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Nigeria’s Startup, Grey Raises $2M for Regional Expansion, Cross Border Payments

Grey Finance, a fintech startup that provides virtual international bank accounts for African freelancers and remote workers, has raised $2 million in seed funding.

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Grey Finance

Grey Finance, a fintech startup that provides virtual international bank accounts for African freelancers and remote workers, has raised $2 million in seed funding.

In July 2020, Idorenyin Obong and Femi Aghedo founded Grey Finance as an instant exchange service company that focuses on exchanging foreign currencies in domiciliary accounts to local currency at parallel market rates or close to parallel market rates.

Earlier this year, the startup metamorphose from Aboki Africa to Grey Finance in an effort to accommodate more financial services, access more markets and deepen its presence across Africa.

Explaining the reason for the changes, Obong, the CEO, said “We are expanding our business scope and have outgrown our original mission.”

“Grey is inspired by the colour. It is solid and stable and inspires calm, balance and composure. That is what we want people to feel every time they use our service.”

Due to the bottleneck in Nigeria and Africa’s payments, many fintech startups have started integrating remittances as one of their numerous services. This includes Flutterwave, even though it was the reason for the company’s indictments in Kenya, and recently, in Ghana.

Last year, Grey Finance raised an undisclosed pre-seed investment and was accepted into Y Combinator’s (YC) winter batch for March 2022.

YC is an American technology startup accelerator, launched in March 2005. It has been used to launch more than 3,000 companies, including Airbnb, Coinbase, Cruise, DoorDash, Dropbox, Instacart, Quora, PagerDuty, Reddit, Stripe, and Twitch.

Since then, Grey had expanded into East Africa, with Kenya as its entry point. The startup according to Obong, partnered payments giant Cellulant and edtech upstart Moringa, two Kenyan leading payment companies.

We went with Cellulant to power our payment infrastructure for Kenyan shillings, said the Chief Executive Officer.

Moringa is like an avenue and channel for training new tech talent, so it made sense to have such a partnership as we are trying to build this for freelancers.”

Grey Finance USD Account Suspension

While the company claimed its Nigerian and Kenyan users can seamlessly receive foreign payments from more than 88 countries, convert them into their local currencies and subsequently withdraw into their local bank accounts, recently the company’s US Dollar bank accounts were suspended by its U.S. partner, leaving its U.S. freelancers stranded for months, Investors King investigation shows.

In one of his numerous emails to customers, Femi, Co-founder and COO, Grey said “We encountered an issue earlier today that affected only our USD accounts — and unfortunately have to perform an immediate system upgrade, which will disrupt the function of USD accounts.

“We are working on rectifying the underlying problem with our banking providers. This upgrade will begin tomorrow, Wednesday, 18 May 2022. We will update you in the next 48 hours on our progress.”

However, the said upgrade lasted for two months as USD service was only restored on July 13, 2022. Raising concerns if the issue is more than just an upgrade.

Meanwhile, Grey has now doubled its functionality to support payouts in Ugandan shillings, making six currencies the platform now supported.

Although it is yet to launch in the country, Obong said Uganda is in Grey’s regional purview as well as fellow East African country Tanzania.

The company has about 100,000 users and has recorded an increase of 200% in transaction volumes.

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Fund Raising

The Fundraising Market in Africa is Growing, But it’s Hard Out There for Startups, Says DAI Magister

Analysis of the current African market by boutique investment bank DAI Magister, reveals that investors have so far bucked macrotrends by exhibiting confidence in investing into African businesses, particularly in first and second round raising.

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African Continental Free Trade Area (AfCFTA)- Investors King

Analysis of the current African market by boutique investment bank DAI Magister, reveals that investors have so far bucked macrotrends by exhibiting confidence in investing into African businesses, particularly in first and second round raising.

However, nascent start-ups are facing difficulty, with just half the number of accelerator deals taking place in Q2 2022 compared with Q2 2021.

DAI Magister has analysed the African market over the past four to six weeks in anticipation of the upcoming fundraising season, to assess the challenges and requirements for key finance functions through the lens of fundraising.

The global investment market overall has declined, with many investors treading cautiously. However Africa’s ecosystem has experienced two very strong quarters in the first half of 2022. June 2022 was the market’s strongest June yet, while Q2 and H1 2022 were also the strongest performing Q2 and H1 on record. The ‘big four’ venture capital markets in particular have seen capital flow into their regions, particularly Kenya, Egypt and Nigeria while South Africa has remained neutral.

According to DAI Magister, in the past few weeks African raises have definitely slowed, with the general pace of activity more moderate than this time last year. However, capital is continuing to flow into deals where companies can demonstrate a clear path to profitability and an open market to continue to scale. Also, Africa continues to have high structural growth rates, which are much higher than the rest of the world, and an ecosystem of startups that are geared towards solving primary ‘must have’ needs.

Risana Zitha, Head of Africa at DAI Magister said: “We’re building an interesting picture of the mindset of an investor looking to pool their resources into African businesses. There is an increased emphasis on compliance and capital efficiency, and many companies are exploring dual track mergers and acquisitions (M&A). In fact, all African M&A deals we’ve been a part of recently have been dual tracks.”

Growing businesses in the African market are in a constant state of raising capital, and it is essential that businesses have repeat, successful rounds to stay competitive. However, it’s no longer the seller’s market that many African investors and startups saw in 2021. Now it’s a more balanced picture, with many investors taking more time and being more choosy than this time last year.

