Fintech Startups Spend Millions On Celebrity Endorsements To Lure Nigerian Customers

It was rare to see a Nigerian startup raising $10 million ten years ago but now the country’s fintech unicorns are becoming just as valuable as its banks.

Every other month we’re hearing about startups all over the country raising capital but a new report has found that in 2021, investors, including global giants SoftBank and Tiger Global, put a total of $1.37 billion into Nigerian startups, according to Africa: The Big Deal, a pan-African funding tracker.

But to justify large valuations, companies need to demonstrate growth, which means spending big on customer acquisition. 

And these well-funded startups are spending big on celebrity endorsements and sponsorship deals to entice customers in Nigeria’s huge but increasingly crowded markets. These endorsements are sometimes accompanied by cash giveaways.

Companies like Flutterwave are doing cash giveaways, TV sponsorships, and music partnerships to stay ahead of competitors and it seems to be working.

One such example is – Chipper Cash. Just a few weeks after it partnered with Burna Boy, it reportedly put out 5,000 naira ($12) each to nearly 10,000 app users when they verified their accounts and sent the star a fund request.

A few other fintech and cryptocurrency companies, like OPay, VBank, and Kuda Bank, have also given away cash prizes to entice customers to use their apps.

Last year, Abeg, a social payments company acquired by PiggyTech Global, reportedly beat Kuda Bank and other interested parties to become the headline sponsor for the sixth season of Big Brother Naija, coughing up $2 million for two seasons, according to two people with knowledge of the terms who spoke to ‘Rest Of The World.’

According to the company, when the show aired between July and October 2021, the adoption of Abeg, PiggyTech’s payments app, jumped from around 20,000 users to nearly 2 million.

A year earlier, Kuda Bank rode on the show’s popularity and said it doubled its customer base to over 600,000 by the end of 2020.

“Competition in Nigeria has become a lot more furious over the last couple of years,” said Stephen Deng, co-founder and partner at DFS Lab, an Africa-focused early-stage venture fund told ‘Rest Of The World’. “As companies have raised more money, a lot of that money has gone into user acquisition.”