Nigerian investors are increasingly taking stakes in fintech startups in and outside the country, upping their investment game in the tech ecosystem where foreign investors have been leading the way.
Nigeria’s leading financial services providers, Investment One Financial Services Limited (Investment One), has made an undisclosed investment in a South African-based fintech startup, Paycode. The investment was made through Investment One’s subsidiary, Investment One Vencap Limited.
Nigeria and South Africa are leaders in Africa’s fintech market, though other countries like Kenya and Egypt are very much in the competition. Though many players are springing up every day, the market remains untapped and each of the startups has distinct services to attract investors.
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Investment One says it was particularly attracted by the technological USPs of Paycode, a valuation that focused on current revenues and users while reasonably discounting cashflows (in an environment where fintech valuations have noticeably sky-rocketed during 2021) and the scope for growth in Nigeria through projects already won.
Paycode provides technology solutions that use biometric digital identity to guarantee proof of life and enable low-cost, last mile delivery of basic financial services. The startup addresses three critical problems for the unbanked and underserved by providing low-cost solutions to those without formal identification in areas with little or no mobile or internet connectivity.
Paycode enables access to basic financial services including cash pay-outs, mobile money, remittances, insurance, microloans, airtime, electricity and social grants by providing a platform that combines biometric digital identity and payments in one convenient platform.
Investment One Group Managing Director, Nicholas Nyamali said the investment in Paycode is part of his company’s financial inclusion efforts.
“Our investment in Paycode represents both our drive to achieve excellent returns for our clients, but also our commitment to bringing financial services to excluded sectors in Nigeria. Paycode’s unique approach to solving the most complex challenges of the financially excluded fits perfectly with our own innovative DNA” he said.
Investment One’s interest in Paycode was also spurred by its market growth. The company looked into Paycode’s future growth trajectory in Nigeria alone to make its investment decision as it is packed with value.
The startup has over 6 million registered card users, a partnership with Mastercard and a strong pipeline of fee-driven grant and social programmes under its belt, and also plans a Series A capital raise in the first Quarter of 2022. The plan is to expand globally and achieve a target of serving over 50 million people by 2025.
Currently, Paycode has active users in Ghana, Zambia and Mozambique but securing a share in a large market like Nigeria presents a key to growth.
Paycode CEO, Ralph Pecker, says having Investment One onboard will help the company to achieve its objective to expand to the Nigerian market.
“We see Investment One as so much more than just an equity partner to Paycode. Investment One is a significant and innovative player in the financial services sector of Nigeria, a key growth market for us. We believe that having them onboard will greatly accelerate our expansion objectives in Nigeria, and that we in turn can provide an excellent return on their investment.”