In the dynamic landscape of African tech, a quiet but significant shift is underway in how companies reward their most valuable assets: their employees. While traditional compensation models have long dominated, the emergence of secondary share sales is providing a new pathway for wealth creation, fostering deeper employee ownership, and addressing the unique challenges of a rapidly evolving ecosystem.
The recent $110 million funding round that propelled Moniepoint to unicorn status in October 2024 not only enriched early investors but also created substantial opportunities for long-serving employees. Documents reveal that at least two senior staff members participated in this round, realizing gains of $20,000 and an impressive $850,000 (₦1.3 billion) respectively, by selling a portion of their shares to new investors. This marked the second instance of employee share sales for the decade-old company, with similar opportunities having been extended during a 2022 fundraise.
This growing trend underscores a strategic evolution in employee benefits. As Moniepoint, and indeed other leading African tech firms, strive to attract and retain top-tier talent from established financial institutions, equity has become an indispensable tool. As HR specialist Emmanuel Faith aptly puts it, "Equity is both a way to acquire staff and a means of staff retention."
The process for these share sales at Moniepoint was meticulously managed. Earlier this year, during company town hall meetings, the opportunity for employee share sales was announced, followed by detailed notifications, criteria, and instructions sent via email to qualified employees. The company even provided education on how to facilitate these sales through Carta, a prominent marketplace for startup equity. Moniepoint, however, declined to comment on these specific transactions.
Employee share sales, while gaining traction, still remain a relatively uncommon practice within Africa’s broader tech ecosystem. However, their increasing prevalence reflects a pragmatic response to current market realities. With the continent's most promising startups often staying private for extended periods, and traditional exit avenues like initial public offerings (IPOs) or acquisitions remaining less frequent, secondary sales have emerged as a viable and preferred method to acknowledge and reward long-term commitment and exceptional performance. Nigerian solar energy startup Arnergy, for instance, also enabled its employees to sell shares to new investors in April.
The impact of such opportunities on employee morale and financial well-being is profound. "This was something we only saw in movies like Silicon Valley and The Social Network," remarked one anonymous Moniepoint employee, expressing the novelty of the experience. "I didn’t expect it at first. Paystack did it, but that was later. We weren’t familiar with it locally. Over time, we learnt more and became hopeful."
When companies secure new investment, they often have the flexibility to allocate a portion of the incoming funds to buying shares from existing employees, rather than solely issuing new shares. The extent of this allocation is typically determined by the size of the investors' commitment. In Moniepoint's case, a deliberate decision was made to set aside funds from new investors specifically for purchasing shares from employees, who then had the autonomy to decide how much of their vested equity they wished to sell.
Despite the significant demand for liquidity, Moniepoint implemented criteria to ensure fairness and strategic allocation. Only employees who had been with the company for at least three years were eligible to sell shares in this particular round, and a cap was placed on the number of shares an employee could sell. Illustratively, the employee who realized $850,000 from the sale opted to sell only a third of their total vested shares. Employee shares typically vest over four years, with 25% vesting annually.
It's important to note that these shares were not necessarily sold at Moniepoint's full unicorn valuation. Later-stage investors often acquire shares from earlier investors and employees at a discounted price. This is largely due to the dynamics of supply and demand, as sellers in these secondary markets often have limited avenues for immediate liquidity.
Nevertheless, this did not diminish the positive sentiment of the two long-serving employees, who have dedicated ten and seven years respectively to Moniepoint. Speaking anonymously to protect their privacy, one shared, "It came at a great time. I had personal financial plans, and this cash gave me a boost."
This sentiment echoes a recurring theme observed in conversations with employees at other companies facilitating similar programs. When TechCabal reported on Arnergy’s employee share sales in May, a strong sense of ownership among staff was consistently highlighted. This same feeling resonates deeply with Moniepoint employees, who perceive their equity not merely as a component of their compensation but as a tangible stake in the company's journey and ultimate success.
"At the beginner stage, companies issue equity because they know that they cannot afford to pay the market value of the talents they are bringing on board," Faith explains. "There is nothing that says ‘we believe in you and we want you to believe in us’ more than giving equity."
While employee equity has historically been overlooked in Nigeria’s tech industry, the growing trend exemplified by Moniepoint and Arnergy in empowering staff with share ownership is fostering optimism. It signals a promising future where equity compensation gradually transitions from an exceptional perk to a standard and expected practice, ultimately redefining the landscape of talent attraction and retention in African tech.