A fintech from Ivory Coast — a part of one of the economically challenged and financially fragmented areas on the earth — has raised funding for an formidable aim: to change into the ‘Stripe for Francophone Africa’. HUB2, because the startup known as, already works with some 55 neobanks, fee firms, remittance firms and cryptocurrency suppliers, and it has now picked up $8.5 million to increase that record, and to up its sport in its tech stack.
Pan-African early-stage investor TLcom Capital is main the Sequence A funding, with FMO, Enza Capital, BPI France, and Eric Barbier, the founding father of Thunes, among the many longer record of traders.
Ashley Gauzere, a former telecom engineer who beforehand labored for Orange Africa and the Center East, based HUB2 in 2019 after noticing the actual challenges within the area’s e-commerce business.
Retailers seeking to work with cellular banking suppliers (customers’ and companies’ telephone accounts double as financial institution accounts in lots of creating nations) usually discover it exhausting to promote regionally since cellular cash operators and banks in Francophone African nations function in silos on account of rules and variances throughout banking programs. On the opposite aspect of the transaction, reaching last-mile customers for a few of these monetary establishments was troublesome on account of low banking penetration. Cost points like fragmentation, interoperability gaps, and assortment challenges are widespread.
Impressed by Stripe, the U.S. juggernaut now valued at $70 billion, Gauzere noticed a chance to construct an providing that would knit collectively advanced operations behind an API that firms might use to make it simpler for them to take funds and handle transactions. (Gauzere is just not the one one: the founders of Nigeria’s Paystack had ambitions to change into a Stripe-like supplier for English-speaking Africa; that enterprise scaled sufficient to finally get the eye of Stripe, which acquired it.)
“The one challenge I wished to unravel in French-speaking Africa after 20 years in telecom and seeing the necessity for high-quality, interoperable fee options was creating infrastructure and unifying funds within the area like a Stripe-like platform,” he remarked.
HUB2 claims to supply “complete protection and seamless integration throughout fee strategies,” partnering with cellular cash suppliers like Wave, Orange, MTN, Moov, Free, and T-Cash, and it simplifies funds by enabling fintechs to gather cellular cash, financial institution transfers, card funds and cryptocurrency by means of a single API.
Concentrating on fee suppliers and fintechs as clients was not HUB2’s first technique. It wasn’t even its second technique.
Initially, Gauzere thought the massive alternative was in concentrating on impartial e-commerce retailers straight.
It discovered that the market was nonetheless too small, nonetheless, so it shifted focus to massive corporates within the area seeking to transition from money to digital funds. That led the corporate to increase its providers to incorporate fee collections through cellular cash, financial institution playing cards, and point-of-sale.
For over a yr, HUB2 adopted that technique and targeted on the insurance coverage sector, which then led to consideration from buzzy fintechs like Ivorian YC-backed Djamo. That led to the corporate to pivoting a 3rd time, serving fintechs solely. These are actually chargeable for 98% of its volumes.
At present, HUB2 operates because the spine for 55 fintechs throughout French-speaking Africa — they embody Julaya, Onafriq, NALA, and CinetPay — offering fee infrastructure for these firms to energy their operations. This alignment with fintechs helped HUB2 obtain product-market match and drove its development during the last three years.
The fee aggregator is on observe to course of €1 billion in transaction quantity (TPV) this yr — a marked enhance from the €70 million it dealt with in 2022 — fueled by constant 15% month-over-month development in each TPV and income, which comes from take charges on these volumes.
“We now have a really horizontal play, and our aim is to supply all fee strategies—from cellular cash and playing cards to banking and cryptocurrencies—protecting all the footprint for fintechs,” defined Jean-Rémi Kouchakji, who joined HUB2 as co-CEO in 2023.
He added that focus is essential for it at this stage. “If you wish to provide every little thing with the fitting licenses, excellent compliance, and technical excellence, verticalizing every little thing isn’t precisely possible,” he stated.
However because it scales, the corporate should flip to serving smaller companies in the long term.
Small and medium enterprises (SMEs) account for 90% of companies in Africa, making them a vital phase that can’t be neglected. It might additionally put it in keeping with competitors. Paystack and Flutterwave, for instance, have scaled by addressing the wants of enterprise shoppers and small companies, a mannequin HUB2 might emulate to increase its attain.
Equally, the five-year-old fintech is ramping up efforts to prop up its fee infrastructure on the whole.
In line with co-CEO Ashley Gauzere, cellular cash has pushed most of HUB2’s transactions, with much less uptake for different fee strategies corresponding to bank cards, financial institution transfers, and cryptocurrency, displaying that its concept of a totally interoperable ecosystem continues to be creating.
To handle this, HUB2 will roll out cross-border fee options, introduce stablecoin-based remittance providers, and increase its card fee capabilities by deepening its integration with CyberSource, Visa’s fee processing platform, throughout extra African markets. Presently, it operates in six Francophone African nations: Senegal, Burkina Faso, Benin, Togo, and Cameroon, however is concentrating on full regional protection inside the subsequent two years.
The five-year-old fintech has a 35-person crew throughout three places of work in France, Ivory Coast, and Mauritius.
“We’re proud to work with HUB2 as the corporate extends its attain throughout Francophone Africa,” stated Eloho Omame, associate at TLcom Capital. “HUB2’s achievements within the area, mixed with TLcom’s observe document in Anglophone markets, create a robust partnership that may make digital funds extra accessible throughout the continent.”
