Nigerian fintech company, Bankly, secures $2mn in a seed round led by Vault & other investors
Bankly, a Nigerian fintech company that is digitising the informal thrift collection system known in Nigeria as esusu or ajo, has raised $2 million in its seed round.
“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 CEO Tomilola Adejana.
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 are among the investors in the latest round.
Read also: Fintech startup, Afriex secures $1.2m seed round
With the latest funding, the startup expects to recruit more agents. Bankly, assisted by the funding, will also sell direct-to-consumer goods in the coming months to broaden its 35,000-customer base in cash-dependent communities.
Investment in Bankly keeps up with the growing interests of investors in the Nigerian fintech industry, especially with the recent acquisition of Paystack and the unicorn status achieved by Flutterwave.
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What is however interesting about investors in this round is that a majority of them are locally based. VANSO, Rising Tide Africa, and Chrysalis Capital all have their main locations in Lagos, Nigeria.
Some investors, such as Rising Tide Africa and Chrysalis Capital, are also gender-specific, investing mostly in female-led startups. Chrysalis Capital had previously invested in Helium Health, while Rising Tide Africa recently made an investment in Ghanaian fintech startup OZÉ.
The main reason for investing in Bankly is, however, the fact that the startup is helping to solve financial inclusion problems in the West African country.
Read also: Ghana Healthtech Startup Redbird Raises $1.5mn Seed Funding
Many Nigerians, for numerous reasons, are currently unbanked and lack access to formal financial services. The results of the EFInA Access to Financial Services in Nigeria 2012 survey, for instance, showed that 34.9 million adults representing 39.7% of the adult population were financially excluded. Only 28.6 million adults were banked, representing 32.5% of the adult population.
Billions of Naira circulate through the informal sector and this has a negative impact on the country’s economic growth and development. The EFInA Access to Financial Services in Nigeria 2012 survey revealed that 23.0 million adults save at home. If 50.0% of these people were to save N1,000 per month with a bank, then up to N138 billion could be incorporated into the formal financial sector every year.
In 2019, the Central Bank of Nigeria issued a policy targeted at phasing out all transactions involving the movement of cash within the country. According to the policy aimed at discouraging cash transactions, cash withdrawal by an individual from N500, 000 and above attracts 3% of the amount withdrawn while cash deposit of N500, 000 and above attracts 2% of the amount to be deposited.
“Given our over 20 years of 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.
Read also: Kenya’s Edtech Startup, Kidato, Backed By Y Combinator Lands US$125k Funding
What You Need To Know About Bankly
Founded in 2018 by Tomilola Adejana and Fredrick Adams, Bankly collates money through its 15,000 agents from unbanked people, allowing them to save using online and offline methods. Customers can deposit and withdraw cash at any time from a Bankly agent. Since there are thousands of agents in these cash-dependent societies, this addresses the problem of access.
“The first phase is building agent networks which is good, but that’s not the goal,” CEO Adejana said. “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.”
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