The co-founder and chief executive of Nigerian fintech Flux says dropping out of college helped to pave the way for the launch of a new crypto payments company, one that has since been backed by renowned start-up accelerator Y-Combinator.
Ben Eluan started Flux with Osezele Orukpe, Akintunde Israel and Ayomide Lasaki in 2019. They’d met as freshman students studying different engineering and computer science courses at Nigeria’s Obafemi Awolowo University, bonding over their shared interest in software programming.
Many of OAU’s alumni go into jobs for big technology companies in Africa, or have even launched their own start-ups, Eluan told CNBC on a telephone call.
For him and his friends, however, school ended up being more of a “distraction” from their passion for programming, eventually leading them to dropout of OAU.
“We’d program instead of going to classes,” and work on software through the night, Eluan said.
Flux is a cryptocurrency remittance app. It lets users convert sovereign currencies into crypto and then send those funds overseas, claiming to make the process of international cash transfers faster and more efficient.
The original idea for Flux came about when the four students were getting paid for a small programming project they had worked on outside of college. However, the money was being transferred from the U.K. in British sterling, which Eluan said took almost a full week to go through — “it was 2019, sending money should not be difficult.”
Looking at some of the existing cross-border payment platforms on the market at the time, they realized these methods tended to use traditional fiat currencies to process transactions. Fiat currencies are government-backed money, like the dollar, pound or euro.
The problem with this, Eluan explained, is that fiat currencies have to pass through different channels, like banks and regulators, before someone can actually receive the money.
In addition, cross-border transfers into Africa are the most expensive in the world, according to a recent paper by U.S. think tank Brookings Institute, with remittance service providers charging an average fee of nearly 9%. By comparison, Flux charges a flat fee of $1.50 on transfers of any amount.
The founders landed on cryptocurrency as a solution to this issue because of its borderless nature, with the process seen to be faster and cheaper than other alternatives, Eluan explained.
They used the allowance their parents sent them at college to help set up the business, as well as continuing to work on other small freelance programming projects.
‘A lot of hard work’
Eluan said that while their parents didn’t know about them using that college money for the business in the beginning, they were supportive on learning that Flux was off the ground.
Even when they did eventually leave school, to pursue working on the company full-time, Eluan said they still weren’t sure if the business would work out and get funding. In order for it to succeed, Eluan said they put “hundreds of hours into programming,” for the business.
California-based venture capital fund Hustle Fund was the first to back Flux and they recently became among the youngest founders in Africa to join top start-up accelerator Y Combinator, in its Winter 2021 batch of early-stage companies.
When asked what his advice would be for other aspiring young entrepreneurs, Eluan said if they “believe in what they do … put in a lot of work and focus on what they are doing and it is definitely going to work out for them too.”