The Flutterwave Scandal: Inside Africa’s Fallen Fintech Unicorn

Flutterwave was once the darling of Africa’s tech scene. The Nigerian fintech startup expanded rapidly globally, raising over $200 million from top Silicon Valley investors. Flutterwave provided payment solutions for thousands of businesses and boasted a $3 billion valuation by early 2022. But behind the scenes, troubling allegations were bubbling, becoming known as the Flutterwave Scandal.

In April 2022, the lid was blown open when Clara Wanjiku Odero, Flutterwave’s former head of implementation in Kenya, published an explosive account on Medium. She described being bullied by CEO GB Agboola and having to fight for compensation after leaving the company. Her story unleashed a wave of complaints from former employees.

This article closely examines how Flutterwave grew quickly but had big problems. We’ll explore the company’s impressive growth, the toxic workplace culture that emerged, and the financial misconduct that ultimately led to its unraveling.

Key Takeaways

• The allegations against Flutterwave reveal troubling ethical issues in Nigeria’s fast-growing startup ecosystem.
• The Flutterwave scandal highlights the urgent need for improved governance, oversight, and accountability as the industry matures.
• Founders must lead in setting company culture and values from the top.
• Board oversight, financial controls, and employee relations must improve at startups.
• Education on ethics and compliance is crucial for developing talent.
• The startup community must work collectively to implement reforms.

Flutterwave’s Rise and Recent Success

Flutterwave was started in 2016 by three founders, Iyinoluwa Aboyeji, Olugbenga Agboola, and Adeleke Adekoya. Their goal was to make it easier for African businesses to accept payments online, especially from international customers. At that time, it was still tricky for African companies to do this.

The founders had much experience working at big banks and other startups before Flutterwave. This helped them get early investments from big companies like Mastercard and Visa. Flutterwave could then quickly expand to other countries in Africa beyond Nigeria.

In 2018, Flutterwave launched a product called Store which lets small businesses create online shops. It helped many African merchants sell to customers around the world. Flutterwave partnered with big names like Uber and Facebook to handle their payments in Africa.

In 2021, Flutterwave raised a lot of money from famous US investors and became valued at over $1 billion. It was a massive success for a Nigerian startup. It showed that Nigerian founders could build very successful tech companies.

Flutterwave grew fast because the founders knew many investors personally and could convince them to invest. The company became the biggest success story in Nigeria’s tech industry.

It showed how Nigerian financial technology startups could solve payment problems in Africa. Flutterwave’s growth inspired many young entrepreneurs. It was a top example of Nigeria’s fast-growing startup ecosystem.

Cracks Emerge in Flutterwave’s Foundation

Under the surface, Flutterwave was having big problems.

In 2018, CEO Gbenga Agboola brought his brother-in-law Ifeoluwa Orioke to be the CFO. This was when things started going downhill at Flutterwave. Orioke was said to bully employees and yell at them. There were also rumors that Orioke was having inappropriate relationships with junior staffers.

Even after complaints to Agboola, Orioke kept his job. Agboola was unlikely to discipline his own wife’s brother. Orioke’s lousy behavior seemed to be allowed to avoid family issues.

By 2019, Orioke’s actions almost stopped Flutterwave from getting Series B funding. A Twitter account called “Eko Minaj” tweeted claims of sexual harassment at the company. This made the lead investor, Visa, pull out of the funding round. Flutterwave had to wait a year to get their Series B money.

Visa eventually came back for the round, but the warning signs were clear. Flutterwave did not fix the deeper problems in their culture.

Financial Impropriety and Negligence

In addition to the lousy workplace culture, Flutterwave made big mistakes with money and operations.

In 2019, Flutterwave’s paperwork was so messy that the old CEO, Iyinoluwa Aboyeji, got arrested by the Nigerian police. The company should have removed him as an authorized officer after he quit.

That same year, Clara Odero was investigated by Kenyan police because Flutterwave still listed her as their contact after she left. Flutterwave’s carelessness caused Odero a lot of stress and hurt her reputation permanently.

Flutterwave also has mishandled employee stock options. Employees reportedly got underpaid when they tried to cash out their shares. And the company had questionable practices that helped the CEO Agboola buy back shares.

Flutterwave told employees to sell their shares to Berrywood Capital, Agboola’s investment company. Berrywood allegedly paid way less than fair market value. This self-dealing should have been disclosed to employees.

The Unicorn Crumbles

By April 2022, things were looking terrible for Flutterwave. Former employees felt able to speak out about the company’s wrongdoings.

Clara Odero’s Medium article went viral, causing anger on social media. Tech news sites like Rest of World and TechCabal published exposes with stories from former staff.

These claims spelled disaster for Flutterwave’s future. Top investors faced pressure to respond to the controversy. Current employees were left feeling discouraged and worried about the company.

Meanwhile, Flutterwave desperately tried to raise more money to keep its billion-dollar value. But potential investors became cautious as Flutterwave’s reputation was severely hurt.

It’s unclear if Flutterwave can recover from these damaging revelations. But for now, the former unicorn has fallen far from its high position. Flutterwave warns that toxic culture and mismanagement can bring down even the most promising African startup.

The Aftermath

Flutterwave’s decline has created tremendous uncertainty.

For employees, the revelations were very disappointing. Morale has dropped as trust in leadership disappeared instantly. The company laid off many employees. Those still employed face a tense work environment with an unclear future.

The remaining executives are scrambling to save face. The company denied the allegations and said former employees’ criticisms were false and already fixed. Flutterwave attacked media critics and told employees not to doubt the company.

