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Kwik Delivery Raises $1.7m Pre-Series A Fund to Drive Expansion into New Markets

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Kwik Delivery, a Lagos-based last-mile delivery startup has raised $1.7 million in its pre-Series A financing round. The funding was as equity from institutional and high net worth investors.

According to its Founder & CEO, Romain Poirot-lellig, the latest funding will be used to grow the company faster and conquer new markets.

Launched in 2019, Kwik Delivery is an on-demand, last-mile delivery platform that connects African businesses to independent delivery riders, dubbed Kwiksters.

The company services B2B and B2C deliveries, with parcels varying from pharmaceutical products to spare parts for cars, cosmetics, and food during the lockdown.

Since its launch, the company has grown considerably. The company commenced its truck deliveries arm in November 2020. The following month, it raised $2 million from a combination of Nigerian and international investors.

Last week, the company launched its last-mile delivery service in Abuja and currently offers 1-hour delivery through its fleet of bike delivery partners. It also provides access to a host of 4-wheel vehicles in the country’s capital.

Romain believes Kwik Delivery has demonstrated to customers and investors alike its efficiency as well as the relevance of its bold technology-based approach during a most challenging period.

With its latest funding, the company plans to solidify its market in Abuja and also expand into new markets.

Fund Raising

Nigerian Fintech Appzone Raises $10M for Expansion and Proprietary Technology

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APPzones

Africa’s fintech space has gained proper attention over the past few years in investments but it is not news that startups still battle with offering high-quality products. However, they seem to be doing quite well compared with traditional banks that face challenges like legacy cost structures and a major lack of operational efficiency.

Appzone is a fintech software provider. It is one of the few companies that builds proprietary solutions for these financial institutions and their banking and payments services. Today, the company is announcing that it has closed $10 million in Series A investment.

Typically, African financial institutions rely on using foreign technology solutions to solve their problems. But issues around pricing, flexibility to innovate, and a lack of local tech support always come up. This is where Appzone has found its sweet spot. The company based in Lagos, Nigeria, was founded by Emeka EmetaromObi Emetarom, and Wale Onawunmi in 2008.

Appzone clearly plays a different game from other African fintechs. One clear differentiator is that the company functions as an enabler (at payment rails and the core infrastructure) within banking and payments.

It commenced as a services firm to provide commercial banks with custom software development services. In 2011, the company launched its first core banking product targeting microfinance institutions. The following year, Appzone launched its first product (branchless banking) for commercial banks. It went live with its mobile and internet banking service in 2016 and launched an instant card issuance product in 2017. In 2020, the company launched services catered to end-to-end automation of lending operations for banks and blockchain switching.

“We started Appzone with the intention to build out innovative local solutions for banking and payments on the continent,” CEO Obi Emetarom told TechCrunch. “The focus was to leverage our ability as an enabler to create proprietary technology for both segments.”

Appzone platforms are used by 18 commercial banks and over 450 microfinance banks in Africa. Together, they amass a yearly transaction value and yearly loan disbursement of $2 billion and $300million.

Since its inception, the Google for Startups Accelerator alumnus claims to have led Africa’s fintech sector in some global firsts from the continent. First, the company says it created the world’s first decentralised payment processing network. Second, the first core banking and omnichannel software on the cloud. Third, the first multi-bank direct debit service based on single global mandates.

Emetarom likes to describe Appzone as a fintech product ecosystem with an emphasis on proprietary technology. So far, we’ve touched on two layers of this ecosystem—the digital core banking service providing software that runs financial institutions’ entire operations and interbank processing, which integrates these institutions into a decentralized network powered by blockchain.

Coinciding with this investment is the introduction and scaling of a third layer that focuses on end-user applications. Appzone, having built both banking and fintech layers, wants to connect individuals and businesses to their services. This is where most new-age fintech startups operate, and although Appzone is coming late to the party, it has a bit of an edge, the CEO believes.

