Emily Johnson
Mon, Sep 4, 2023 8:10 PM

Nigerian Fintech Anchor Raises $2.4 Million in Seed Investment

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Nigerian Fintech Anchor Raises $2.4 Million in Seed Investment
Anchor, a Nigerian banking-as-a-service (BaaS) provider, has secured $2.4 million in seed investment. Led by Goat Capital, the funding round saw participation from FoundersX, Rebel Fund, Y Combinator, and Byld Ventures. Anchor offers APIs, dashboards, and tools for developers to embed and build banking solutions, and it aims to provide personalised services and flexibility at a lower cost.

Anchor, a Nigerian fintech specialising in banking-as-a-service (BaaS), has raised $2.4 million in seed investment. Led by Goat Capital, the financing round also saw participation from FoundersX, Rebel Fund, and existing investors, including Y Combinator and Byld Ventures.

Having emerged from stealth mode just a year ago with over $1 million in pre-seed funding, Anchor's core proposition is to provide developers with APIs, dashboards, and tools to embed and build banking solutions. In the Nigerian market, it competes with the likes of JUMO, Maplerad, OnePipe, and Bloc.

The emergence of BaaS providers comes as incumbent banks struggle to keep up with the rapidly changing digital banking landscape. These platforms have garnered attention from neobanks and businesses seeking to integrate financial services within their product offerings. Taking advantage of this trend, BaaS providers strive to deliver more personalised services and flexibility at a lower cost. They facilitate the provision of bank accounts, payments, savings, and cards for partner businesses.

Anchor differentiates itself by partnering with regulated banking institutions, enabling it to drastically reduce the time required to build banking products. According to Segun Adeyemi, co-founder and CEO of Anchor, the company's APIs now support various features such as business accounts, card issuance, bill payments, bulk disbursements, and cross-border payments, in addition to developer-only features like an audit log system and developer webhooks.

Reflecting on the company's growth, Adeyemi said, "If you look at the scope of our product today, even though there were a few other players that have been in the market before us, there is no one that has the scope of offering that we have in the market today. This can be validated by looking at the scope of our offerings and comparing them to what similar companies do today."

Since its launch in August last year, Anchor has added approximately 270 clients, with around 63 actively transacting on the platform. The fintech's clientele spans fintechs, SaaS firms, e-commerce enterprises/marketplaces, and other tech-enabled businesses, including Bujeti, Pennee, SeamlessHR, LifeBank, Waza, and Zit.ng.

Anchor claims to have facilitated over $550 million in annualised total transaction volume (TTV) for its clients, and its revenue is reportedly growing at a monthly rate of 30%. The company generates revenue through processing fees, issuance fees for accounts and cards, and interest income on the float.

By allowing non-digital native firms to onboard online, Anchor contributes to increased financial inclusion. The company initially aimed to encourage embedded financing for larger supermarkets and multinationals in Nigeria, but adaptations had to be made following the realization that these companies were not yet digitally ready. As a result, Anchor shifted its focus to digitally ready and tech-enabled businesses.

With the recent seed funding injection, Anchor is set to double down on its efforts to improve compliance processes, develop value-added products such as its ledger system, and onboard more customers. The company also sees potential in exploring pan-African expansion, and it recently partnered with the fintech arm of Nigeria's largest telecom, MTN.

Justin Kan, partner at lead investor Goat Capital, expressed his optimism about Anchor's growth prospects in the category. "The embedded finance market in Africa is nascent but growing fast at over 30% CAGR," he said. "Anchor's growth rate is impressive and showing signs of becoming the category leader, which is something we look out for in our portfolio companies."

Source of content: OOO News 2023-09-04 News

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