The recent acquisition of a Nigerian fintech startup called Traction Apps by OmniRetail, a B2B e-commerce company recognized as one of Africa’s fastest-growing startups, reflects a trend where venture capitalists are spearheading the consolidation of startups to create larger entities with higher potential for significant returns.
Similar scenarios have unfolded in other acquisitions like the one involving business banking startup Brass, acquired by a group led by payment giant Paystack, and the acquisition of digital trading fintech Chaka by Risevest, as revealed by a mutual investor.
Ventures Platform, an investor in both OmniRetail and Traction Apps, confirmed that these acquisitions were investor-driven. The VC firm also played a role in facilitating these deals, emphasizing that while investors provide guidance, founders play a crucial role in determining the timing and approach to such processes.
The acquisition of Traction Apps by OmniRetail, structured as an all-stock deal, offers stakes in OmniRetail to Traction Apps’ investors, which include Multiple Partners, P1 Ventures, Ventures Platform, Voltron Capital, and others. This move aligns with a strategy seen in other acquisitions within the fintech space.
OmniRetail’s acquisition of Traction Apps is projected to create synergies that can enhance the growth and profitability of OmniRetail. The integration of Traction Apps’ financial services and merchant network is expected to bolster OmniRetail’s proprietary financial service, OmniPay, leading to increased efficiency and profitability.
By leveraging Traction Apps’ payment licenses, OmniPay can provide essential financial services like credit scores for retailers, expanding its value proposition. The acquisition is anticipated to enable OmniRetail to offer a broader range of fintech services such as bill payments, insurance, and loans.
Following the acquisition, the combined entity aims to serve a significant customer base in the wholesale and retail sectors, with substantial transaction volumes and annual loan facilitation. The founders of Traction Apps are set to remain with the company to drive its growth within the larger entity.
The trend of integrating fintech services into business models aligns with the evolving landscape of the tech industry, as highlighted by industry experts predicting that every company will eventually incorporate fintech elements into their operations.