Africa has another unicorn as Chipper Cash raises $100M Series C led by SVB Capital

Fintech in Africa is a goldmine. Investors are betting big on startups offering a plethora of services from payments and lending to neobanks, remittances and cross-border transfers, and rightfully soEach of these services solves unique sets of challenges. For cross-border payments, it’s the outrageous rates and regulatory hassles involved with completing transactions from one African country to another.

Chipper Cash, a three-year-old startup that facilitates cross-border payment across Africa, has closed a $100 million Series C round to introduce more products and grow its team.

It hasn’t been too long ago since Chipper Cash was last in the news. In November 2020, the African cross-border fintech startup raised $30 million Series B led by Ribbit Capital and Jeff Bezos fund Bezos Expeditions. This was after closing a $13.8 million Series A round from Deciens Capital and other investors in June 2020. Hence, Chipper Cash has gone through three rounds totalling $143.8 million in a year. However, when the $8.4 million raised in two seed rounds back in 2019 is included, this number increases to $152.2 million.

SVB Capital, the investment arm of U.S. high-tech commercial bank Silicon Valley Bank led this Series C round. Others who participated in this round include existing investors — Deciens Capital, Ribbit Capital, Bezos Expeditions, One Way Ventures, 500 Startups, Tribe Capital, and Brue2 Ventures. 

Chipper Cash was launched in 2018 by Ham Serunjogi and Maijid Moujaled. The pair met in Iowa after coming to the U.S. for studies. Following their stints at big names like Facebook, Flickr and Yahoo!, the founders decided to work on their own startup.

Last year, the company which offers mobile-based, no fee, P2P payment services, was present in seven countries: Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa and Kenya. Now, it has expanded to a new territory outside Africa. “We’ve expanded to the U.K., it’s the first market we’ve expanded to outside Africa,” CEO Serunjogi said to TechCrunch.

In addition and as a sign of growth, the company which boasts more than 200 employees plans to increase its workforce by hiring 100 staff throughout the year. The number of users on Chipper Cash has increased to 4 million, up 33% from last year. And while the company averaged 80,000 transactions daily in November 2020 and processed $100 million in payments value in June 2020, it is unclear what those figures are now as Serunjogi declined to comment on them, including its revenues.

When we reported its Series B last year, Chipper Cash wanted to offer more business payment solutions, cryptocurrency trading options, and investment services. So what has been the progress since then? “We’ve launched cards products in Nigeria and we’ve also launched our crypto product. We’re also launching our US stocks product in Uganda, Nigeria and a few other countries soon,” Serunjogi answered.

Crypto is widely adopted in Africa. African users are responsible for a sizeable chunk of transactions that take place on some global crypto-trading platforms. For instance, African users accounted for $7 billion of the $8.3 billion in Luno’s total trading volume. Binance P2P users in Africa also grew 2,000% within the past five months while their volumes increased by over 380%.

Individuals and small businesses across Nigeria, South Africa and Kenya account for most of the crypto activity on the continent. Chipper Cash is active in these countries and tapping into this opportunity is basically a no brainer. “Our approach to growing products and adding products is based on what our users find valuable. As you can imagine, crypto is one technology that has been widely adopted in Africa and many emerging markets. So we want to give them the power to access crypto and to be able to buy, hold, and sell crypto whenever,” the CEO added.

However, its crypto service isn’t available in Nigeria, the largest crypto market in Africa. The reason behind this is the Central Bank of Nigeria’s (CBN) regulation on crypto activities in the country prohibiting users from converting fiat into crypto from their bank accounts. To survive, most crypto players have adopted P2P methods but Chipper Cash isn’t offering that yet and according to Serunjogi, the company is “looking forward to any development in Nigeria that allows it to be offered freely again.”

The same goes for the investment service Chipper Cash plans to roll out in Nigeria and Uganda soon. Presently, Nigeria’s capital market regulator SEC is keeping tabs on local investment platforms and bringing their activities under its purview. Chipper Cash will not be exempt when the product is live in Nigeria and has begun engaging regulators to be ahead of the curve.

“As fintech explodes and as innovation continues to move forward, consumers have to be protected. We invest millions of dollars every year in our compliance programs, so I think working closely with the regulators directly so that these products are offered in a compliant manner is important,” Serunjogi noted. 

Six billion-dollar companies in Africa; the fifth fintech unicorn

During our call, Serunjogi made some remarks about Nigeria’s central bank which resembles comments made by Flutterwave CEO Olugbenga Agboola back in March.

While acknowledging the central banks in Kenya, Rwanda, Uganda for creating environments where innovation can thrive, he said: “Nigeria has probably the most exciting and vibrant tech ecosystem in Africa. And that’s credit directly to CBN for creating and fostering an environment that allowed multiple startups like ourselves and others like Flutterwave to blossom.”  

Most fintechs would argue that the CBN stifles innovation but comments from both CEOs seems to suggest otherwise. From all indication, Chipper Cash and Flutterwave strive to be on the right side of the country’s apex bank policies and regulations. It is why they are one of the fastest-growing fintechs in the region and also billion-dollar companies.

Obviously, we’re not getting into our valuation, but we’re probably the most valuable private startup in Africa today after this round. So that’s a reflection of the environment that regulators like CBN have created to allowed innovation and growth, ” Serunjogi commented when asked about the company’s valuation.

Up until last week, the only private unicorn startup in Africa this year was Flutterwave. Then China-backed and African-focused fintech came along as the company was reported to be in the process of raising $400 million at a $1.5 billion valuation. If Serunjogi’s comment is anything to go by, Chipper Cash is currently valued between $1-2 billion thus joining the exclusive billion-dollar club.

But to be sure, I asked Serunjogi again if the company is indeed a unicorn. This time, he gave a more cryptic answer. “We’re not commenting on the size of our valuation publicly. One of the things that I’ve been quite keen on internally and externally is that the valuation of our company has not been a focus for us. It’s not a goal we’re aspiring to achieve. For us, the thing that drives us is that we have a product that is impactful to our users.”

Maijid Moujaled (CTO) and Ham Serunjogi (CEO)

Serunjogi added that this investment actualizes the importance of possessing a solid balance sheet and onboarding SVB Capital and getting existing investors to double down is a means to that end. According to him, a strong balance sheet will provide the infrastructure needed to support key long-term investments which will translate to more exciting products down the road.

“We look at our investors as key partners to the business. So having very strong partners around the table makes us a stronger company. These are partners who can put capital into our business, and we’re also able to learn from them in several other ways,” he said of the investors backing the three-year-old company.  

Just like Ribbit Capital and Bezos Expeditions in last year’s Series B, this is SVB Capital’s first foray into the African market. In an email, the managing director of SVB Capital Tilli Bannett, confirmed the fund’s investment in Chipper Cash. According to him, the VC firm invested in Chipper Cash because it has created an easy and accessible way for people living in Africa to fulfil their financial needs through enhanced products and user experiences.

“As a result, Chipper has had a phenomenal trajectory of consumer adoption and volume through the product. We are excited at the role Chipper has forged for itself in fostering financial inclusion across Africa and the vast potential that still lies ahead,” he added.

Fintech remains the bright spot in African tech investment. In 2020, the sector accounted for more than 25% of the almost $1.5 billion raised by African startups. This figure will likely increase this year as four startups have raised $100 million rounds already: TymeBank in February, Flutterwave in March, OPay and Chipper Cash this May. All except TymeBank are now valued at over $1 billion, and it becomes the first time Africa has seen two or more billion-dollar companies in a year. In addition to Jumia (e-commerce), Interswitch (fintech), and Fawry (fintech), the continent now has six billion-dollar tech companies.

