Cowrywise, a Nigerian fintech startup that provides digital wealth management and monetary preparation services, has raised $3 million in pre-Series A funding. Quona Capital led the round as Tsadik Structure, Gumroad CEO Sahil Lavingia, and a distribute of Nigerian angel investors in your area and in the diaspora took part. The company formerly raised more than $500,000 through a combination of equity funding and grants.
The idea for Cowrywise came when CEO Razaq Ahmed was a financial investment expert with Meristem covering equities and making suggestions to retail and wealth management customers. He noticed that existing investment management firms in the nation focused on the leading 1 percent. They couldn’t scale investment items to millions of Nigerians mostly due to their limiting size.
Banks, however, have been able to make development on this front when compared to investment firms. They expanded heavily in the mid and late 2000s to accumulate the branch networks they have today where there are about 45 million special accounts in Nigeria.
Over the years, the quality of bank services in terms of savings and investments has actually significantly minimized. With interest rates hovering around 3-5% per annum, what Nigerians are now acquainted with is to send out and get money through their savings account, and utilize debit cards for withdrawals leaving the market still underserved when it concerns investment items.
For this factor, Ahmed, along with Edward Popoola as CTO, established Cowrywise in 2017 to solve this problem. With Cowrywise, they wanted to democratise access to cost savings and financial investment products to the growing demography of underserved Nigerian millennials and the middle class.
“Wealth management had actually been weird to many Nigerians because the existing gamers were not constructed for the mass market. That has always been a problem we felt required a solution,” Ahmed told TechCrunch.
When they released, the founders wanted to utilize the telecom market’s reach to drive its investment products to millions of customers. It didn’t turn out as planned, as the task became expensive to undertake and likewise, the telcos asked for cutthroat rates and commissions.
Cowrywise creators(Edward Popoola and Razaq Ahmed) The company switched focus, choosing to build upon existing payment facilities business like Flutterwave and Paystack. The first facet of products introduced to the market were savings-related products backed by fixed income instruments like treasury expenses. Ahmed claims that these products yield better interests at 10%-15%, more substantial than what banks provided.
Following that was the introduction of its mutual funds’ products. Currently, the business has 19 different mutual funds and at least 20% of the overall mutual funds in the nation are noted on its platform. Ahmed claims this is the largest portfolio of mutual funds a single entity has in the country.
These assets cut across five investment partners, and they enable users to conserve and invest with as little as 100 ($0.25). The partners include United Capital Possession Management, Meristem Wealth Management, Afrinvest Wealth Management, ARM Financial Investment Managers and Lotus Capital. Cowrywise indirectly charges consumers for this service and splits the charge with the mutual fund partners however the CEO doesn’t divulge how much.
Also, the four-year-old business takes into consideration the needs of various demographics and religious background, which Ahmed asserts is as a result of an understanding with the mutual fund partners.
“Our shared fund partners clearly acknowledge the value of becoming part of an inclusive digital platform that allows retail investors to invest regardless of faith or monetary status,” he stated.
The YC alum and Driver Fund business also uses advisory services and recommends different funds to clients based upon their danger cravings and spending power.
Image Credits: Cowrywise However constructing trust with users has not constantly been smooth for the company. It’s an issue Ahmed explains Cowrywise has needed to deal with via openness and outstanding service delivery.
One of Cowrywise’s darkest days came last September when a customer took to Twitter to grumble about its lack of communication in reported stolen funds from her account. In action, Cowrywise apologised for the lapse in communication, acted on the request, and guaranteed to do better.
“Service delivery has helped us bridge that trust gap to a big degree, and I feel it’s reflected in the user development and adoption we’ve experienced. Trust was a significant problem we dealt with but right now, we’re crossing that bridge quite well,” the CEO said.
About that, Cowrywise has more than 220,000 users. In its first year, it had just 2,000 users. Likewise, to highlight the journey ahead for the company, there are only half a million Nigerians actively purchasing mutual funds. When compared to the overall variety of active checking account in the country of more than 40 million, it is apparent Cowrywise still has space to grow in the $3 billion market.
Cowrywise’s distinct approach to wealth management is one reason why Quona Capital led the round according to partner Johan Bosini. The VC company, known to back fintech and retail enablers like SA-based Lulalend and Yoco, and Kenya’s Sokowatch, is making its first venture into the Nigerian market with Cowrywise.
“Razaq, Edward, and the Cowrywise group are providing daily Nigerians with easy access to versatile and powerful wealth-generating tools that have usually been reserved for people who are currently rich,” said Bosini to TechCrunch. “In a market of 200 million individuals, we think this will be extremely impactful for individuals to have more control over their monetary future.”
The business wants to increase its consumer base, and the new infusion will be important to that. According to the company, the investment will likewise broaden Cowrywise’s item offerings, support more fund managers in Nigeria and construct out its investment management facilities.
Cowrywise is among the numerous wealth tech start-ups on the continent. There are start-ups with equivalent company models like Nigeria’s Piggyvest and others are Robinhood-esque platforms like Egypt’s Thndr and Nigeria’s Bamboo, Trove, Risevest and Chaka. Cowrywise’s financial investment which is the largest advertised round at this phase brings in much-needed validation for this sector of fintech start-ups that are beginning to take off.
In the exact same vein, despite a slow start to a year which has seen Africa’s agritech and cleantech sectors take the lion’s share of investments, we may see fintech startups picking up the type of rate we’ve been accustomed to that has made them dominate VC funding for the previous couple of years.
Article curated by RJ Shara from Source. RJ Shara is a Bay Area Radio Host (Radio Jockey) who talks about the startup ecosystem – entrepreneurs, investments, policies and more on her show The Silicon Dreams. The show streams on Radio Zindagi 1170AM on Mondays from 3.30 PM to 4 PM.
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