Nigerian integrated finance platform Anchor raises $2.4m to expand its product offering

Anchor, a Nigerian banking-as-a-service (BaaS) provider, has raised $2.4 million in seed investment. justin Kan’s Goat Capital led the funding round which also welcomed participation from FoundersX, Rebel Fund and some existing investors including Y Combinator and Byld Ventures.

The fintech came out of hiding a year ago with over $1 million in pre-seed funding. His proposition was simple: provide APIs, dashboards and tools to help developers integrate and build banking solutions. Anchor is one of the few BaaS providers in the Nigerian market; it competes in a crowded fintech space that includes JUMO, Maplerad, OnePipe, and Bloc.

Incumbent banks have been lazy to update their services in a rapidly changing digital banking world. Therefore, these platforms are popular with neobanks and other companies looking to integrate financial services into their products. Now, platforms offering banking as a service see an opportunity to provide more personalized services and more flexibility at a lower cost. They help these businesses provide bank accounts, payments, savings, and cards.

Anchor partners with regulated banking institutions. By doing so, it claims to help businesses reduce the process of building banking products from years to days. The fintech only catered to customer accounts when it launched. However, according to Segun Adeyemi, co-founder and CEO of Anchor, Anchor’s APIs now support business accounts, card issuance, bill payments, bulk disbursements, cross-border payments and reserved features. for developers such as an audit log system and developer webhooks.

“If you look at the breadth of product today, even though a few other players were in the market before us, no one has the breadth of supply that we have in the market today,” said the CEO. founded Anchor with Olamide Sobowale And Gbekeloluwa Olufotebi TechCrunch said on a call. “This can be validated by looking at the scope of our offerings and comparing them to what similar companies are doing today.”

Scalable to serve more than five dozen customers

Anchor went live in August last year with around 30 customers in various stages of onboarding. Its current total is around 270, with around 63 of them online and actively transacting on the platform. Its customer base includes fintechs, SaaS companies, e-commerce companies/marketplaces, and other technology companies. Bujeti, Pennee, SeamlessHR, LifeBank, Waza and Zit.ng are some of its clients.

So far, the YC-backed fintech claims to have generated over $550 million in total annualized transaction volume (TTV) by enabling fintech services for these companies. Similarly, revenue is up 30% month-over-month, according to the CEO. Processing fees, account and card issuance fees and float interest income generate revenue for the business.

Online integration of non-digital businesses increases financial inclusion. As a result, emerging fintechs have sought to address financial inclusion with their services. For Anchor, its initial objective was to encourage integrated financing of large supermarkets and multinationals in Nigeria. According to Adeyemi, the startup recognized huge potential to connect these businesses online and power their financial services offerings. But it didn’t go as planned.

“We I realized they weren’t ready for digital yet,” the general manager said. “We figured it would take most of them three to four years to properly integrate, or even get them to the stage where they can maximize their accounts with integrated finance. As a startup, we had to realize that we didn’t have the luxury of waiting for customers. So we had to change and focus more on digital-ready and technology-driven businesses.

A major growth driver in preparation

According to Adeyemi, this is one of the most remarkable lessons the market taught Anchor after its first year. Others include determining appropriate pricing, developing revenue streams that positively impact client bottom lines, and reengineering its compliance processes. Therefore, the fintech, created a year ago, will focus twice as much on these areas following this injection of funding. “We want to improve our end-to-end compliance system, invest in value-added products like our ledger system, and onboard more customers,” Adeyemi explained.

The global integrated finance market will be worth $384.8 billion by 2029. Africa will account for 10% of this industry, with Anchor stating that it serves a $7 billion addressable market in Nigeria. There are various growth avenues Anchor could leverage on to capture market share. First and foremost is its recent partnership with the fintech arm of Nigeria’s largest telecom, MTN.

In the meantime, the startup is also in the early stages of talks about exploring pan-African expansion, one reason why Kan, partner at lead investor Goat Capital, is bullish about the startup. “The integrated finance market in Africa is nascent but growing rapidly at over 30% CAGR,” Kan said. “Anchor’s growth rate is impressive and shows signs of becoming the category leader, which is what we look for in our portfolio companies.