Here’s another interesting piece of information. The timeframe at which startups are reaching this landmark seems to be shortening. While it took Interswitch and Fawry seventeen and thirteen years respectively, it took Flutterwave five years; Jumia, four years; then OPay and Chipper Cash three years.

#africa, #bezos-expeditions, #ceo, #chipper-cash, #cto, #finance, #flutterwave, #funding, #ham-serunjogi, #jeff-bezos, #maijid-moujaled, #money, #nigeria, #opay, #payments, #ribbit-capital, #svb-capital, #tc, #tymebank, #uganda

Venture capital investment in Africa predicted to reach a record high this year

Investments in African startups keep growing at a healthy pace ever since reports started keeping count in 2015. That year, publications Disrupt Africa and Partech released independently researched and contrasting figures showing that venture capital investments hit $186 million and $277 million, respectively. Those are ridiculously low figures for a continent when you consider that four-year-old Snapchat raised more than $500 million in one round that same year. However, while the disparity in funding between Africa and a single high-growth U.S. startup continues, the good news is that more money is coming into the continent.

In 2019, Africa’s venture capital investments rose to an all-time high, per Partech’s report. According to Partech, 234 African tech companies raised $2.02 billion in 250 equity rounds. This indicated a 74% increase from 2018’s figure of $1.163 billion raised by 146 startups in 164 rounds.  

There was shared optimism that 2020 would record a new high, but that was before the pandemic struck. For that reason, African tech ecosystem accelerator AfricArena predicted that venture capital funding in the continent’s startups would fall between $1.2 billion and $1.8 billion. In what may be described as an educated guess or a calculated prediction by the publication, year-end reports by Partech and Briter Bridges pegged total investment raised at $1.4 billion and $1.3 billion, respectively.

This year, AfricArena, in a new report, is predicting that VC funding in the continent’s startups would increase between $2.25 billion and $2.8 billion, which, if met, will surpass 2019 figures for a record high on the continent.

Here’s the rationale behind the prediction from an excerpt in the report:

We foresee that the first two quarters of 2021 will be similar Q4 2020 with the mix of factors. Vaccine campaigns will likely take longer than hoped to have a meaningful impact. However, this rollout – regardless of how long they will actually take – will eliminate the major uncertainty about the end of the pandemic, which is only a question of time.

As a result, we expect an extremely strong acceleration of deals from seed to Series B as well as major growth deals, together with some IPOs (Nigeria’s Interswitch, for example), that will propel deal activity to never seen before levels of activity. As of April 2020, our forecast for 2021 ranged from under $1.6 billion to over $3 billion. The worst-case scenario was based on a prolonged and fragmented impact on the African economies and the best-case scenario factoring in a full recovery Q1 2021. Based on the above observations, our views are now that 2021 will range between $2.25 and $2.8 billion.

As of April 30, the total disclosed venture capital funding stood a little over $800 million, according to Maxime Bayen, deal tracker and senior venture builder at BFA Global. If that pace is kept throughout the year, African startups might raise more than $2 billion.

AfricArena

Image Credits: AfricArena

In 2020, the number of early-stage deals increased, but there was a drop in growth deals and overall ticket sizes, constituting the drop in funding activities. Per Partech, seed rounds grew 80% year-on-year and accounted for 64% of all deals made. In total, African startups raised $220 million in seed funding, which was a 47% increase year on year. Series A and B rounds grew likewise. Series A deals went up 9% (86 rounds), and Series B deals, 16% (29 rounds), yet their investment sizes dropped 5% ($447 million) and 8% ($449 million), respectively.

Growth deals also dropped by 16%, and only two deals closed above $50 million compared to the 10 that took place in 2019, some of which include Interswitch, OPay, Branch and Andela.

The driving force to exceed the $2 billion mark in 2021 lies on VCs to make more deals and startups to replicate the large growth rounds of 2019. The former appears to be in place as African startups continue to raise money week in and week out. However, there’s still work to be done for the latter, as only two African startups have raised more than $100 million in a single round so far — fintech startups Flutterwave and TymeBank.

#africa, #finance, #flutterwave, #investment, #nigeria, #partech, #tc, #tymebank, #venture-capital, #venture-capital-investments

Nigeria’s Mono raises millions to power the internet economy in Africa

In February, Nigerian fintech startup Mono announced its acceptance into Y Combinator and, at the time, it wanted to build the Plaid for Africa. Three months later, the startup has a different mission: to power the internet economy in Africa and has closed $2 million in seed investment towards that goal.

The investment comes nine months after the company raised $500,000 in pre-seed last September and two months after receiving $125,000 from YC. Mono’s total investment moves up to $2.625 million, and investors in this new round include Entrée Capital (one of the investors in Kuda’s seed round), Kuda co-founder and CEO Babs Ogundeyi; Gbenga Oyebode, partner at TCVP; and Eric Idiahi, co-founder and partner at Verod Capital. New York but Africa-based VC Lateral Capital also invested after taking part in Mono’s pre-seed.

In a region where more than half of the population is either unbanked or underbanked, open finance players like Mono are trying to improve financial inclusion and connectivity on the continent. Open finance thrives on the notion that access to a financial ecosystem via open APIs and new routes to move money, access financial information and make borrowing decisions reduces the barriers and costs of entry for the underbanked

Launched in August 2020, the company streamlines various financial data in a single API for companies and third-party developers. Mono allows them to retrieve information like account statements, real-time balance, historical transactions, income, expense and account owner identification with users’ consent.

When we covered the company early in the year, it had already secured partnerships with more than 16 financial institutions in Nigeria. In addition to having a little over a hundred businesses like Carbon, Aella Credit, Credpal, Renmoney, Autochek, and Inflow Finance access customers bank account for bank statements, identity data, and balances, Mono has also connected over 100,000 financial accounts for its partners and analysed over 66 million financial transactions so far.

Mono has done impressively well in a short period. While it appears to have figured out product-market fit, CEO Abdul Hassan is quick to remind everyone that the burgeoning API fintech space is just an entry point to its pursuit of being a data company — a case he also made in February.

“The way I see it, our market is not that big. Compare the payments market now with 2016, when Paystack and Flutterwave just started. The payments space in 2016 was very small and the number of people using cards online was very small,” said Hassan, who co-founded the company with Prakhar Singh. “It’s the same thing for us right now. That’s why our focus isn’t only on open banking but data. We’re thinking of how we can power the internet economy with data that isn’t necessarily financial data. For instance, think about open data for telcos. Imagine where you can move your data from one telco to another instead of getting a new SIM card and making a fresh registration. That’s where I see the market going, at least for us at Mono.” 

Abdul Hassan (CEO) and Prakhar Singh (CTO)

He adds that the company is taking an approach of building a product one step at a time until it can fully diversify from financial data offerings, including connecting with payment gateways (Paystack and Flutterwave) and other fintechs like wealth management startups Piggyvest and Cowrywise.

“When you’re able to connect to all the systems, a lot of use cases will come up. The first step is how can we connect to all available data and open it up for businesses and developers,” he continued.

Therefore, Mono will use the funding to reinforce its current financial and identity data offerings and launch new products for diverse business verticals. Also, a long-overdue pan-African expansion to Ghana and Kenya is top priority. The last time I spoke with Hassan, the end of Q1 looked feasible to get into at least one of the two markets but it didn’t turn out that way. But the wait seems to be over as the company said it’d be going live in Ghana next month with a handful of existing customers from Nigeria and new ones in Ghana. Some of these partners include five banks (GTBank, Fidelity Bank and three unannounced banks) and the mobile money service arm of MTN Ghana.