But the damage was already done. Within Nigeria’s close tech community, Flutterwave’s reputation was ruined. Investors and startups who once admired Flutterwave were horrified by its swift fall from grace.

Deeper Issues in Nigeria’s Startup Ecosystem

The problems at Flutterwave point to more significant issues in Nigeria’s startup scene.

In recent years, many new tech companies have proliferated in Nigeria. They can raise lots of money from investors wanting high returns. But some startups need to put proper rules and controls in place as they expand.

At Flutterwave, the company grew huge in just a few years. The founders needed to focus more on building a good workplace culture and protecting employees. They cared more about getting significant investments and having a high valuation.

Some other startups in Nigeria have similar problems. They care too much about fast growth and raising money. They don’t pay enough attention to having good management and treating staff well.

There is also a lack of openness at many startups. They don’t share enough information on how the company is run and manages money. Flutterwave wasn’t open about issues like managers dating employees.

Networks and friends drive Nigeria’s tech industry. This can lead to too much loyalty to friends instead of focusing on what is suitable for the company.

The startup scene is also heavily male-dominated. This can create a culture where women aren’t treated with respect, and misconduct is unpunished, like at Flutterwave.

The Flutterwave scandals reveal significant flaws in Nigeria’s startup success stories. Fast growth led to lots of problems being ignored. As the tech industry develops, companies need to protect employees better and have ethical leadership.

The Moment of Reckoning

The Flutterwave scandal is very troubling. But they also give Nigeria’s startup community a chance to improve things. This is a wake-up call to build a healthier tech ecosystem.

All parts of the tech industry need to respond. Founders must lead in setting company cultures focused on ethics and accountability. Strong values need to come from the top.

At Flutterwave, the CEO Agboola did not make clear that harassment was unacceptable. He sent mixed messages on these issues. This allowed problems to grow.

Companies also need better oversight as they grow. Flutterwave should have had stronger HR systems and better ways to handle employee complaints. Startups must improve corporate governance to prevent misconduct.

Investors in startups cannot just focus on profits. They must hold companies to high standards and call out unethical behavior. Otherwise, problems like those at Flutterwave will repeat.

Employees, too, should keep speaking up when they see wrongdoing. Government regulators have a role too. They can set guidelines for startups without stifling innovation.

The startup community must work together – founders, investors, staff, and regulators. Everyone has a part to play in bringing positive change. Progress will be difficult. Some companies may resist change. But these scandals show reform is urgently needed.

Nigeria has fantastic talent and potential. With a renewed commitment to ethics, the ecosystem can emerge even stronger. What happened at Flutterwave was disappointing. But it is also a powerful lesson. Nigeria’s tech industry can become a model for accountability, transparency, and good governance.

The future is still bright. Nigeria will keep producing great startups that empower Africans. The scandals should accelerate positive change, not slow it down.

Learning Lessons from Other Industries

As Nigeria’s tech industry tries to improve, it can look at other fast-growing sectors for guidance. Industries like finance and media also had misconduct issues as they overgrew. By putting stronger oversight and protections in place, they provided a roadmap for ethically maturing an industry.

Nigeria’s startups can adopt best practices around board governance, financial controls, and employee relations from these more established fields. The mistakes have already happened – the goal is to prevent them from happening again. The startup community can build on lessons learned elsewhere with a willingness to evolve.

The Importance of Education

Another critical thing is improving education on ethics and values in Nigeria’s tech ecosystem. Universities, training programs, and professional organizations should emphasize technical skills, integrity, accountability, and leadership. Employees and founders need proper governance, compliance, and human resources mentoring.

Investors and board directors must also prioritize guidance and standards-setting. Education on moral reasoning and ethical decision-making will provide a critical foundation. By integrating these teachings at all levels, the industry can mature with ethics ingrained from the start. 

Protecting Innovation

As the startup sector strengthens ethical norms, care must be taken not to stifle creativity and innovation. Rules and compliance are needed but can go too far. The innovative spirit that built companies like Flutterwave must not get buried under too much bureaucracy.

With balanced governance aligned with community values, progress can continue. The scandals exposed real issues, but Nigeria’s talent and potential remain unchanged. Reforms must not become punitive. Forward-looking leaders will ensure accountability while retaining the openness and ambition that brings change.

Crazy Facts

• Flutterwave grew incredibly quickly, reaching a $3 billion valuation just six years after being founded.
• The company attracted big-name backers like Visa and Mastercard in its early funding rounds.
• Flutterwave now processes over 140 million transactions worth $9 billion annually across Africa.
• CEO Agboola has been a prolific investor, with stakes in over 25 other African startups.
• The Flutterwave scandal reportedly led Visa to pull out of funding the company’s Series B round.

The Bottom Line

The rise and fall of Flutterwave serves as a sobering lesson for Nigeria’s startup ecosystem. While the company achieved meteoric growth and status as Africa’s highest-valued unicorn, its toxic culture and lack of financial controls led to an implosion. As Nigeria’s tech sector matures, improved governance, oversight, transparency, and ethics are crucial.

The startup community must unite to implement reforms, leaning on guidance from more established industries. Founders must lead in setting company values. Investors should hold firms accountable. Employees must feel empowered to speak out against misconduct.

And regulators can provide frameworks without stifling innovation. Nigeria’s immense entrepreneurial potential can continue to thrive with a renewed commitment to integrity across all stakeholders. The Flutterwave scandal, while disappointing, can catalyze positive evolution across the industry. 

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