“Most of these companies operating in end-user applications have to depend on services from core banking and interbank processing to be able to get their own offerings out there. For us, I think we have an advantage in terms of costs and flexibility because we are already operating in both layers,” Emeratom said in relation to what he thinks of competition.

The company is coming out to blitz scale its products and services after working in stealth mode for more than a decade. One way it wants to carry this out will be to take its pan-African expansion sternly even though a large part of its 450 clients are based in Nigeria. Other countries with a presence include the Democratic Republic of Congo, Ghana, Gambia, Guinea, Tanzania, and Senegal. Before now, Appzone lacked the resources to push into these markets aggressively even though they showed promise. But having closed its Series A, the plan is to drive growth in these countries and expand across more African countries.

Another means Appzone plans to achieve scale is by growing its engineering team — a department it takes pride in. These engineers make up half of Appzone’s 150 employees and there are plans to double down on this number. Like most Nigerian startups these days, Appzone is big on senior engineers. Still, while it might present a problem to other companies, Emetarom says the company has no issue training promising junior talent to grow in expertise.

“Our proprietary tech allows us to innovate at a fraction of a cost, and they are built by essentially the best local talent available. Because those systems are really complex and the level of innovation required is on another level, we literally seek out the to 1% of talent in Nigeria,” he remarked. “We know that even though the expertise isn’t there, we can accelerate acquiring that expertise when we train the very best talents. The more we train our engineers, the faster they grow in terms of expertise, and they will be able to deliver at the same level of world-class quality we expect.“

Back to the round, a noteworthy event is that most investors who took part are based in Nigeria despite its size. CardinalStone Capital Advisers, a Lagos-based investment firm, led the Series A investment. Other investors based in the country include V8 Capital, Constant Capital, and Itanna Capital Ventures. New York-based but Africa-focused firm Lateral Investment Partners also participated.

Before now, Appzone closed a $2 million from South African Business Connexion (BCX) in 2014. Four years later, it raised $2.5 million in convertible debt and bought back shares from BCX in the process. But overall, the company says it has raised $15 million in equity funding.

Speaking on the investment, Yomi Jemibewon, the co-founder and managing director of Cardinal Stone Capital Advisers, said the firm’s investment in Appzone is further proof of Africa’s potential as the future hub of world-class technology.

“Appzone is building a disruptive fintech ecosystem that will be the backbone of Africa’s finance industry with products across payments, infrastructure and software as a service. The impact of Appzone’s work is multifold — the company’s products deepen financial inclusion across the continent whilst providing best-fit and low-cost solutions to financial institutions. Its emphasis on premium talent also helps stem brain drain, rewarding Africa’s best brains with best in class employment opportunities,” he added.

Appzone’s funding continues the fast-paced investment activities witnessed by Africa’s fintech space after a slow January. In the last two months, more than eight fintech startups have secured million-dollar rounds. This includes very large rounds by South African digital bank TymeBank ($109 million) in February and African payments company, Flutterwave ($170 million) in March.

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Fund Raising

Verdant Capital Raises USD 9.9 M Series A Equity Capital for Tugende, a Leading Technology Enabled MSME Lender in East Africa

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Edmund Higenbottam, MD of Verdant Capital - Investorsking.com

The transaction is the most recent for the award-winning fintech and financial inclusion investment banking franchise of Verdant Capital.

Partech Africa, a member of the Partech Group, a leading global technology venture capital fund, and Enza Capital invested in the USD 3.6 million extension round – agreed and structured in 2020 – bringing the total Series A volume to USD 9.9 million. This adds to the first close which was led by Mobility 54, the Africa-focused venture capital entity backed by the Toyota Group as well as USD 12 million of debt financing raised over the last 18 months, through institutional investors from the UK, Germany, Switzerland, the Netherlands and South Africa. Verdant Capital serves as Tugende’s financial advisor and arranger for its equity and debt capital raises.