“Our expansion is mostly inspired by our customers looking to expand to other markets, same with some of our products. We work with our customers to give them the right tools to build new experiences for their customers,” Hassan stated

Mono

Image Credits: Mono

Mono is one of the three API fintech companies to have raised a seed investment this year. Last month, another Nigerian fintech Okra closed $3.5 million while Stitch, a South African API fintech, launched with $4 million in February. Back to back investments like this show that investors are incredibly optimistic about the market. Avil Eyal, managing partner and co-founder of Entrée Capital, one of such investors, had this to say.

“We are very excited to be working with Abdul, Prakhar and the entire Mono team as they continue to build out the rails for African banking to enable the delivery of financial services to hundreds of millions of people across the African continent.”

#africa, #banking, #finance, #financial-services, #financial-technology, #flutterwave, #funding, #internet-economy, #money, #mono, #new-york, #open-banking, #startups, #tc

Payments, lending and neobanks rule fintechs in emerging markets, report says

Tech investments in emerging markets have been in full swing over the past couple of years and their ecosystems have thrived as a result. Some of these markets like Africa, Latin America, and India, have comprehensive reports by publications and firms on trends and investments in their individual regions. But there’s hardly a report to compare and contrast trends and investments between these regions and rightfully so. Such a task is Herculean.

Well, a report released today by data research organization Briter Bridges and global inclusive tech accelerator Catalyst Fund is punching above its weight to offer a holistic representation to the darling sector of these three markets: fintech.

The report “State of Fintech in Emerging Markets Report” has three objectives — to evaluate the investment, product, and inclusivity trends across emerging markets.

The team surveyed over 177 startups and 33 investors across Africa, Latin America, and India. Though this sample size used is minuscule, the key findings are quite impressive.

Let’s dive in.

Fintechs have raised $23B across the regions since 2017

There’s no stopping emerging markets’ favorite. The sector has continued to receive the largest share of investments year-on-year for the past five years.

More than 300 million unbanked African adults account for 17% of the world’s unbanked population. So it’s not difficult to see why in 2019, the continent witnessed five mega deals in Branch, Tala, World Remit, Interswitch, and OPay that amounted to a total of over $775 million. While this dropped last year to $362 million, companies like Flutterwave, TymeBank, Kuda have raised sizeable rounds during this period.

fintech funding five years emerging markets

Image Credits: Briter Bridges & Catalyst Fund

Latin America is home to a growing base of digital users, enabling regulation and reforms, and vibrant small businesses. And just like Africa, the percentage of unbanked people is high, 70%. Fintechs in the region have taken the opportunity to cater to their needs and have been compensated with mega-rounds, including NuBank, Neon, Konfio, and Clip. Collectively, fintech startups have raised $10 billion in the past five years.

In 2019 alone, Indian fintech startups raised a record of $4.8 billion, per the report. Then last year, the sector brought in $3 billion. Over the past five years, they have totaled $11.6 billion with notable names like CRED, Razorpay, Groww, BharatPe, among others.

Africa’s average seed rounds stand at $1M, India and Latin America average $3M

Per the report, early-stage deals have been increasing over the past five years totaling over $1.6 billion. Their average size, especially for seed rounds, has grown from $750,000 in 2017 to $1 million in 2020. For  Latin America, the average seed deal in the last five years was around $5.7 million while India did approximately $4.6 million. The report says the data for the latter was skewed because of CRED’s $30 million seed round.

Image Credits: Briter Bridges & Catalyst Fund

Latin America is IPO-hungry, India breeds unicorns while Africa is just getting started with M&A

Last year, Stripe’s acquisition of Paystack was the highlight of Africa’s M&As because of its size and the homegrown status of the Nigerian fintech startup. Other larger rounds include the $500 million acquisition of Wave by WorldRemit (which happens to be the largest from the continent) and the DPO Group buyout by Network International for $288 million.

Unlike the African fintech market that has noticed mega acquisition deals and many undisclosed seven-figure deals, the Latin American fintech market is a sucker for IPOs. Per the report, fintechs in the region have several $100 million rounds (Nubank, PagSeguro,  Creditas, BancoInter and Neon) but have sparse M&A activity. Some of the startups to have gone public recently include Arco Educacao, Stone Pagamentos, Mosaico, and Pagseguro

On the other, India has more than 25 billion-dollar companies and keeps adding yearly. Just last month, the country recorded more than eight. These unicorns include established companies like PayTm and new ones like CRED.

Payments, credit, and neobanks lead fintech activity

The report shows that payments companies are the crème de la crème for fintech investment across the three regions. Within that subset, B2B payments reign supreme. The next two funded fintech categories are credit and digital banking.

In Africa, payments startups have seen more investments than credit and neobanks. Flutterwave, Chipper Cash, Wave, Paystack, DPO come to mind.

most funded fintech categories emerging market

Image Credits: Briter Bridges & Catalyst Fund

Latin America most funded fintechs are neobanks. And it is the only region with all three product categories closely funded at $2-3 billion. Some of these companies include NuBank, Creditas, and dLocal.

India’s top-funded fintech startups are in payments. But it has notable representation in credit and neobanks, some of which have raised nine-figure rounds like Niyo, Lendingkart, and InCred.

Investors are enthused about the future of insurance, payments, and digital banks

From the handful of investors surveyed in the report on their view on future trends in fintech products 5 years from now, most of them chose insurance, payments, and digital banking models.

Investment platforms and embedded models are also areas of interest. They were less keen on agriculture and remittances while wealth tech platforms and neobanks were also lower in priority. How is it that digital banking and neo-banking are at two ends of the spectrum of investor choice? I can’t say for sure.

investors appetite in the coming years emerging markets

Image Credits: Briter Bridges & Catalyst Fund

Parts of the report talk about underserved consumers in these regions and how fintech startups are serving them. It also discusses whether these fintech startups promote financial inclusion and what features and products would get them to that point.

In all of this, the glaring fact, which is no news, is that Africa is lagging years behind Latin America and India. Talking with Briter Bridges director Dario Giuliani, he pointed out that he’d lean on five years. He added that what makes India a better market at this stage is because it is a country rather than a continent.

“It is easier to manage one country than 54 countries in Africa and 20 in Latin America,” he said to TechCrunch. “In Africa, we use the label ‘Africa,’ but we’re very much talking about 4-6 countries. Latin America is basically Brazil, Mexico, Argentina and Colombia who are seeing massive companies rise. India is one.”

One key detail the report mentions is that most fintechs across emerging markets are crossing over to different sectors like crop insurance, credit lines for distributors and vendors, KYC, e-commerce payment gateways, medical finance, and insurance. Guiliani says he expects this to continue.

#africa, #banking, #brazil, #briter-bridges, #catalyst-fund, #chipper-cash, #digital-banking, #dlocal, #finance, #financial-inclusion, #financial-technology, #fintech, #flutterwave, #india, #latin-america, #ma, #nubank, #online-lending, #payments, #paystack, #paytm, #startups, #stripe, #tc, #tymebank, #wave, #worldremit

Paystack expands to South Africa seven months after Stripe acquisition

Nigerian fintech startup Paystack has been relatively quiet since it was bought by fintech giant Stripe last October. The deal, worth more than $200 million, caused shockwaves to the African tech ecosystem and offered some form of validation to work done by founders, startups and investors alike.

Today, the payments company, which powers businesses with its payment API and is actively present in Nigeria and Ghana, is announcing its official launch in South Africa.

In 2018 when we reported Paystack’s $8 million Series A (which Stripe also led), it was powering 15% of all online payments in Nigeria. The company had more than 10,000 businesses on its platform and expansion to other African countries was one way it planned to use the money. Ghana was its next stop.

Since expanding to Ghana, Paystack has grown and claims to power 50% of all online payments in Nigeria with around 60,000 customers, including small businesses, larger corporates, fintechs, educational institutions and online betting companies. Some of its customers include MTN, SPAR and UPS, and they use the company’s software to collect payments globally.

