By Jeph Ajobaju, Chief Copy Editor
Mono, a fintech API startup, has raised $2 million in the latest round of seed investments, giving it a total $2.625 million war chest to pursue its dream of making the internet more accessible to Africa’s 1.2 billion population.
It comes two months after, Kuda, another fintech startup, raised new $25 million for digital banking on the country in a Series A round led by Valar Ventures, the firm co-founded, and backed by PayPal co-founder Peter Thiel.
Target Global, the European venture capital firm that led Kuda’s last funding, participated in the round, as reported by TechCabal.
Investors in Mono in this seed round include Entrée Capital; Kuda’s co-founder and CEO, Babs Ogundeyi; Gbenga Oyebode, partner at TCVP; Eric Idiahi, co-founder and partner at Verod Capital; VC Lateral Capital.
Mono had raised $500,000 in pre-seed in September 2020 and two months later received $125,000 from Ycombinator. Mono has now received a total $2.625 million in investments, per Nairametrics.
Launched in 2020, Mono helps digital businesses in Africa access their customers’ financial account for data and payments.
In a region where more than half of the population is unbanked or underbanked, open finance players like Mono are trying to improve financial inclusion and connectivity on the continent.
Open finance has shown that access to a financial ecosystem via open APIs are new routes to move money, access financial information, and make borrowing decisions thereby reducing the barriers and costs of entry for the underbanked.
Nairametrics reports that Mono has partnered with more than 16 financial institutions and over a hundred businesses in Nigeria such as Carbon, Aella Credit, Credpal, Renmoney, Autochek, and Inflow Finance.
The company accesses customers’ bank accounts for bank statements, identity data, and balances. It has also connected over 100,000 financial accounts for its partners and analysed over 66 million financial transactions so far according to Techcrunch.
Other API fintechs to have also raised a seed investment this year – including Nigerian fintech, Okra, which raised $3.5 million last month; and Stitch, a South African API fintech, which launched with $4 million in February.
Excitement about Mono
“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,” said Avil Eyal, managing partner and co-founder of Entrée Capital.
Mono CEO Abdul Hassan explained that “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.”
Kuda piles up seed fund for digital-only banking
Kuda has raised a total $36.6 million in two years to build a digital bank in Africa.
Bizao has also joined the race to digitise payment on the continent. It announced in February that its cross-border payments network operates in at least 10 countries in francophone Africa.
Bizao has processed close to 300 million transactions in the region, according to Aurélien Duval-Delort, who founded the startup in 2019.
Kuda’s latest Series A follows $10 million raise in November 2020, a feat cheered for being the largest seed round by an African startup.
TechCabal reports that at the time, the company said it had 300,000 customers (a mix of individuals and sole-proprietor businesses) and was processing an average of $500 million worth of transactions per month.
Five months later, Kuda said it had 650,000 customers.
Ryan Laubscher, who recently joined Kuda as Chief Operating Officer, told TechCabal that Kuda processed $2.2 billion in transactions in February 2021 alone – a staggering increase from $5.2 million processed in February 2020.
All of this has been achieved just in Nigeria where Kuda launched as a no-fees, digital-only bank in the second half of 2019 with $1.6 million pre-seed funding.
Raising funds to fit plans
Given these impressive numbers, the large seed round (for an African startup), and their ambition to bank every African in every part of the world, it may have been expected that Kuda would raise a Series A larger than $25 million.
Laubscher said the round stirred interest from multiple investors. However, the startup chose to raise only what was adequate to fund their plans.
“It is very important to us that our metrics are justifying the valuation that investors are buying into with their capital,” Laubscher said on a call with TechCabal.
“Our growth is at the point where we need to beef up our technology and people. But in terms of our plans for the next 18 months, we’ve got sufficient capital to fund those plans.
“If we need more capital, it’s going to mean that something is going very right. And if that’s the case, we can raise again.”
Kuda has two co-founders: Babs Ogundeyi, the CEO, and Musty Mustapha, the Chief Technology Officer.
The company has a microfinance banking licence from the Central Bank of Nigeria (CBN). At the moment, Kuda’s flagship product is a digital-only savings account.
Customers can download the app, enter Know Your Customer (KYC) information and have an account within a day.
The new customer can receive deposits into this account, though the maximum balance and deposit amount depends on the level of KYC information provided. Customers request a debit card on the Kuda app and have it delivered to their homes.
Laubscher says Kuda’s Series A round was oversubscribed and a “decent amount of capital” was left on the table.
Their plan is to further accelerate the company’s growth in ways that those investors who couldn’t get in at this round would still be interested in being part of the Kuda story when they raise again.
Africa as destination for venture capital
Last year, Kuda’s seed round was announced after Paystack’s landmark exit to Stripe. Earlier this year, Flutterwave became a unicorn and landed a crucial integration that enables merchants in Africa to receive PayPal payments.
The three startups rank highly on Africa’s fintech funding list, but the money is perhaps to be best understood as a sure signal that Africa is the destination for venture capital seeking tech-based value creation.
In addition to its mobile-first savings account, Kuda is testing a credit product at the moment, but what will differentiate them from traditional banks is the capacity to facilitate easy banking.
“What really excites me is blowing people away with the quality of customer service where they really feel that they are loved by their bank,” Laubscher said.
