Nigerian Fintech Startup Paystack Raises $1.3 Million
Paystack, one of Nigeria’s most hotly anticipated tech start-ups, has just secured $1.3M Seed investment from both international and homegrown investors. The investors include Tencent, Comcast Ventures and Singularity Investments, with participation from Spark, M&S Partners, Tokyo Founders Fund, Blue Rinc Capital, Pave Investments, KIBS-CFY Partners, Michael Siebel, Justin Kan, Olumide Soyombo, Leonard Stiegeler and a number of Angels.
The company, founded by Shola Akinlade and Ezra Olubi, initially caught the eye of industry commentators as it was one the first Nigerian tech company to be accepted into the world-famous Y Combinator progam, based in Silicon Valley. Since then, having taken Paystack through Private beta, and securing $120,000 early-stage investment from Y Combinator, Akinlade [CEO] and Olubi [CTO] have quietly been building the company, working to secure this Seed investment round, whilst also building a network of partner merchants in Nigeria, over 1,500, who are now using the platform to accept online payments.
I spoke to Paystack’s CEO, Shola Akinlade, to find out how the company is working to fix Nigeria’s fragmented online payments system.
Introduce us to Paystack – how did the idea come about?
We started Paystack because we knew online payments in Africa were essentially broken and someone definitely had to do the hard work of fixing it. Ezra Olubi [Paystack Co-founder and CTO] and I graduated from Babcock University 10 years ago, and after that, I worked on Precurio, a collaboration software for businesses in emerging markets which was downloaded over 150,000 times and made available in six languages. Ezra on the other hand, started off working in payments with Eyowo, and then went on to become the CTO of Jobberman, and Delivery Science. But we were both from solidly tech backgrounds.
Sometime in 2014, I was helping a few banks with financial software and realised I had a great chance of solving the payments problem; firstly because I had built world-class software before, and now, I had a little access to the financial industry. I started speaking with people in the tech ecosystem and then put up a waiting list, which was really just a call for those who wanted to try out what we were working on. Within one month, we had over 300 people join the waiting list. From this, we felt that we had tapped into an issue that was experienced by many, so we grew the idea from there. The challenge was to solve the issue of online payments in Africa, somehow connecting the super-fragmented aspects of the sector. What we did was develop multi-channel payment options for merchants across the country, enabling them to accept payments from around the world, via credit card, debit card, and direct bank transfer on web and mobile. It’s taken two years of non-stop hard work to grow it from idea stage, to the product we have today.
You were accepted into the tech accelerator Y Combinator at an early stage. What was the process and how did it help your company?
Y Combinator is amazing. I had applied for the tech accelerator with my first company, in 2007 and, sadly, didn’t get in. I applied again last year with Paystack and got invited to Silicon Valley for a 10-minute interview. We packed our bags, took our laptops, got on a plane, shared our vision with YC applications team, showed them what we were building and, to our surprise, we got in, making us the first Nigerian company to be accepted into the program.
The YC program basically changed our company’s trajectory. They funded us with $120k and advised us to focus on building our product and talking to our customers, noting that almost everything else involved in building our ideas and company, would be a distraction. They helped us focus on the detail; the core structure of the company that was going to help us scale. YC also helped with fundraising, as at the end of Y Combinator, there’s a Demo Day where each company has to present to the top early stage investors in the world. It seems we were able to capture the attention of investors who understood the scale of the challenge, as well as our solution for fixing the problem of payments in Africa, as we were able to raise our seed round on the back of Demo Day.
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