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Monday, March 20, 2023

Africa Tech Valuations Slide as Fidelity Slashes Reddit, Stripe on Sell-off

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Valuations of high flying African Technology firms may be coming down to earth as Fidelity Investments cut several closely held technology companies, including social media platform Reddit and payment software provider Stripe.

Stripe which provides a quick way to integrate payments services into an online or offline transaction by way of an API acquired Paystack, a startup out of Lagos, Nigeria in 2020 for over $200 million..

In April, Fidelity funds marked down stakes in Reddit by more than a third from the preceding month and Stripe by 13 per cent, according to filings and data compiled by Bloomberg.

Fidelity also cut valuations for TikTok owner ByteDance and for Instacart.

The changes track a broad decline in public equity markets that punished technology stocks in particular, with the Nasdaq 100 tumbling 21 per cent through the first four months of the year.

The key culprits are higher interest rates and less rosy macro growth projections, both of which disproportionately impact the high-growth companies in which venture capital firms invest, according to Tellimer Research.

Venture-backed growth companies that debuted since the start of the pandemic lost almost half of their value, according to PitchBook data.

Africa’s fintech company, Flutterwave valued at over three billion dollars in February 2022 following $250 million it raised in its Series D funding, should also see its valuation slide from recent highs.

Flutterwave’s Venture backers then included some of the world’s most respected investors led by B Capital Group, and with participation from Alta Park Capital, Whale Rock Capital, Lux Capital, among others.

Several existing investors, also participated  including, Glynn Capital, Avenir Growth, Tiger Global, Green Visor Capital, Salesforce Ventures.

Fidelity funds cut Reddit to US$39.65 a share from US$61.79, where they had been valued for the previous nine months.

Stripe shares were reduced to US$32.05 apiece, the lowest since last March. The payments firm raised US$600 million that month at a valuation of US$95 billion, making it the most valuable US startup.

Reddit was valued at more than US$10 billion as of August.

Shares of Instacart were pegged at US$64.85 at the end of April, down by almost half from their peak a year earlier, while Beijing-based ByteDance was reduced to US$128.07, a 13 per cent decline from the preceding month.

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