Nigerian Tech Start-ups Raise $343m in 3 Months

According to recent reports, it was disclosed that several Nigerian start-ups in the tech space raised combined cash of $343 million in the first three months of this year.

These African start-ups had an extraordinary year last year, after they raised about $5 billion, surpassing the record of the previous year of $4.3 billion. Nigeria happens to be the biggest beneficiary of seed rounds and other venture capital secured on the continent last year.

In late January, a Nigerian tech start-up with an investment platform that allows Nigerians to trade in United States (U.S.) stocks in real-time from their mobile phones or computers, Bamboo, raised $15 million in a Series A funding round led by American venture capital firms Greycroft and Tiger Global.

Motley Fool Ventures, Saison Capital, Chrysalis Capital, and Y-Combinator’s Michael Seibel also participated in the round, the company had said.

Last August, the Central Bank of Nigeria (CBN) got a court approval to freeze the bank accounts of Bamboo and other similar Nigerian fintech platforms for six months. The accounts have since been unfrozen by the court.

Launched in January 2020 by CEO Richmond Bassey and COO Yanmo Omorogbe, Bamboo has grown in popularity with retail investors, claiming over 300,000 accounts in Nigeria. Its users can access equities on the U.S. stock exchanges, that is, the stocks of roughly 6,000 companies

“Our goal is simple: we want to give Africans and their asset managers easy, fast and secure access to global investment options that will allow them to earn real returns,” Bassey said.

With the new funding, Bamboo said it plans to further accelerate its growth, doubling down on unlocking new markets and launching more products, it said in response that Bamboo will be providing more asset classes and investment opportunities for its users.

“Bamboo is enabling Africans to build wealth by creating an investing platform that is helpful to experienced investors and to those new to the stock market. We are thrilled to support the innovative, user-first approach the Bamboo team is bringing to market,” Greycroft Partner Alison Lange Engel said on the investment.

Last year, the company launched Powered by Bamboo, its app programming interface (API) solution that allows asset managers, fintechs, and other financial institutions to plug into Bamboo’s API to provide their customers access to global securities. The company has been testing the product with a small group of companies and expects to onboard more this year.

Bassey said: “Everyone building for African investors is welcome. We plan to add other products and tools that offer greater access and make global investing simpler from Africa.We’re building the technology infrastructure powering financial services in Africa.”

Last April, Bamboo announced plans to launch in Ghana and has since seen more than 50,000 Ghanaians join the waiting list, according to the company. In the  future, Bamboo plans to expand into more markets such as Kenya and South Africa.

Compared to developed markets such as the U.S., investing in stocks is relatively new in Nigeria, and Africa. For instance, nearly 75 per cent of Bamboo users have never trade stocks before.

Thus, the company has had to put significant effort into educating its users on how to invest and become better investors, using a mix of regular educational content published on its social media, a stock market course, an investment bootcamp, newsletters with investing tips and exclusive value-added services from top investment advisors like The Motley Fool and MyWallSt.

These efforts appear to pay off, going by Bamboo’s figures. In 2021, repeat depositors made up 85 per cent of deposits on the platform, an indication that Bamboo users are rapidly gaining confidence in trading US stocks.

But with the US equities market experiencing its worst January in well over a decade—since 2009—how are Bamboo users reacting to the downturn?

“Even though they are new to stock investing, Bamboo users tend to handle their emotions like more seasoned investors. We saw this during the 2020 Covid-19 pandemic crash and we’re seeing it again now,” Bassey said.

Bamboo allows Nigerians buy and trade US stocks in real-time from their mobile phones or computers.

Bamboo allows Nigerians buy and trade US stocks in real-time from their mobile phones or computers.

Africa’s wealth management market remains largely underdeveloped but holds high potential. According to data cited by Bamboo, Africans account for over 16 per cent of the world’s population, yet they own less than one per cent of global wealth.

But that is expected to change over the next decade, with private wealth in the continent expected to increase by 30per cent to reach $2.6 trillion by 2030, according to AfrAsia Bank.