The South African launch was preceded by a six-month pilot, which means the project kickstarted a month after Stripe acquired it. Stripe is gearing toward a hotly anticipated IPO and has been aggressively expanding to other markets. Before acquiring Paystack, the company added 17 countries to its platform in 18 months, but none from Africa. Paystack was its meal ticket to the African online commerce market, and CEO Patrick Collison didn’t mince words when talking about the acquisition in October.

“There is an enormous opportunity. In absolute numbers, Africa may be smaller right now than other regions, but online commerce will grow about 30% every year. And even with wider global declines, online shoppers are growing twice as fast. Stripe thinks on a longer time horizon than others because we are an infrastructure company. We are thinking of what the world will look like in 2040-2050,” he said. 

Although Stripe said the $600 million it raised in Series H this March would be used mainly for European expansion, its foray deeper into Africa has kicked off. And while Paystack claims to have had a clear expansion roadmap prior to the acquisition, its relationship with Stripe is accelerating the realization of that pan-African expansion goal.

Now, Africa accounts for three of the 42 countries where Stripe currently has customers today.

“South Africa is one of the continent’s most important markets, and our launch here is a significant milestone in our mission to accelerate commerce across Africa,” said Paystack CEO Shola Akinlade of the expansion. “We’re excited to continue building the financial infrastructure that empowers ambitious businesses in Africa, helps them scale and connects them to global markets.”

The six-month pilot saw Paystack work with different businesses and grow a local team to handle on-the-ground operations. However, unlike Nigeria and Ghana, where Paystack has managed to be a top player, what are the company’s prospects in the South African market where it will face stiff competition from the likes of Yoco and DPO?

“The opportunity for innovation in the South African payment space is far from saturated. Today, for instance, digital payments make up less than half of all transactions in the country,” Abdulrahman Jogbojogbo, product marketer at Paystack said. “So, the presence of competition is not only welcome; it’s encouraged. The more innovative plays there are, the faster it’ll be to realize our goal of having an integrated African market.”

Khadijah Abu, head of product expansion, added that “for many businesses in South Africa, we know that accepting payments online can be cumbersome. Our pilot in South Africa was hyper-focused on removing barriers to entry, eliminating tedious paperwork, providing world-class API documentation to developers, and making it a lot simpler for businesses to accept payments online.”

Many people compare Paystack to Africa’s newest fintech unicorn Flutterwave. Founded a year apart, both companies help businesses accept payments from thousands of businesses. When the latter raised its recent juggernaut $170 million round, it claimed to have 290,000 businesses on its platform. While Flutterwave has been high-flying with its pan-African expansion (it has a presence in 20 African countries), Paystack has adopted a rather scrupulous approach. The company said the reason behind this lies with the peculiarities each African country presents and because each country has different regulations, launching at scale takes time. 

“Our goal isn’t to have a presence in lots of countries, with little regard for service quality. We care deeply that we deliver a stellar end-to-end payment experience in the countries we operate in,” Jogbojogbo continued. “And this takes some time, careful planning and lots of behind-the-scenes, foundational work.”

But being backed by Stripe and armed with millions of dollars, Paystack might need to switch things up eventually. Even as it operates independently, its pan-African vision is equally important to Stripe, and speed will be crucial, even the five-year-old company acknowledges this and said, “its pace of expansion will quicken as it expands into more African countries.”

#africa, #financial-technology, #flutterwave, #ghana, #nigeria, #online-commerce, #online-payments, #payments, #paystack, #south-africa, #stripe, #tc

Nigerian fintech of the unbanked Bankly raises $2M led by Vault and Flutterwave

Nigeria remains a largely cash-dominated country. There are over 100 million adult Nigerians, of which more than half have little or no access to financial services

Today, Bankly, a Nigerian fintech startup digitizing cash for the unbanked, announced that it has closed a $2 million seed round. Founded by Tomilola Adejana and Fredrick Adams in 2018, Bankly is digitizing the informal thrift collections system known with different names such as esusu or ajo in Nigeria.

In the absence of a banking system nearby or a disregard for one, the unbanked resort to these traditional systems because they work completely offline. The system allows them to collate and save cash with a thrift collector responsible for disbursing funds when due.

However, there are issues around this system. First is the security issues that arise when the thrift collector goes missing with the money or is feared dead, leaving no clue where the savings are kept. There’s also limited access where members cannot consistently save if absent from a particular location. The third is the lack of customer data since most don’t have an online banking presence.

What Bankly has done is to digitize their whole process of collating money and allow these unbanked people to save their money using online and offline methods.

Over the past 18 months, the company has been building out its distribution and agent network. Here, customers can deposit and withdraw cash with a Bankly agent anytime. This solves the issue of access as there are thousands of agents in these cash-dependent communities.

When the information of this new set of customers is collected and saved on its platform, Bankly starts to build engaging communities where these people can collectively save their income with the agents. Slowly, an online banking presence is built for them.

With most of their money in a bank and little or no cash to buy airtime or make payments, they would frequently opt to access these services via their mobile phones.

Image Credits: Bankly

Onboarding these new set of customers means they get to save and transact more over time. This opens up access to credit and with more value created, there’s a new set of banked people, which leads to financial inclusion in the long run. With its insights into customer behaviour and transactions, Bankly also provides “data-as-a-service” to other service providers to offer tailored products and services to Nigeria’s informal sector

“The first phase is building agent networks which is good but that’s not the goal,” CEO Adejana said to TechCrunch. Just in the same way mobile inclusion happened, you need to then focus on acquiring customers who, after transferring cash to their mobile accounts, use it to buy airtime or make payments. We call that the three-phase process. The distribution first, then focusing on the consumer, after that full digitization. This is how we reach financial inclusion.”

Bankly operates like a traditional bank but with fewer assets, revenue, customers and operational costs. But because it doesn’t spend a lot in acquiring customers and building physical presences, it can pass on those cost savings to customers as interests and still make decent margins.

Agents on the platform also take commissions for any transaction a customer makes through them. This time last year, they were a little over 2,000 of them across the country. Now, Bankly has grown this number to 15,000 agents in just over a year.

The company still plans to add more agents with the new investment received. To increase its 35,000 customer base in cash-dependent communities, Bankly will also provide direct-to-consumer products in the coming months.

L-R: Fredrick Adams (CPO) and Tomilola Adejana (CEO)

In Bankly’s three years of operation, Adejana cites finding the right partners, talent, and most importantly, the right investors as challenges that the company has faced. Due to the nature of Bankly’s business, Adejana didn’t accept some of the investment offered to the company and only let in investors who aligned with the company’s plans for the unbanked.

“We’ve had to be patient to make sure that we were talking to people who deeply understand the problem and are passionate about solving it and are not about getting returns as soon as possible,” she said.

The co-lead investors include Vault, the holding company of VANSO, a fintech that was sold to Interswitch in 2016, and African payments company Flutterwave. While both companies have pioneered the technology the banked enjoy by building payment rails, they’ve done little to move the needle for the unbanked. With Bankly, there’s a chance to do so.

“Given our over twenty years experience in Nigeria’s fintech industry and previous exits, we strongly believe that Bankly understands the nuanced needs of this market — not to mention the team, strategy, and technology — to succeed in bringing affordable financial services to the unbanked. We are delighted to participate in this financing round as Bankly moves into its next growth stage,” Idris Alubankudi Saliu, partner at Vault said.

For Flutterwave, this marks its first disclosed investment into another company. When it raised a $170 million Series C last month, CEO Olugbenga Agboola mentioned to TechCrunch that Flutterwave might explore some partnerships with smaller companies and potential acquisitions in the coming years. So while the investment comes as a surprise, it’s not rare to see startups invest in other startups, particularly in the ones they hope to acquire in the future—case in point, Stripe and Paystack.

