Africa has been one of the least-developed regions globally when it comes to technology and being on the less advanced side of the so-called digital divide. But with a huge population and a set of nations whose economies are rapidly changing, we are seeing a significant knock-on effect in tech. Today, one of the more interesting startups, in the area of financial services, is announcing some funding that underscores that trend.
Paystack, a Stripe-like startup out of Lagos that provides online payment facilities to merchants and others by way of an API and a few lines of code, is announcing that it has raised $8 million in a Series A round of funding. The company is active today in Nigeria, where its payment API integrates with tens of thousands of businesses, and in two years it has grown to process 15 percent of all online payments; and the plan is to both continue to grow in its home market, as well as expand to more countries, starting with Ghana.
I describe Paystack as “Stripe-like”, and in an interesting twist, the round is being led by none other than Stripe itself — a mark not just of how the latter (once a YC startup itself) is eyeing up like-minded global founders and businesses as it continues to grow, but also how Stripe understands the challenges of breaking into a region like Africa, and therefore sees an opportunity to work with and support those who are.
“The Paystack founders are highly technical, fanatically customer oriented, and unrelentingly impatient,” says Patrick Collison, CEO of Stripe, in a statement. “We’re excited to back such people in one of the world’s fastest-growing regions.”
“It takes a lot of local nuances to build for African businesses,” said Shola Akinlade, the CEO of Paystack who co-founded the company with Ezra Olubi (who is the CTO) and are pictured above. “Paystack seems to be the only one doing this.”
In 2016, Paystack became the first startup from Nigeria to enter Y Combinator, and the incubator is doing some follow-on investing in this round. Other strategic investors in this Series A include Visa and the Chinese online giant Tencent, parent of WeChat and a plethora of other services. (Tencent also invested in Paystack’s previous round: the startup has raised $10 million to date.)
Stripe scored a big win in financial services in the West when it developed a very quick and easy way of integrating payments into any app or website, taking what used to involve a lot of integration and negotiation and reducing it into a few lines of code. It came just at a time when apps were starting to take off, and people were coming around to feeling more comfortable about making financial transactions online, as long as they were easy to do.
Paystack has followed a similar template, albeit much more localised.
Nigeria is the biggest economy in Africa, but even so, it is only just getting the ball rolling on digitising commerce. There have been other payment providers operating in the market — Interswitch being perhaps the biggest — but Akinlade describes Paystack as a more modern take on payments. Specifically, its focus is on integrating the wide range of payment options that Nigerians (and soon, those in other countries in Africa) use both to accept payments and make them and making each of them equally easy to use.