Sudo Africa, a fintech that offers a card-issuing API to Nigerian developers and businesses, has raised $3.7 million in pre-seed funding.
Global Founders Capital (GFC), based in San Francisco, led the round. Picus Capital, LoftyInc Capital, Rallycap Ventures, Kepple Africa, Berrywood Capital, ZedCrest, and Suya Ventures are among the investors.
Several African fintech founders, including Olugbenga ‘GB’ Agboola, Ham Serunjogi, and Odun Eweniyi, are also shareholders in the company.
Card-issuing API (pioneered by the likes of Rapyd, Ayden, and even Stripe globally), like many API-led fintechs, is gaining traction with investors who believe it’s the next big thing in a sector that has attracted the most VC dollars in Africa.
Sudo Africa founders Aminu Bakori and Kabir Shittu told Reporters that the opportunity to build Sudo arose from a problem they encountered while attempting to issue cards at their previous startup: a mobile wallet system allowed users to aggregate existing financial institutions into a single platform and conduct transactions.
“At some point, we wanted to issue cards and collaborated with one of Nigeria’s local banks,” CEO Bakori explained. “They were able to print up to 1,000 cards, but it took a long time and none of them worked because the bank was unable to provide any APIs for us to manage the cards or even control their usage.”
That was the first time we came around, contemplating how to distribute cards.”
According to Bakori, the fintech landscape is one in which, while startups create silo interfaces that allow their customers to send or receive funds between themselves, issues always arise when global financial systems are involved.
For example, using a mobile wallet or local card in Nigeria to make a purchase on Amazon is always a nightmare. This has become less of an issue, however, with the introduction of virtual dollar cards in a few digital banks and fintech platforms. This technology is being driven by card-issuing API fintechs such as Kaduna-based Sudo Africa.
Sudo Africa’s sales pitch to customers is that, whereas banks take weeks or months to issue cards, Sudo Africa does so in days. The company’s infrastructure, developed in collaboration with licensed card issuers, enables it and any developer or merchant who joins its platform to issue virtual and physical cards to their customers. Furthermore, the platform allows businesses to control and program cards to their liking, build features, and securely integrate with other services.
Here’s a more detailed explanation. Assume a company uses Sudo Africa to issue cards for employee expense management; employees are given cards with low balances, so whenever they need to use the card, an API is called each time to decide whether to approve or deny the transaction in real time.
Another example is a delivery company that sends a dispatch rider with a programmable card to a specific mall to make a transaction and spend a certain amount of money. Sudo’s API is designed in such a way that if the rider decides to use the card in another mall for any reason or spends more than the intended budget, the card will no longer function.
“This is more than just creating a prepaid card, funding it, and then allowing the customer to spend it wherever he wants,” Bakori explained.
Sudo’s customers come from a variety of industries, according to Shittu, the company’s COO. Fintechs, microfinance banks, non-tech enterprises, government agencies, logistics companies, commercial banks, and e-commerce companies are among them, according to him.
When its issued cards are used to make a web or POS transaction, the company charges interchange fees, and it takes authorization fees when spending and location-based controls are applied. According to Shittu, Sudo collects lower card production and personalization fees than incumbents.
Sudo Africa is the only player in this space that currently only provides virtual and physical cards in Nigeria. Despite being based in Zambia, Union54 has customers all over Africa. According to Flutterwave, it assists merchants in its 35 African markets in issuing virtual cards, with physical cards currently available only in Nigeria.
As a result, Sudo Africa, which is setting an example for other fintechs and startups trying to make a name for themselves outside of Lagos, is expected to want to expand to other African markets with this investment, not out of competition, but out of necessity. “Right now, our main concern is to expand into other African countries.” So we’re hoping to be in three or four more African countries by the end of the year,” said the chief operating officer.