Other investors who took part in the round include Plug and Play Ventures, Rising Tide Africa and Chrysalis Capital.

Bankly aims to grow its customer base to 2 million unbanked Nigerians over the next three years. The goal is to support the Central Bank of Nigeria’s National Financial Inclusion Strategy of increasing the number of banked Nigerians from 60% to 80% by 2020. A year on, that strategy is yet to be actualized. But Adejana says Bankly is working with these regulators towards a more realistic target of 2025.

“We’re thrilled to have closed this milestone fundraise and to have such seasoned fintech investors who understand the market join us on this journey to bank Nigeria’s unbanked. Now we have built the agent network and are poised to serve customers directly via offline and online channels. Partnerships, collaboration, and a deep understanding of the needs of the unbanked will be vital to our success,” said Adejana.

Before Bankly, the CEO worked as an investment banker but it was during her masters’ program in Sydney she got into the world of fintech. After returning to Nigeria, Adejana worked on a product that offered loans to small businesses, then later joined Accion Venture Lab, a program focused on products that foster financial inclusivity. It was there Bankly started.

The product has caught on well. And while there are lots of fintech products in the Nigerian market claiming to reach the unbanked, Bankly remains one of the very few that can boldly stake a claim to that.

To truly attain financial inclusion in Nigeria, Adejana believes the onus lies with the fintechs to have long-term views just as the telcos and fast-moving customer goods did in the past. This increases the pie of customers fintechs can serve instead of taking a slice of an existing one. “For financial services to reach the last mile, it has to be distributed the same way fast-moving consumer goods are distributed,” she added

#finance, #financial-inclusion, #financial-services, #flutterwave, #funding, #payments, #startups, #tc, #unbanked, #vault

Flutterwave and PayPal collaborate to allow African merchants to accept and make payments

It is nearly impossible for businesses in some African countries to receive money from PayPal. While the payments giant has not given reasons why this is so, speculation hints at factors like insufficient regulation and poor banking security in said countries. 

That might be a thing of the past for some businesses as African payments company Flutterwave today is announcing a collaboration with PayPal to allow PayPal customers globally to pay African merchants through its platform.

Via this partnership, businesses can connect with the more than 377 million PayPal accounts globally and overcome the challenges presented by the highly fragmented and complex payment and banking infrastructure on the continent.

According to CEO Olugbenga ‘GB’ Agboola, this will happen via a Flutterwave integration with PayPal so merchants can add PayPal as a payment option when receiving money outside the continent. The service, which is already available for merchants with registered business accounts on Flutterwave, will be operational across 50 African countries and worldwide, the company claims. Flutterwave hopes to roll out this service to individual merchants on the platform as well.  

“In a nutshell, we’re bringing more than 300 million PayPal users to African businesses so they can accept payments across the continent,” he said to TechCrunch. “Our mission at the company has always been to simplify payments for endless possibilities, and from when we started, it has always been about global payments. So despite having the largest payment infrastructure in Africa, we want to have arguably all the important payments systems in the world on our platform.”

A PayPal spokesperson confirmed the Flutterwave collaboration with TechCrunch.

Since the company’s expansion to Africa, it has maintained a one-sided relationship with most countries on the continent, allowing them only to send money. And according to its website, only 12 African countries can send and receive money on the platform, but to varying degrees. They include Algeria, Botswana, Egypt, Kenya, Lesotho, Malawi, Mauritius, Morocco, Mozambique, Senegal, Seychelles and South Africa.

Users in countries who are not afforded the luxury to do so have to rely on using the PayPal account of a friend or family, based in countries where payments can be received. Next, they request the funds via bank transfer, leading to more incurred costs or use other cross-border money platforms like WorldRemit.

This is a pain point for these businesses, particularly in Nigeria. PayPal finally arrived Africa’s most populous country in 2014 and a year later, it became the company’s second-biggest market on the continent.

But despite its fast adoption rate and large fintech appetite, merchants cannot still receive payments from other countries on the platform with various sources alluding PayPal’s decision to the country’s history with internet fraud.

Fraud or not, Nigeria’s e-commerce and that of the continent at large continues to grow at a breathtaking pace. In 2017, Africa generated $16.5 billion in revenue, and by 2022, it is expected to reach $29 billion. With numbers like this, it isn’t hard to see why PayPal wants to get in on the action, albeit not completely. Hence, the partnership with Flutterwave.

The company, via its APIs, offer payment services to individuals and businesses across the continent. Since launching in 2019, the African payments company has partnered with Visa to launch Barter; Alipay to offer digital payments between Africa and China; and Worldpay FIS for payments in Africa.

But this one with PayPal is arguably its biggest partnership yet. Now, African businesses have more access to sell to global customers using PayPal to receive and send payments online. 

In a way, Flutterwave absorbs most of the risk PayPal thinks it will incur if it makes its platform more open to merchants in these countries. But at the same time, it solidifies Flutterwave’s position in the eyes of multinationals looking to enter the African market.

Like when its partnership with Worldpay FIS coincided with its Series B funding, this announcement is also coming on the back of a raise. Last week, the payments company closed a $170 million Series C led by Avenir Growth Capital and Tiger Global, becoming a billion-dollar company in the process.

In hindsight, the mammoth raise suggests that there are a couple of projects in the company’s pipeline. Going by this partnership, we can expect the majority of them to be global plays.

Yet, these questions remain top of mind — What happens when PayPal automatically allows businesses from these neglected African countries to start receiving payments? Will both services continue to coexist if that happens? We’ve reached out to PayPal for comment.

However that plays out, this is a step forward in the right direction for Flutterwave, which has shown time and time again the length it is willing to go for its 290,000 merchants and the ongoing quest to become a global payments company.

“By working with PayPal, we can further strengthen our commitment to our customers and service users as we will be enabling them to transact and expand their business operations to reach new markets. PayPal’s global reach is unrivalled, and collaborating with them allows our customers to explore new markets where PayPal is embedded,” the CEO said.

#africa, #alipay, #cross-border-e-commerce, #ecommerce, #finance, #flutterwave, #kenya, #mobile-payments, #money, #nigeria, #payments, #paypal, #startups, #tc, #worldpay

African payments company Flutterwave raises $170M, now valued at over $1B

The proliferation of fintech services across Africa remains in full swing as investors remain bullish about the opportunities that abound in the sector. Today we behold another unicorn: African payments company Flutterwave announced that it has closed $170 million, valuing the company over $1 billion.

New York-based private investment firm Avenir Growth Capital and US hedge fund and investment firm Tiger Global led the Series C round. New and existing investors who participated include DST Global, Early Capital Berrywood, Green Visor Capital, Greycroft Capital, Insight Ventures, PayPal, Salesforce Ventures, Tiger Management, WorldpayFIS 9yards Capital

The Series C round comes a year after Flutterwave closed its $35 million Series B and $20 million Series A in 2018. In total, Flutterwave has raised $225 million and is one of the few African startups to have secured more than $200 million in funding

Launched in 2016 as a Nigerian and U.S.-based payments company with offices in Lagos and San Francisco, Flutterwave helps businesses build customizable payments applications through its APIs.

When the company raised its Series B, we reported that Flutterwave had processed 107 million transactions worth $5.4 billion. Right now, those numbers have increased to over 140 million transactions worth over $9 billion. The company, which also helps businesses outside Africa to expand their operations on the continent, has an impressive clientele of international companies. Some of them include Booking.com, Facebook, Flywire, and Uber.

Flutterwave says over 290,000 businesses use its platform to carry out payments. And according to the company’s statement, they can do so “in 150 currencies and multiple payment modes including local and international cards, mobile wallets, bank transfers, Barter by Flutterwave.”