Bassey is upbeat platforms like Bamboo will play a major role in realising the projected growth, by helping to develop an investing culture among Africans.

“We think investing in stocks has a bright future in Nigeria. Nigerians are hungry to earn a return on their investments and build wealth. We are bullish on platforms such as ours in bringing more Nigerians into the world of investing,” he said.

Without revealing many details, Bamboo says in the statement it plans to make it seamless for African investors in the diaspora to discover the best investment opportunities on the continent.

In February, a payments technology processor, Flutterwave secured $250 million in Series D funding at a valuation of $3 billion.

The round was led by B Capital Group, with participation from Alta Park Capital, Whale Rock Capital, Lux Capital, and a number of other investors.

The company helps merchants accept payments both online and at the point-of-sale (P0S) through a host of methods, including cards, mobile money and bank transfers.

Founded by entrepreneur Olugbenga Agboola in 2016, Flutterwave has processed over 200million transactions worth over $16billion to date across 34 countries in Africa. It now serves over 900,000 businesses across the globe.

The company says the new funds will be utilised to grow its product suite and drive its expansion plans by accelerating customer acquisition in existing markets and growth through merger and acquisition (M&A).

Partech in its 2020 report had rated Nigeria, Kenya, Egypt, South Africa and Ghana as investment destinations in terms of attracting funding for start-ups

A  Nigerian platform launched in 2018 by Connected Analytics, ThankUCash, as a multi-merchant loyalty and cashback platform that connects customers with businesses in a bid to help businesses grow and help customers to earn some cash on every purchase made.

In January, the Lagos- based start-up revealed that it raised $5.3million to expand within the Nigerian market. It is currently eyeing the Federal Capital Territory and the Southern city of Port Harcourt. 500 Global and Unicorn Growth Capital co-led the seed round.

The CEO Simeon Ononobi started the firm alongside Suraj Supekar, Madonna Ononobi and Harshal Gandole.

Another start-up is Reliance Health. The firm is a health care startup founded in 2016 by three co-founders who want to redefine health insurance.

On February 7, the startup announced raising a $40million Series B round, the largest in African health tech. It was led by General Atlantic.

Reliance Health uses software, data science and telemedicine to deliver health insurance services.

Femi Kuti, Opeyemi Olumekun and Matthew Mayaki are the founders of the Lagos- and Texas-based digital healthcare service provider.

Investment platform, Bamboo raised $15million in a new financing round. In January 2020, Richmond Bassey and Yanmo Omorogbe founded Bamboo an investment platform.

The investment firm had announced that it had raised $15million in a new Series A round backed by Greycroft and Tiger Global.

Another Nigerian tech startup, SeamlessHR, raised $10million to expand its human resource and payroll solutions across Africa.

In January, the company which was founded in 2018 by Emmanuel Okeleji, the Chief Executive Officer and Chief Technical Officer, Deji Lana said it raised $10million Series A funding led by TLcom Capital and other investors like Capria Ventures, Lateral Frontier Ventures, Enza Capital and Ingressive Capital participated.

Casava, a Nigerian digital insurance platform founded by Bode Pedro early February 2022 also raised $4million to make insurance affordable and accessible to Nigerians.

Casava is an offshoot of VisaCover, an insurance brokerage company founded in 2014 by Bode.

The company provided an alternative in the auto insurance market allowing weekly insurance payments instead of the yearly conventional payment.

The founder built Casava in 2019 and launched fully in April 2021 after it secured a license to provide affordable and accessible insurance products to Nigerians.

Startups in the Edutech space did not miss out as AltSchool which was launched in October 2021 raised $1million in pre-seed funding to scale-up in business.

AltSchool was founded by Chief Executive Officer Adewale Yusuf, Akintunde Sultan and Opeyemi Awoyemi.

The start-up is an online school with a curriculum to improve/upskill non-technical people with technical and soft skills.

 

April 05, 2022