anchora Nigerian Banking as a Service (BaaS) company, has raised US$2.4 million in seed investment. Justin Kan’s Goat Capital led the funding round Which also welcomed participation from FoundersX, Rebel Fund, and some existing investors, including Y Combinator and Byld Ventures.
The fintech emerged from obscurity a year ago with over $1 million in seed funding. Its proposal was clear and straightforward: provide APIs, dashboards, and tools to help developers embed and build banking solutions. Anchor is one of the few BaaS providers in the Nigerian market; It competes in a crowded fintech space that includes JUMO, Maplerad, OnePipe, and Mass.
Incumbent banks have been lazy to quickly upgrade their services in the rapidly changing world of digital banking. Consequently, these platforms have been very popular with neobanks and other companies seeking to integrate financial services into their products. Now, platforms offering banking as a service see an opportunity to offer more personalized and flexible services at a lower cost. They help these companies with bank accounts, payments, savings and cards.
Anchor partners with regulated banking institutions. By doing so, it claims to help companies shorten the process of building banking products from years to days. The fintech only catered to customer accounts when it was first launched. However, according to Anchor co-founder and CEO Segun Adeyemi, Anchor’s APIs now support business accounts, card issuance, bill payments, bulk payments, cross-border payments, and developer-only features such as an audit trail system and developer webhooks.
“If you look at the product scope today, even though there are a few other players who were in the market before us, no one has the scope of offering that we have in the market today,” the CEO who founded Anchor with. Olamide Sobowale And Gbekiloluwa Olufotibi He told TechCrunch in a call. “This can be validated by looking at the scope of our offerings and comparing them to what similar companies are doing today.”
Expansion to serve more than five dozen customers
Anchor launched in August last year with approximately 30 customers in various stages of setup. Its current total is approximately 270 companies, with approximately 63 of these companies online and actively transacting on the platform. Its clients include fintech companies, SaaS companies, e-commerce organizations/marketplaces, and other technology-enabled companies. Bujeti, Pennee, SeamlessHR, LifeBank, Waza, and Zit.ng are a few of its clients.
To date, YC-backed fintech companies claim to have generated over $550 million in annual total transaction volume (TTV) by enabling fintech services for these companies. Likewise, the company is increasing revenue by 30% month-on-month, according to the CEO. Processing fees, account and card issuance fees, and interest income on the float generate revenue for the company.
Onboarding local, non-digital businesses online increases financial inclusion. As a result, fintech startups have sought to address financial inclusion through their services. For Anchor, its initial goal was to encourage consolidated financing for major supermarkets and multinational companies in Nigeria. According to Adeyemi, the startup realized there was huge potential to connect these businesses online and enhance their financial services offerings. But it didn’t go as planned.
“we “They realized they weren’t digitally ready yet,” the CEO said. “We found that most of them would take three to four years to get on board properly or even get to the stage where they could maximize their accounts with embedded funding. As a startup, we had to realize that we don’t have the luxury of waiting for customers. So, We had to change and focus more on digitally ready and technology-enabled businesses.
Great growth channel in the business
This was one of the most notable lessons the market taught Anchor after its first year, according to Adeyemi. Others include setting appropriate pricing, developing revenue streams that positively impact customers’ bottom lines and re-engineering their compliance processes. Therefore, the one-year-old fintech will double down on these areas after this funding infusion. “We want to improve our overall compliance system, invest in value-added products like our ledger system, and onboard more clients,” Adeyemi explained.
The global embedded finance market will be worth $384.8 billion by 2029. Africa will account for 10% of the industry, with Anchor reporting that it serves a $7 billion addressable market in Nigeria. There are several growth avenues that Anchor can leverage to gain market share. Above all, its recent partnership with the fintech arm of Nigeria’s largest telecommunications company, MTN.
while, The startup is also in very early discussions about exploring pan-African expansion, which is one of the reasons why Kahn, a partner at lead investor Goat Capital, is bullish on the startup. “The embedded finance market in Africa is nascent but growing rapidly at a CAGR of over 30%,” said Kahn. “Anchor’s growth rate is impressive and shows signs of becoming the leader in its category, which is something we look for in our portfolio companies.”