Nigerian fintech startup Paystack today announces it has closed a Seed Investment of $1.3M from international investors 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 angel investors.
The announcement follows news that the fintech start-up has recently built a payment gateway integration for Shopify, one of the world’s largest ecommerce platforms.
The Y Combinator-backed online payments platform is solving the considerable challenge of online payment transactions in Nigeria, by seamlessly connecting all multi-channel payment options with 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.
Led by co-founders Shola Akinlade and Ezra Olubi, the Paystack team will use the investment to build out its engineering team in Lagos, as well grow its sales and marketing operations, to accelerate product development and customer onboarding.
We contacted the team to hear more about their recent experiences.
How did being part of Y Combinator influence the way you are running your business today – and how did it help you during the fundraising process?
Shola Akinlade: “Y Combinator (YC) helps you focus on the most important things and remind you that almost every other thing is a distraction. For us, the most important things were building our product and talking to our customers. That’s really helped us with growing the business. The demo day at the end of YC was a great way to kickstart our fundraising process.”
Can you share some insights in the fundraising process? How long did the process take from start to finish? What approach did you use to contact investors?
Ezra Olubi: “A bulk of the fundraise was done four weeks after the YC Demo Day. After Demo Day, we had a list of investors that were interested in our business and we emailed them to set up meetings and calls. The format for each meeting/call varies, but mostly it results in us telling our story, talking about the problem, the market, showing our solution and traction.
After that, we try to understand what the investors are looking for and what their investment process is. We also try to get a sense of how long it will take to get a decision. We met most of the investors on Demo Day, and the others were from intros.”
Looking back at this experience, do you have tips/tricks for other entrepreneurs who are raising a Series A round?
Shola Akinlade: “Three tips: 1 – Don’t get distracted. Especially in the early stages, entrepreneurs need to focus on building a great business (and not chasing investors). 2 – Try to get a quick decision from investors so you can easily know who’s in or out. 3 – Have a good sense of the most impressive things about your business and share that when pitching.”
Connecting merchants to payment options
At present, businesses on the continent struggle to integrate and keep up with many different payment options on offer. Paystack does the heavy-lifting and is aiming to become the go-to, indispensable layer that connects merchants to payment options. Paystack is completely platform agnostic – it does not favour one payment platform over any other – something unique in African fintech, which is currently very fragmented. Merchants who sign up for Paystack can receive live payments from customers within 30 minutes of integration and the product allows for recurring billing, thanks to its PCI-Compliant one-click and subscription payments infrastructure.
“Catalyst for the continent’s online economy”
Paystack CEO Shola Akinlade says: “Having painstakingly identified the many barriers that merchants on the continent have when it comes to online payments, we have built and refined a product for Africa that we hope will act as a catalyst for the continent’s online economy, be it on-demand services, e-commerce, travel & hospitality, financial services or entertainment. We know Africa’s digital economy has potential, many billions of dollars of potential, we simply need to unlock it and make businesses work better, faster and more effectively. Paystack will do this. Thanks to the backing from our investors with today’s announcement, and our time spent with Y Combinator, we are now in the strongest position yet to resolve the disconnect between African businesses and accepting payments.”
Paystack is launching its service in Nigeria, Africa’s largest economy and most populous economy, before rolling out the service across the continent. Nigerian businesses collected about $150B last year, most of which was collected offline. However the digital economy on the continent is growing fast, and Nigeria alone currently sees 6 million new Internet users every year.
As mobile adoption continues at a torrid pace, with 400 million more smartphone connections by 2020 expected, the continent will need a reliable payments platform to support growth in online transactions.
Addressing a massive market
“Paystack is addressing a massive market, helping businesses accept payments online in less than 30 minutes from sign-up,” said Christian Ebersol, Associate at Comcast Ventures. “We look forward to supporting this talented team as they streamline the payment process between merchants and consumers.”
Now moving out of beta, Paystack has partnered with some of Nigeria’s leading Internet companies iROKOtv, Jobberman, Payporte, and Hotels.ng, to facilitate fast, safe payments. The payment platform has also built a strong following amongst Nigeria’s technology community, as over 30 independent developers have built additional plug-ins and tools for Paystack, using the company’s REST APIs and client libraries.