The MSME credit gap across sub-Saharan Africa amounts to more than USD 331 billion per year, with a gap of USD 37 billion in East Africa alone. The growth of innovative and technology enabled business models, such as Tugende’s, are helping fill the credit gap left by traditional banks. The capital raises for Tugende strengthen its balance sheet and allow the expansion of its loan portfolio. Having built its leading position financing boda bodas (motorcycle taxis) in Uganda, Tugende launched its Kenyan operations in late 2019, kick-starting its regional expansion, while continuing to add new asset products for other types of informal sector clients. The equity investments and partnerships with leading equity firms will also accelerate Tugende’s technology development and organisational growth.

Tugende uses asset finance, technology, and a high touch customer support model to help micro, small and medium enterprises (MSMEs) own income-generating assets. Tugende has served over 43,000 clients with more than 16,000 having achieved ownership of at least one asset. Its core asset finance packages include medical and life insurance, training, safety equipment and digital credit profiles in addition to affordable asset finance. Tugende has broadened the productive assets it finances to include fishing boat engines, cars, refrigerators and other income generating equipment and is also currently piloting financing for e-mobility assets. All payments are digital and Tugende provides proprietary credit scores automatically to all clients to help them monitor their performance and unlock new opportunities like discounts and new products.

Tugende’s Series A transaction cements Verdant Capital’s track record in raising capital for high impact emerging financial technology leaders and bringing these businesses to a broad range of global investors. In recognition of Verdant Capital’s strong capital raising volumes in the last 12 months across East, West and South Africa, Verdant Capital was awarded Best Fintech Capital Raising Team in Africa, by cfi.co in its Q1 2021 business and finance awards. In the recent cfi.co awards, ESG and impact investing themes were writ large with BBVA and Credit Mutual, from Spain and France, respectively, winning accolades for Responsible Investment Management and Neuberger Berman’s award for its North American ESG investment platform.

Verdant Capital won the award following a period of record deal volumes in Africa, with some USD 500 million of capital raising and M&A in the Fintech sector in 2020. Verdant Capital successfully completed transactions in the sector with a total value of USD 40 million in 2020. The capital raises included businesses such as Tugende, Retail Capital, a South African SME-credit tech player, and Planet42, a South African car-subscription business.  Based on the growth in its own pipeline, Verdant Capital expects sector-wide deal volumes in 2021 to exceed the levels set in 2020.

Verdant Capital’s ability to showcase its clients to a global audience is further enhanced by its proprietary annual global investor conference, Video Africa. The second edition hosted in March was attended by 45 leading specialist investors from 22 countries, showcasing 18 of the firm’s leading fintech and financial services clients from across Africa.

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Bankly, Nigerian Fintech Startup Raised $2 Million in Seed Round

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Bankly, a fintech startup that focused on digitizing cash for the Nigerian unbanked population, announced it has raised $2 million in a seed round.

The company founded by Tomilola Adejana and Fredrick Adams in 2018, is digitizing the popular traditional thrift known locally as esusu or ajo collection for over 100 million adults in Nigeria.

The first phase is building agent networks which is good but that’s not the goal,” CEO Adejana stated. “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.L-R: Fredrick Adams (CPO) and Tomilola Adejana (CEO)The fintech startup operates like a traditional bank with fewer revenue, assets, customers and operational costs. However, because Bankly does not spend a lot on acquiring customers and building physical presences like Kuda Bank, it can pass those costs to customers as interest and still report decent margins going forward.

The company presently has 15,000 agents across the country, up from 2,000 in 2020.

Speaking on finding investors, Adejana said “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 seed round was led by Vault, the holding company of VANSO, a fintech that was sold to Interswitch in 2016, Plug and Play Ventures, Rising Tide Africa and Chrysalis Capital.

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.

According to Adejana, the startup plans to grow its customer base to 2 million unbanked Nigerians in the next three years. She explained that the goal is to deepen the Central Bank of Nigeria’s goal of increasing people in the financial system from 60 percent to 80 percent by 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.

 

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