Allegations against Flutterwave

Flutterwave is a Nigerian fintech firm that provides payment infrastructure to international merchants and payment service providers across Africa. Iyinoluwa Aboyeji, Olugbenga Agboola, and Adeleke Adekoya formed the company in 2016, and it is based in San Francisco, California, with operations in Nigeria, Kenya, Ghana, South Africa, and seven other African nations.

Flutterwave received a $170 million Series C fundraising round in 2021. This was the greatest amount ever raised by an African digital business at the time, and it gave Flutterwave a valuation of over $1 billion, making it a unicorn. [1] Y-Combinator, Visa Ventures, Mastercard, Avenir Growth Capital, and Tiger Global Management are among the investors in Flutterwave. Flutterwave also raised a US$250 million Series D fundraising round in 2022, valued at about US$3 billion.

Flutterwave launched Send, an African-focused remittances service, in December 2021, and immediately named Ayodeji Ibrahim Balogun, better known as Wizkid, a Nigerian Grammy Award-winning international musician, as its global ambassador to further promote the company's brand among Africans in the diaspora.

Flutterwave and AfroSport Network teamed up in January 2022 to broadcast the 2021 Africa Cup of Nations free-to-air from 9 January to 6 February 2022.

Flutterwave, Africa's most valuable startup, is under fire for alleged questionable commercial and personal actions by Olugbenga Agboola, the company's founder and CEO.

Allegations against Agboola

Agboola is alleged to have created a phantom 'co-founder' identity to give himself more shares in the company's early days, and offered share prices below the company's valuation to employees who wanted to cash in on their vested options, according to a story published Apr. 12 on West Africa Weekly, a Substack newsletter by David Hundeyin, a Nigerian journalist. According to the story, the employee stock sales went to an investment vehicle owned by Agboola.

Employees were forced to sell their stock options to an investment vehicle run by Olugbenga Agboola, according to Hundeyin. According to Hundeyin's report, they sold for less than market value, as estimated by Agboola, and this is classified as insider trading. But first, let's look at how employee stock options work.

Employee stock options (ESOs) are a type of compensation that a firm offers to its employees. This allows them to purchase shares in the company at a defined price. However, the stock must have been vested before they can access the shares.

Vesting simply means that you can now exercise or purchase the company's stock. It happens gradually, so if the contract specifies a four-year vesting time, you won't be able to completely exercise your stock option until four years have passed since the contract was signed.

You may be able to access the vested portion in some situations. Let's have a look at an example. Chike is the owner of ESO in XYZ. He had to work for the corporation for four years before exercising his option, according to the contract. He has access to 25% of the shares in the first year. If he decides not to, he will be able to access half of the ESO in the second year, and this will continue until the fourth year when he will be able to access 100%.

ESOs are only beneficial if the company's stock price climbs above the agreed-upon price. So, if Chike is advised that the best time to buy the stock is when it increases to $3, he can buy it for $3 if it rises to $4.

So, was there any insider trading going on?

This employee appears to have exercised his option to buy but subsequently wished to sell those shares, according to a screenshot supplied by Hundeyin on February 28, 2021. They are offered the option to sell at $3.4999, which they accept after rounding up to $3.5.

He also allegedly did not disclose to Access Bank, his previous employer, that he was working for them while creating Flutterwave in the early days of the latter, so taking undue advantage of his position and assets at the bank. At Flutterwave, there was also talk of sexual interactions with subordinate female employees.

Quartz has requested an official word from Flutterwave and will update the article once one is received. But here is the story of one of the supposedly harassed females who spoke out:

Clara Wanjiku, an ex-employee of Nigerian payment business Flutterwave, released a Medium post on Monday, April 4, criticizing the company's CEO, Olugbenga Agboola, for "5 years of continual harassment."

Wanjiku says in the post that she was not paid her "dues" after departing her position as Head of Implementation at Flutterwave (Rest of Africa) in 2018, and she sued Flutterwave for it.

Clara said in her article that she received calls from a number of Flutterwave employees after she filed her lawsuit, requesting to talk and address the issue outside of court. Flutterwave eventually paid her "dues."

There's more, though...

The company also accused Wanjiku of being behind a Twitter account that accused some male members of Flutterwave's management of sexual harassment, according to Wanjiku.

She claims Agboola "sabotaged" her attempt to acquire a job at a Nigerian bank after she left Flutterwave by telling her she was a lousy worker.

Wanjiku filed a lawsuit against Flutterwave for damages because the corporation failed to remove her as the primary contact on their M-Pesa account. After the account reported a fraudulent transaction, the police pursued Wanjiku and her family.

Wanjiku sought $900,000 in damages for the claimed negligence, but the court only granted her $2,500, which she refused to accept.

These allegations come at a time when African startups with toxic workplace environments are being targeted. TechCabal is looking into this story and has reached out to Wanjiku and Flutterwave for comment.

Now Clara Wanjiku Odero is the CEO and Co-Founder of Credrails and holds a Bsc from Kenyatta University.  

The connection between Agboola and Flutterwave

The 37-year-old Agboola is one of Africa's most well-known entrepreneurs, thanks to Flutterwave's status as an early mover in Nigeria's online payments sector and its unparalleled $3 billion value. He has a reserved demeanor and offers few media interviews, although he appears on a number of lists aimed at highlighting African achievement, including Quartz Africa's 2019 innovators, Fortune's 2020 list, and TIME's 2020 list (2021).

Agboola's profile has grown beyond his leadership at Flutterwave in the last year, thanks to a flurry of personal investments in other African firms. A few hours after yesterday's West Africa Weekly piece went up, he won a Business Insider award for "Tech Investor of the Year."

Flutterwave has also ventured into corporate venture capital, co-leading a $3.4 million deal for Dapio, a UK-based fintech. The company's $250 million financing in February would be used to fund investments and aggressive marketing.

Flutterwave's wings reveal flaws

However, suspicions about Agboola and Flutterwave have grown in recent days after a former employee, Clara Wanjiku Odero, accused Agboola of bullying and the company of incompetence that led to fraud. Despite Flutterwave's denial, Odero, who is now the CEO of a Softbank-backed Kenyan fintech called Credrails, did not respond to Quartz's calls for comment. A story that appeared to depict her in a negative light while extolling Flutterwave's unicorn ride may have led her to write about her experience at the company. During a retreat in Ghana this year, the company's leadership, including Agboola, were interviewed for the piece.

Following that private trip, the corporation is now facing public scrutiny over a number of issues raised in this week's exposé, including a rumored US Securities and Exchange Commission ethics inquiry in 2018. (Flutterwave is incorporated in Delaware and headquartered in California). The SEC did not confirm or deny the inquiry, citing confidentiality concerns. Former Flutterwave co-founder Iyinoluwa Aboyeji admitted there was one, but contested the Substack journalist's assessment.

The majority of observers have rekindled their fury at Nigerian companies' corporate dysfunction and bad work culture. Some people are concerned that international investors, who are increasingly pouring money into African businesses, may be frightened. If Flutterwave answers the claims, the next step might be vindication for Flutterwave and the ecosystem, or a dance between damage control and course correction by interested parties.

Or, as Matt Flannery, co-founder of Branch, a loan service that operates in Nigeria and Kenya, predicts, further revelations that amplify the shockwaves already sparked.