Nigerian fintech startup Anchor gets $1 million for its banking-as-a-service business

The news

• Nigerian fintech startup, Anchor, has come out of stealth with the announcement of its $1 million pre-seed funding.
• The startup, founded by Segun Adeyemi, Olamide Sobowale and Gbekeloluwa Olufotebi, helps businesses offer services such as payments, savings and card issuance.
• Investors in the round include Y Combinator, Byld Ventures, Luno Expeditions, Niche Capital, Mountain Peak Capital and Emmanuel Okeleji, Seamless HR CEO.

In February 2022, Nigerian fintech startup Flutterwave unveiled its new logo and dashboard at the Flutterwave 3.0 event, but that wasn’t all the startup revealed. It revealed that it was now set to enable startups to embed financial products into their core offerings. Consequently, businesses can issue cards and supply wallets without worrying about compliance issues.

However, the fintech unicorn is hardly the only business that sees a massive opportunity. Startups like Anchor also see the opportunity, and after a few months of testing their product with a limited number of users, have announced their pre-seed round.

Co-founder and CEO Adeyemi is no newcomer to the fintech space, having built and sold Amplify to Carbon before moving to JUMO as country manager in Nigeria. Although Anchor only ran its private beta this year, it entered Y Combinator and reportedly got more than 30 startups, including Pivo and Pennee, to use it.

In addition, the startup has reported a 200% monthly growth as it reportedly handles millions of dollars worth of transactions. With intense competition in Nigeria’s fintech space, startups need to stand out from the pack, and Adeyemi believes the founding team’s experience is a bonus.

Speaking to TechCrunch, he said: “It’s an understanding of the space as founders and the core team building this. We’ve seen firsthand the painful process of closing banking partnerships, negotiating third-party contracts and obtaining regulatory approvals. And more generally, the extensive time and effort required to launch financial products.

“We optimize for speed on the market, while at the same time not compromising on security and scalability. So there are a lot of use cases that we’ve built for that if you start from scratch, it will take some time to get up and running.”

While the experience of the founders may work in its favor, one must remember that Nigeria’s fintech space is still nascent. With frequent regulatory attacks and many players serving a few people, experience alone will not count.