Risana continued: “We’re seeing that the rules have changed since last year. Restructuring to cut costs was not on the agenda in 2021, but now, businesses are being open about layoffs – and it’s being encouraged.

“Investors have formed strong views on what they ‘like’ and ‘don’t like’, which is very different to even just a year ago. In response to this, African businesses need to debate whether they take a radical approach to rethinking their business model and how they make their money, or whether they need to make minor adjustments in order to attract investment during a period of balance. Also, it’s important to remember that successfully raising even a smaller amount than originally anticipated has far more value in the current environment. Basically, a $ raised now is worth far more than a $ raised 12 months ago, because many competitors are seeing fundraisings delayed, and capital is always far more valuable when others do not have it..

“Flexibility is crucial to ensure that businesses are responding to the market so get that all-important ‘yes’ from investors.”

While the fundraising market overall is growing steadily, nascent start-ups are having a harder time raising capital. Just 16% of deals in Q2 2022 were accelerator, compared with 32% in Q2 2021.

Risana added: “There has been a significant decrease in accelerator deals when comparing Q2 2022 and Q2 2021. This is in part due to decrease in first time investors from the US and Europe, increase in financing in later rounds and an increased level of sophisticated questions from investors.

“Startups are likely to have less experience raising investment, so it’s essential that they’re able to take advantage of the growing market. This can only be done with the right guidance and resources to ensure they can make a success of their business and reap the benefits of the increased funding we’re seeing in later rounds.

“The same goes for businesses in Africa of all sizes. It’s a volatile time no matter what round you’re raising, and we’re seeing the need for leaders to begin to think differently about their business and approach to fundraising.”

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Fund Raising

Vendease Raises $30 M in New Seed Round, Plans to Deepen Operation Across Africa

Vendease an online marketplace for Africa’s food businesses has recently raised $30 million in an equity and debt funding round.

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Vendease

Vendease an online marketplace for Africa’s food businesses has recently raised $30 million in an equity and debt funding round.

This seed round of $30 million was split between $20 million equity and $10 million debt, which was co-led by TLcom and Partech, in a rare joint investment by two of the biggest Africa-focused funds.

The equity round also included Hack VC, Kube VC, VentureSouq, Hustle fund, GFR Fund, Magic Fund, and Kairos Angels, who re-invested after participating in the previous round. The $10 million debt round was raised from the local finance market. 

According to Vendease, the new seed round raised will be used to deepen its operations across eight cities in Nigeria and Ghana, while noting that the startup is currently building a technology to aid in the effective movement of  food from the point of production to the point of consumption

CEO of Vendease Tunde Kara while commenting on the recent funds raised said,  “We’re building technology to efficiently move food from the point of production to the point of consumption.

“Everything we build at Vendease; financing, logistics, warehousing, inventory management, is tailored towards ensuring that food flows efficiently from that point of production to the point of consumption.”

Vendease enables African restaurants and food businesses to buy products, access financial services, and secure their operations.

According to the company, most customers, including restaurants and food businesses, hospitals, hotels, and schools, incur losses of $100 billion annually due to several factors.

These factors range from unreliable supplies and waste to limited data to make informed purchasing decisions to little or no capital to fund purchases.

Vendease, described as a series of stacks, is designed to reduce waste and help food businesses thrive.

The platform claims to have transported about 400,000 metric tons of food for its more than 2,000 customers in the past 12 months and helped them save about $2 million in procurement and more than 10,000 man-hours.

Vendease CEO Kara also disclosed that his company has saved its customers nearly $500,000 in losses due to overstocking.

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Fund Raising

Fintech Company Julaya, Raises $5 Million Extension Round To Expand Operations In West Africa

Julaya has raised $5 million in an extension round to take the total fund raised since 2021 to $7 million following the $2 million raised in a pre-series fund rounding early in 2021.

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Julaya

Ivorian Fintech firm Julaya has raised $5 million in an extension round to take the total fund raised since 2021 to $7 million following the $2 million raised in a pre-series fund rounding early in 2021.

The round was led by the European Venture capital fund, Speed invest, which has six unicorns in its portfolio.

Also participating in the round include EQ2 Ventures, Kibo Ventures, the angel groups Unpopular Ventures, Jedar Capital, previous backers Orange Ventures, Saviu, 50 Partners, Ivorian entrepreneur Mohamed Diabi, and Chelsea football player Édouard Mendy.

Founded in 2018, Julaya which primarily uses mobile money channels to enable B2B payments for companies in Francophone Africa, disclosed that proceeds from the financing round will be used to expand its operations into the West African market.

The startup’s product line has recently been expanded to include a “Cash & Collect” solution that enables “quick and secured” cash collection, particularly in the Fast-moving consumer goods (FMCG) industry.

More than 500 SMBs, startups, large corporates, and government institutions, including famous brands such as Africa’s e-commerce giant Jumia, use Julaya as their digital account to pay their partners and collect payments.

CEO & co-founder of Julaya Mathias Léopoldie said, “African companies are eager to improve their profitability, and digitizing their finances is one of the most important steps for them to grow their business.

“90% of payments are still made in cash on the continent, and Julaya is proud to be part of the fintech landscape that helps businesses be more successful.”

Principal at Speedinvest Enrique Martinez-Haussmann, speaking on how Julaya’s technology is changing how companies operate, said, “Julaya’s technology is fundamentally changing how companies operate in an increasingly complex payment landscape across Francophone Africa.

“As we look ahead, the potential for Julaya’s technology goes far beyond its payment capabilities, having the opportunity to become a close banking partner for companies in West Africa.”

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