investors with the hope of entering Kenya, Ghana and South Africa. As at November Opay had increased its active agents by another 100,000 taking total agents to over 140,000 and the daily transactions doubled bringing the total to over $10 million daily transactions.
Opay has recently raised $400 million making it the largest on record in Africa’s tech scene. They also announced that they want to help emerging markets to reach a faster economic development.
In Nigeria, Opay allows users to pay for all essential bills and added a port of Chinese marketplace Alibaba called Buffalo Mall where users can shop directly in Naira.
With all signs and indications, Opay is set to make life easier for the people constantly neglected by the banking sector, and that has played significantly well for Opay as they have very little competition in this space.