This year, Africa-based investors are taking the bull by the horns. They have gone after AppZone, the Lagos-based fintech software firm and have poured in up to $10 million in new funding, consequently. Appzone has clients spread across Nigeria, Ghana, Gambia, DRC (Democratic Republic of Congo), Tanzania, Senegal and Guinea, and has so far raised $15mn in total equity funding.
“For the last 12 years, we’ve worked in stealth mode, building the really complex infrastructure to power the continent’s growing digital financial services space and forging partnerships with the continent’s biggest financial institutions,” Appzone’s co-founder and CEO Obi Emetarom. “We are not just trying to bring African fintech on-par with the rest of the world — we exist to make our financial sector the most innovative and technologically advanced on the globe through solutions built for Africa by Africans.”
Here Is What You Need To Know
- The latest round was led by CardinalStone Capital Advisers with participation from V8 Capital, Lateral Investment Partners, Constant Capital, and Itanna Capital Ventures.
- The funding will bolster investment in Appzone’s key technology and set off a surge of new nation expansions.
Why The Investors Invested
A majority of the investors involved in this round are based in Africa. While CardinalStone Capital Advisers and Itanna Capital Ventures are based in Nigeria, Constant Capital is based in Accra Ghana. On the other hand, V8 Capital has its base in Mauritius. Lateral Investment Partners, although it has its base in the United States, maintains strong African presence.
Investment in AppZone is one of the few instances where local investors would be spearheading a big ticket size funding in an African startup.
This is particularly interesting because according to African Private Equity and Venture Capital Association 2019 VC report, North American investors represented 42% of the total number of investors that participated in VC investments on the continent between 2014 and 2019, followed by European based investors at 23%. African based investors accounted for only 20%, followed by Asia-Pacific (8%) and investors based in the Middle East (6%). This, perhaps, shows why the continent lags behind other continents in terms of funding available to its startups ecosystem.
Cardinal Stone Capital Advisers’ investment in Appzone, according to Yomi Jemibewon, co-founder and managing director, is “further evidence of Africa’s potential as the future centre 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 said.
Lead investor in this round, CardinalStone Capital Advisers (CCA) recently failed to raise the $100 million it expected when its first vehicle was finally closed. Focused on Nigeria and Ghana, CardinalStone Capital Advisers Growth Fund LP finally closed with commitments of around $64 million. The operation, which took place in September 2020, was announced by the firm on Tuesday, March 23, 2021. The VC invests in high-growth companies, for amounts between $5 and $10 million. The fund, which has already made two investments in a fintech and a welfare company in Nigeria, has announced over the next two years, 7 more commitments in diverse sectors.
A Look At What AppZone Does
AppZone, which was established in 2008, provides proprietary solutions for digital core banking and interbank transaction processing to clients in seven African countries, including well-known institutions such as Access Bank, GT Bank, and Zenith Bank.
The firm began as a consulting company specialising in custom software creation for commercial banks. The business released its first core banking product for microfinance institutions in 2011. The next year, Appzone launched its first commercial banking product (branchless banking). In 2016, it launched its mobile and internet banking services, and in 2017, it introduced an instant card issuance product. In 2020, the firm will introduce services for end-to-end lending automation and blockchain swapping for banks.
To date, the company’s channels have represented 18 commercial banks and over 450 microfinance banks, totaling $2 billion in annual transaction volume and $300 million in annual loan disbursement.
Traditional and challenger banks in Africa are restricted, according to Appzone co-founder and CEO Obi Emetarom, to using international technology solutions customised for Western markets, many of which are plagued by major stumbling blocks such as prohibitive prices, inadequate flexibility to innovate, and a lack of local tech support.