While its website shows an active presence in 11 African countries, Flutterwave CEO Olugbenga Agboola, also known as GB, told TechCrunch the company is live in 20 African countries with an infrastructure reach in over 33 countries on the continent.

Last year was a pivotal one for the five-year-old company. Its second investment came just in time before the COVID-19 pandemic hit Africa, negatively impacting some businesses but not payments companies like Flutterwave.

Agboola says his company grew more than 100% in revenue within the past year due to the pandemic without giving specifics on numbers. It also contributed to its compound annual growth rate (CAGR) of 226% from 2018.  

According to the CEO, this growth resulted from an increase in activities in “COVID beneficiary sectors”  — a term used by Flutterwave to describe sectors positively impacted by the pandemic. They include streaming, gaming, remittance, e-commerce, among others. Agboola adds that the company plans to ride on these sectors’ growth and continue in that trajectory.

Besides, Flutterwave’s response in introducing the Flutterwave Store for merchants during pandemic-induced lockdowns was instrumental as well. The product, which went live across 15 African countries, helps over 20,000 merchants to create storefronts and sell their products online.

Image Credits: Flutterwave

Flutterwave wants to become a global payments company, and the Series C investment helps to reach that goal. The company says it plans to use the funds to speed up customer acquisition in its present markets. It will also improve existing product offerings like Barter, where it has over 500,000 users, and introduce new offerings. One such is Flutterwave Mobile, which in the founder’s words “will turn merchants’ mobile devices into a point of sale, allowing them to accept payments and make sales.”

In a statement, Agboola gives credit to the company’s more than 300 staff, investors, customers, and regulatory bodies like the Central Bank of Nigeria (CBN) for creating the backbone for Flutterwave’s success.

For some, it would come off as strange that the CEO mentioned the last stakeholder given the unfavourable and questionable regulations it has recently placed on fintechs in Nigeria.

However, Agboola thinks the reverse is the case. He makes a bold statement by saying that under the current CBN governor’s current administration, the Central Bank has shown a consistent regulatory framework that has allowed fintechs like Flutterwave to thrive.

“Flutterwave, for instance, launched when the governor just came in. We got our license and scaled our business because of a favourable regime that allowed it to be possible. There are so many trailblazing innovations that we don’t talk about a lot about Nigeria, like the BVN and the NIP system. Nigeria has consistently been at the forefront of payments innovation for over a decade, and all it was possible because of the forward-looking CBN policies,” he said.

On exits, acquisitions, and the billion-dollar club

One fintech company that has unquestionably championed payments in this timeframe is Interswitch. The payments giant is currently worth $1 billion after Visa acquired a 20% stake in 2019 and Flutterwave joins the company as the only fintechs in Nigeria to have reached that valuation. This number increases to four in Africa when including publicly traded African e-commerce company, Jumia and Egyptian payments company Fawry.

Flutterwave’s $170 million mammoth raise and its billion-dollar valuation represent a landmark achievement for the African startup scene. While the aforementioned companies’ valuations can’t be disputed, there are question marks on whether some are startups or others, African companies.

Interswitch, for instance, was founded in 2002, which doesn’t necessarily make it a startup despite still being private. Fawry was launched in 2007 but didn’t become a billion-dollar company until 2020, a year after going public. Jumia, albeit public, reached unicorn status as a private company in 2016; however, there are varying consensus if it is an African company or not.

Unlike the others, Flutterwave checks all the boxes of what a billion-dollar African startup should ideally look like — founded by Africans in Africa while reaching a $1 billion valuation in fewer than 10 years.

Most stakeholders in Africa’s tech ecosystem knew this would happen, but the timing expected was later rather than sooner. After raising $35 million in a Series B in 2020, who would have thought Flutterwave was going to raise almost five times that amount the following round and be valued at more than $1 billion the next year? Maybe just a few.

Well, these numbers rarely matter to Agboola, as I ask him what he thinks of Flutterwave’s new growth metric. “I’ll say valuation is both art and science. At some point, we were also the most valuable African company at YC, but it’s not really a metric we’re focused on at Flutterwave because they move up and down,” he smiles. “Our key metrics have always been revenue, customer growth and retention.”

Aptly said, but as the company continues to grow, questions around profitability and exit will become more frequent.

Paystack, another Nigerian payments company that is often compared to Flutterwave got acquired by Stripe for more than $200 million last year. At the time, there were also rumours of Flutterwave taking the same route, but this Series C raise suggests that the company is not looking to exit at the moment. However, if the YC-backed company indeed does, it might be through an IPO.

“Like every other startup, we’re thinking about ways to create exit tools for our investors. So, a listing is very much in our plans, but for now, we’re focused on giving the best value to our customers,” Agboola said. 

In the course of the company’s journey to this point, it has remained big on partnerships. In 2019, Flutterwave partnered with Visa to launch Barter and Alipay to offer digital payments between Africa and China. Then last year, the company announced a partnership with Worldpay FIS for payments in Africa.

Although Flutterwave has done this with bigger establishments, Agboola says the company will be looking to do the same with smaller companies, opening the doors to potential acquisitions.

We believe in payments in partnership as you have to partner to scale. So, if in the course of making partnerships and scaling and we identify promising companies with a similar ethos and have our vision in mind, that is in making Africa a country, an acquisition isn’t off the table,” he said.

After capturing much of Sub-Saharan Africa, Agboola says Flutterwave’s next plan is to go live in North Africa. There, it will likely face competition from a local leader, Fawry, but that doesn’t matter. The African fintech market is large enough to accommodate multiple players.

That’s one reason why it has also been a popular bet with investors. The sector, which is both local and international investors’ top destination, attracted between 25% to 31% of the total VC funding last year from varying sources.

But from the information on their websites, this is the first time Flutterwave’s lead investors —  Avenir Growth Capital and Tiger Global — are backing an African fintech startup. For the former, Flutterwave represents the first African startup in its portfolio, but Tiger Global is known to have invested in Nigerian media company iROKOtv and South African e-commerce company, Takealot.

Via their partners — Jamie Reynolds of Avenir Growth Capital and Scott Shleifer of Tiger Global, both firms said they’re backing Flutterwave on its quest to build a global and world-class payments company.

Looking into the future, Agboola insists that the company’s focus remains to support its 290,000 merchants and help them build global businesses.

“We look forward to increasing our investments across the continent and deepening the impact our platform has on lives and livelihoods as we take more businesses in Africa to the world, and at the same time continue to bring more of the world to Africa,” he said.

 

#africa, #finance, #flutterwave, #funding, #olugbenga-agboola, #payments, #startups, #tc, #tiger-global, #unicorn, #worldpay

Uber Africa launches Uber Cash with Flutterwave and explores EVs

Uber is launching its Uber Cash digital wallet feature in Sub-Saharan Africa through a partnership with San Francisco based — Nigerian founded — fintech firm Flutterwave.

The arrangement will allow riders to top up Uber wallets using the dozens of remittance partners active on Flutterwave’s Pan-African network.

Flutterwave operates as a B2B payments gateway network that allows clients to tap its APIs and customize payments applications.

Uber Cash will go live this week and next for Uber’s ride-hail operations in South Africa, Kenya, Nigeria, Uganda and Ghana, Ivory Coast and Tanzania, according to Alon Lits — Uber’s General Manager for Sub-Saharan Africa.

“Depending on the country, you’ve got different top up methods available. For example in Nigeria you can use your Verve Card or mobile money. In Kenya, you can use M-Pesa and EFT and in South Africa you can top up with EFT,” said Lits.

Uber Cash in Africa will also accept transfers from Flutterwave’s Barter payment app, launched with Visa in 2019.

The move could increase Uber’s ride traffic in Africa by boosting the volume of funds sent to digital wallets and reducing friction in the payment process.

