Finclusion lands funding to fuel African neobank offering

Finclusion Group, a FinTech that aims to boost financial inclusion in sub-saharan Africa, has raised $20m amid a period of growth in startups in the region.

A report by TechCrunch has revealed that investors in the round included Andela and Flutterwave co-founder Iyin Aboyeji (who invested via his VC firm Future Africa), LendInvest founder Christian Faes and ComplyAdvantage founder Charlie Delingpole.

Others include Amandine Lobelle, Jai Mahtani, Sudeep Ramnani, Jonathan Doerr, Richard Aseme (RCA Ventures), and Klemens Hallmann. They join the likes of Manuel Koser, Alexander Schuetz and Christian Angermayer, Leo Stiegeler, investors in the company’s previous round.

Finclusion secured $20m in October 2021, raised in partnership with Lendable, a FinTech providing capital to companies in emerging and frontier market FinTech companies.

At the time of the funding, Finclusion said it hoped to bolster financial inclusion in South Africa, Tanzania, Kenya, eSwatini and Namibia. The company claimed to have already established a number of key distribution partners to this end since its inception in 2018.

Finclusion Group uses AI algorithms to provide financial services to African customers via an array of credit-centric products. Employers can leverage the platform to access payroll, HR, financial wellness and insurance solutions, while employees can benefit from wage streaming and access to earned and future wages. Its platform can also be used by consumers and SMEs for buy now, pay later technology.

Now, as the digital banking space in Africa is taking shape as FinTechs and neobanks grow in the region, Finclusion is looking to grow its operations in South Africa, Eswatini, Kenya, Namibia and Tanzania and expand into Mozambique and Uganda.

According to a statement by the company, the expansion, facilitated by the recent financing, is part of Finclusion’s strategy to “drive financial inclusion within market segments that have traditionally been underserved across the African continent, with a current focus on southern and eastern Africa.”

Finclusion Group recently posed the question “Is Africa the new Frontier of FinTech?”, due to the region experiencing significant growth in startups and investments, particularly in 2021. The group reported that African startups secured $330.5m in the first half of 2021, more than double that was raised in total in 2020.

The region has been a historically unappealing investment due to high geopolitical and currency related risks. However, as more African startups secure funding and reach unicorn status, the market has become more attractive.

For example, Uganda-based asset financing startup Asaak raised $30m in pre-Series A funding, B2B e-commerce fashion startup Gahez raised $2m in a pre-seed funding round, and Nigeria-based Mono raised $15m in Series A funding, the company helps consumers to connect their financial accounts in a single place. Cross-border payments company Chipper Cash also became a FinTech unicorn after a $150m Series C extension round pushed its valuation just above $2bn in November 2021.

The success of African startups could be crucial to creating an appetite for risk and reward amongst investors. The region still lags in funding and startups are valued much lower than those in the US and Europe, and not many have been able to reach unicorn status, but there is a growing emergence of successful startups to keep an eye on.

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