Tizeti, a Y Combinator-backed internet service provider operating in Nigeria, Togo, and Ivory Coast, has announced plans to go public on the Nigerian Exchange (NGX). The company, founded in 2013, aims to tap into a wider pool of investors amid declining venture capital activity and challenging global economic conditions.
The IPO represents a major milestone for the eleven-year-old company and the NGX, which has struggled to attract listings from Nigerian startups.
Why an NGX Listing?
- Raising Local Capital in Naira:
- Listing on the NGX allows Tizeti to avoid the pressure of delivering venture capital-scale returns, which has become increasingly difficult due to naira devaluation and economic headwinds.
- Providing Investor Exits:
- Early backers like Y Combinator, 4DX, and Ventures Platform will have an opportunity to exit their investments, a critical element of the startup funding lifecycle.
- Alternatives to Foreign Markets:
- African startups have faced harsh realities on international exchanges. For example:
- Jumia: Listed on the NYSE in 2019, shares dropped from $14.50 to $4.64 today.
- Swvl Holding: Listed on NASDAQ in 2021, shares fell from $247 to $6.34 by 2024.
- African startups have faced harsh realities on international exchanges. For example:
Prominent industry players like Iyin Aboyeji have advocated for startups achieving $1 million+ ARR to consider local listings.
“Raising a Series A from a fund that can’t fund you to a global IPO scale is a fool’s errand,” Aboyeji noted in response to Tizeti’s announcement.
Tizeti’s Growth and Differentiation
Tizeti has grown significantly since its launch, reporting:
- $1.2 million in revenue (2018) from 3,000 subscribers.
- Delivering 180 terabytes (TB) of data daily as of December 2023.
What Sets Tizeti Apart?
- Affordable and Unlimited Internet:
- Utilizes undersea cables (e.g., MainOne) and solar-powered towers to keep costs low.
- Competes with satellite-based providers like Starlink, offering a cost-effective alternative without congestion issues.
- Diverse Product Offerings:
- Subscription-based internet: For homes and businesses in Nigeria and Ghana.
- FREEFIBER.AFRICA: A unique service providing a US IP address, phone number, debit card, and mailing address for $10/month.
- Co-branded Wi-Fi hotspots: In partnership with Facebook, targeting high-traffic areas.
- Voice-over-IP (VoIP) services.
Implications for NGX and Nigerian Startups
- Boost for the Nigerian Exchange:
- Tizeti’s IPO could serve as a case study for other African startups to consider local listings.
- Revitalizing Startup Capital:
- With venture funding drying up globally, successful IPOs on the NGX may unlock alternative funding pathways for Nigeria’s growing tech ecosystem.
- Challenges Ahead:
- Skepticism about local markets: Nigerian startups have historically preferred foreign exchanges for higher visibility and deeper investor pools.
- Economic uncertainties: The devaluation of the naira and inflation could impact Tizeti’s ability to attract retail and institutional investors.
What’s Next for Tizeti?
Tizeti is prioritizing its fiber broadband service launch and will share more IPO details soon, according to Temitope Osunrinde, VP of Marketing. With its IPO ambitions aligned with its mission to deliver affordable internet in West Africa, Tizeti seeks to expand its reach while proving the viability of local startup listings.
The IPO could position Tizeti as a trailblazer in connecting West African startups with local capital markets, offering a path for other tech companies to follow.