Uber still accepts cash on the continent — which has one of the world’s largest unbanked populations — but has made strides on financial inclusion through mobile money.

Update on Uber Africa

Uber has been in Africa since 2015 and continued to adapt to local market dynamics, including global and local competition and more recently, COVID-19. The company’s GM Alon Lits spoke to TechCrunch on updates — including EV possibilities — and weathering the coronavirus outbreak in Africa.

Uber in Sub-Saharan Africa continued to run through the pandemic, with a couple exceptions. “The only places we ceased operations was where there were government directives,” Lits said. That included Uganda and Lagos, Nigeria.

Though he couldn’t share data, Lits acknowledged there had been a significant reduction in Uber’s Africa business through the pandemic, in line with the 70% drop in global ride volume Uber CEO Dara Khosrowshahi disclosed in March.

“You can imagine in markets where we were not allowed to operate revenues obviously go to zero,” said Lits.

Like Africa’s broader tech ecosystem, Uber has adapted its business to the outbreak of COVID-19 in Africa, which hit hardest in March and April and led to lockdowns in key economies, such as Nigeria, Kenya and South Africa

On how to make people feel safe about ride-hailing in a coronavirus world, Lits highlighted some specific practices. In line with Uber’s global policy, it’s mandatory in Africa for riders and drivers to wear masks.

“We’re actually leveraging facial recognition technology to check that drivers are wearing masks before they go,” said Lits. Uber Africa is also experimenting with impact safe, plastic dividers for its cars in Kenya and Nigeria.

Uber Africa Nairobi

Image Credits: Uber

In Africa, Uber has continued to expand its services and experiment with things the company doesn’t do in in any major markets. The first was allowing cash payments in 2016 — something Uber hopes the introduction of Uber Cash will help reduce.

Along with rival Bolt, Uber connected ride-hail products to Africa’s motorcycle and three-wheeled tuk-tuk taxi markets in 2018.

Uber moved into delivery in Africa, with Uber Eats, and recently started transporting medical supplies in South Africa through a partnership with The Bill and Melinda Gates Foundation.

Mobility Africa

In addition to global competitors, such as Bolt, Uber faces local competition as Africa’s mobility sector becomes a hotspot for VC and startups.

A couple trends worth tracking will be Uber’s potential expansion to Ethiopia and moves toward EV development in Africa.

On Ethiopia, the country has a nascent tech scene with the strongest demographic and economic thesis — Africa’s second largest population and seventh biggest economy — to become the continent’s next digital hotspot.

Ethiopia also has a burgeoning ride-hail industry, with local mobility ventures Ride and Zayride. Uber hasn’t mentioned (that we know of) any intent to move into the East African country. But if it does, that would serve as a strong indicator of the company’s commitment to remaining a mobility player in Africa.

Ampersand Africa e motorcycle

Ampersand in Rwanda, Image Credits: Ampersand

With regards to electric, there’s been movement on the continent over the last year toward developing EVs for ride-hail and delivery use.

In 2019, Nigerian mobility startup MAX.ng raised a $7 million Series A round backed by Yamaha, a portion of which was dedicated to pilot e-motorcycles powered by renewable energy.

Last year the government of Rwanda established a national plan to phase out gas motorcycle taxis for e-motos, working in partnership with EV startup Ampersand.

And in May, Vaya Africa — a ride-hail mobility venture founded by mogul Strive Masiyiwa — launched an electric taxi service and solar charging network in Zimbabwe. Vaya plans to expand the program across the continent and is exploring e-moto passenger and delivery products.

On Uber’s moves toward electric in Africa, it could begin with two or three wheeled transit.

“That’s something we’ve been looking at in South Africa…nothing that we’ve launched yet, but it is a conversation that’s ongoing,” said Uber’s Sub-Saharan Africa GM Alon Lits.

He noted one of the challenges of such an electric model on the continent is lack of a robust charging infrastructure.

Even so, if Uber enters that space — with Vaya and others — emissions free ride-hail and delivery EVs buzzing around African cities could soon be a reality.

#africa, #african-tech, #business, #ceo, #dara-khosrowshahi, #e-motorcycles, #energy, #ethiopia, #evs, #flutterwave, #ghana, #kenya, #lagos, #nigeria, #player, #rwanda, #san-francisco, #south-africa, #tanzania, #tc, #transport, #uber, #uganda, #vaya-africa, #visa, #yamaha, #zimbabwe

Africa Roundup: Visa connects to M-Pesa, Flutterwave enters e-commerce

It seems the demand for Safaricom’s M-Pesa payment product never eases. Since its 2007 launch in Kenya, the fintech app has commanded over 70% of the mobile money market in that country. When COVID-19 hit the East African nation of 53 million in March, the Kenyan Central Bank turned to M-Pesa as a public health tool to reduce use of cash.

And last month, one of the world’s financial services giants — Visa — connected M-Pesa to its global network.

Visa and Safaricom — which is Kenya’s largest telecom and operator of M-Pesa — announced a partnership on payments and tech.

The arrangement opens up M-Pesa’s own extensive financial services network in East Africa to Visa’s global merchant and card network across 200 countries.

The companies will also collaborate “on development of products that will support digital payments for M-Pesa customers.” The partnership is still subject to regulatory approval.

The details remain vague, but the payment providers also said they will use the collaboration to facilitate e-commerce.

Images Credits: Getty Images

On a continent that is still home to the largest share of the world’s unbanked population, Kenya has one of the highest mobile-money penetration rates in the world. This is largely due to the dominance of M-Pesa in the country, which has 24.5 million customers and a network of 176,000 agents.

As we detailed in ExtraCrunch, Visa has been on a VC and partnership spree with African fintech companies. The global financial services giant has named working with the continent’s payments startups as core to its Africa expansion strategy.

One of those fintech ventures Visa has teamed up with, Flutterwave, launched an e-commerce product in April. The San Francisco and Lagos-based B2B payments company announced Flutterwave Store, a portal for African merchants to create digital shops to sell online.

The product is less Amazon  and more eBay — with no inventory or warehouse requirements. Flutterwave insists the move doesn’t represent any shift away from its core payments business.

The company accelerated the development of Flutterwave Store in response to COVID-19, which has brought restrictive measures to SMEs and traders operating in Africa’s largest economies.

After creating a profile, users can showcase inventory and link up to a payment option. For pickup and delivery, Flutterwave Store operates through existing third party logistics providers, such as Sendy in Kenya and Sendbox in Nigeria.

The service will start in 15 African countries and the only fees Flutterwave will charge (for now) are on payments. Otherwise, it’s free for SMEs to create an online storefront and for buyers and sellers to transact goods.

While the initiative is born out of the spread of coronavirus cases in Africa, it will continue beyond the pandemic. And Flutterwave’s CEO Olugbenga Agboola — aka GB — is adamant Flutterwave Store is not a pivot for the Y-Cominator backed fintech company.

“It’s not a direction change. We’re still a B2B payment infrastructure company. We are not moving into becoming an online retailer, and no we’re not looking to become Jumia,” he told TechCrunch .

In early stage startup activity, a relatively new company — Okra — has created a unique platform that allows it to generate revenue on both sides of the fintech aisle.

Founded in June 2019 by Nigerians Fara Ashiru Jituboh and David Peterside, the company refers to itself as a “super-connector API” with a platform that links bank accounts to third party applications.

Okra’s clients include fintech startups and large financial institutions in Nigeria. The company got the attention of TLcom Capital — a $71 million Africa focused VC firm —that backed Okra with $1 million in pre-seed funding. The Nigerian startup is using the funds to hire and expand to new markets in Africa, most likely Kenya .

More Africa-related stories @TechCrunch               

#africa, #africa-roundup, #amazon, #api, #ceo, #david-peterside, #e-commerce, #east-africa, #ebay, #economy, #finance, #financial-technology, #fintech-startup, #flutterwave, #genomics, #kenya, #lagos, #m-pesa, #money, #nigeria, #okra, #olugbenga-agboola, #online-retailer, #safaricom, #san-francisco, #south-africa, #tc, #techcrunch, #tlcom-capital, #visa, #vodafone

African fintech firm Flutterwave launches SME e-commerce portal

San Francisco and Lagos-based fintech startup Flutterwave has launched Flutterwave Store, a portal for African merchants to create digital shops to sell online.

The product is less Amazon and more eBay — with no inventory or warehouse requirements. Flutterwave insists the move doesn’t represent any shift away from its core payments business.

The company accelerated the development of Flutterwave Store in response to COVID-19, which has brought restrictive measures to SMEs and traders operating in Africa’s largest economies.

After creating a profile, users can showcase inventory and link up to a payment option. For pickup and delivery, Flutterwave Store operates through existing third party logistics providers, such as Sendy in Kenya and Sendbox in Nigeria.

The service will start in 15 African countries and the only fees Flutterwave will charge (for now) are on payments. Otherwise, it’s free for SMEs to create an online storefront and for buyers and sellers to transact goods.

While the initiative is born out of the spread of coronavirus cases in Africa, it will continue beyond the pandemic. And Flutterwave’s CEO Olugbenga Agboola — aka GB — is adamant Flutterwave Store is not a pivot for the fintech company, which is an alum of Silicon Valley accelerator Y-Combinator.

“It’s not a direction change. We’re still a B2B payment infrastructure company. We are not moving into becoming an online retailer, and no we’re not looking to become Jumia,” GB told TechCrunch on a call.

Image Credits: Flutterwave

He was referring to Africa’s largest e-commerce company, which operates in 11 countries and listed in an NYSE IPO last year.

Flutterwave has a very different business than the continent’s big e-commerce players and plans to stick with it, according to GB.

When it comes to reach, VC and partnerships, the startup is one of the more connected and visible operating in Africa’s tech ecosystem. The Nigerian-founded venture’s main business is providing B2B payments services for companies operating in Africa to pay other companies on the continent and abroad.

Launched in 2016, Flutterwave allows clients to tap its APIs and work with Flutterwave developers to customize payments applications. Existing customers include Uber and Booking.com.

In 2019, Flutterwave processed 107 million transactions worth $5.4 billion, according to company data. Over the last 12 months the startup has been on a tear of investment, product and partnership activity.

In July 2019, Flutterwave joined forces with Chinese e-commerce company Alibaba’s Alipay to offer digital payments between Africa and China.

The Alipay collaboration followed one between Flutterwave and Visa to launch a consumer payment product for Africa, called GetBarter.

Then in January of this year, the startup raised a $35 million Series B round and announced a partnership with Worldpay FIS for payments in Africa.

On the potential for Flutterwave Store, there’s certainly a large pool of traders and small businesses across Africa that could appreciate the opportunity to take their businesses online. The IFC has estimated that SMEs make up 90% of Sub-Saharan Africa’s business serving the region’s one-billion people.

Flutterwave confirmed Flutterwave Store’s initial 15 countries will include Africa’s top economies and population countries of Nigeria, Ghana, Kenya and South Africa.

Those markets already have a number of players driving digital commerce, including options for small businesses to post their wares online. Jumia’s Jumia Marketplace allows vendors register on its platform and use the company’s resources to do online retail.

Facebook has made a push into Africa that includes its overall push to get more users to sell on Facebook Marketplace. The social media giant now offers the service in Nigeria — with 200 million people and the continent’s largest economy.

GB Flutterwave disrupt

Flutterwave CEO GB, Image Credits: TechCrunch

eBay has not yet gone live in Africa with its business to consumer website, that allows any cottage industry to create a storefront. The American company does have an arrangement with e-commerce startup MallforAfrica.com for limited sales of African goods on eBay’s U.S. shopping site.

On where Flutterwave’s new product fits into Africa’s online sales space, CEO GB says Flutterwave Store will maintain a niche focus on mom and pop type businesses.

“The goal is not be become like eBay, that’s advocating for everybody. We’re just giving small merchants the infrastructure to create an online store at zero cost right from scratch,” he said.

That’s something Flutterwave expects to be useful to Africa’s SMEs through the COVID-19 crisis and beyond.

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Visa partners with Paga on payments and fintech for Africa and abroad

Visa has entered a partnership with Nigeria based startup Paga on payments and technology.

Founded in Lagos, Paga scaled its fintech business in West Africa, before targeting expansion in Ethiopia and Mexico.

The startup has created a multi-channel network for over 14 million customers in Nigeria to transfer money, pay-bills and buy things digitally through its mobile-app or 24,840 agents.

The new arrangement allows Paga account holders to transact on Visa’s global network. It will also see both companies work together on tech.

The collaboration reflects a strategy of the American financial services giant to expand in Africa working with the continent’s top startups.

Visa’s partnership with Paga doesn’t include investment in the startup, but it is expected to drive larger payment volumes for both companies — and Visa’s priorities in Africa.

“We want to digitize cash, that’s a strategic priority for us. We want to expand merchant access to payment acceptance and we want to drive financial inclusion,” said Otto Williams, Visa’s Head of Strategic Partnerships, Fintech and Ventures for Africa.

The Paga-Visa arrangement will bring new merchant options to Paga’s network.

“Based on the partnership we’re going to launch QR codes and NFC [payments] into the market in Nigeria — alternative ways of receiving payments than bringing out a physical card,” said Oviosu.

Tayo Oviosu

Visa and Paga’s engineering teams have already started working together, according to Oviosu, and Paga expects to roll-out these new options in Nigeria sometime in second-quarter 2020.

The startup is pivoting toward becoming less of a Nigeria-centered company and more an emerging markets fintech platform. In January, Paga acquired Ethiopian software development company Apposit, on plans to launch in the East African country.  After Nigeria, Ethiopia has Africa’s second-largest population of 114 million.

Paga has also opened an office in Mexico and will launch its payments products there this year.

“There are several very large countries around the world in Africa, Latin America, Asia where these [financial inclusion] problems still exist. So our strategy is not an African strategy…We want to go where these problems exist in a large way and build a global payments business,” Oviosu told Techcrunch in January.

The Visa-Paga partnership comes as fintech has become Africa’s best funded startup sector — according to latest VC reporting — with thousands of ventures vying to scale digital-finance products to the continent’s unbanked and underbanked consumers and SMEs.

As a company, Visa maintains multiple partnerships with Africa’s largest banks, but collaborating with the continent’s VC backed fintech ventures has taken center-stage. This was confirmed in Visa’s recent 2020 Investor Day presentation, which dedicated several slides to its strategy of “partnering with leading African players” in the startup ecosystem.

The global financial services company has entered into collaborations with several African fintech ventures, such as B2B payments company Flutterwave and South African startup Yoco, which is focused on enterprise payments services and hardware for SMEs.

Visa has also jumped into the venture funding realm in African fintech. In 2019 Nigerian financial services company Interswitch reached a $1 billion valuation and unicorn status after Visa acquired a minority equity stake.

Visa’s Otto Williams, who has taken a lead on the company’s Africa strategy, noted non-equity collaborations will remain the primary focus — though those could lead to VC down the road.

“If we have a commercial partnership in place that creates the right…investment thesis…you know those strategic partnerships inform venture investments,” Williams said.

Of course, Visa’s isn’t the only American financial services firm backing African tech companies. In 2019, its rival Mastercard invested $50 million in Pan-African e-commerce venture Jumia. The two are working together on developing fintech services across Jumia’s customer network.

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