Fast growth, big capital, and how Moniepoint is building a fintech unicorn in Africa | E2036

Alex Wilhelm kicks off the show (0s)

• A nine-figure fintech round took place in 2024, with the startup in question focusing on the African market (3s).
• The startup is Moniepoint, which recently raised a $110 million series C and is now reportedly a brand new unicorn (58s).
• Moniepoint's CEO and co-founder, Tosin Ani, joined the show to discuss the company's growth and progress (55s).
• The show is sponsored by OpenPhone, which offers business phone numbers that work through an app on smartphones or desktops, with a 20% discount available for the first six months (11s).
• Another sponsor is Lemon, which provides pre-vetted remote developers, offering a 15% discount for the first four weeks of developer time (24s).
• Linear is also a sponsor, offering a tool for product teams to focus on planning and building great products, with a 25% discount available (33s).
• The show is titled "This Week in Startups," and the host is Alex Wilhelm (49s).

Moniepoint's origin story and pivot to the current model (1m21s)

• Moniepoint started as a company called TeamApt in 2015, founded by the current CEO and his co-founder after leaving their previous workplace, where they built digital banking solutions for banks, merchants, businesses, and consumers. (1m51s)
• TeamApt operated as a software company for about four years, focusing on building a profitable business before raising funding, and managed to support 26 out of the top 30 banks in Nigeria, scaling revenues to seven figures. (3m12s)
• Despite the success, the founders lacked confidence in the business model due to its service-based nature, which relied on winning contracts and had limited recurring revenue, and the restricted total addressable market of banks. (3m58s)
• In 2019, the company decided to pivot and launch Moniepoint, aiming to become one of the biggest financial service providers in the country, targeting a larger serviceable and addressable market, and addressing gaps in the services provided by banks to their customers. (4m29s)
• The pivot involved a shift from servicing and helping banks become more digital to challenging the banks and providing better services to their customers, with the goal of becoming a major financial service provider. (4m50s)
• In 2019, Moniepoint raised its first external capital, a $5.5 million round, which required the founders to put aside their previous work and take a leap of faith into a new business, but they were resolute about making the pivot successful. (5m10s)
• Moniepoint's organization was split into two parts, one focusing on business as usual and the other on new things, with personal attention on the new aspects, leading to experimentation and the launch of Merchant acquiring online and offline (5m24s).
• Moniepoint experienced rapid growth, onboarding 30,000 agents and processing 23 million transactions per month by 2021, with agents serving as human financial service providers offering micro financial services (6m8s).
• Agents in the Moniepoint context are human financial service providers, operating as miniaturized bank branches, offering services like cash withdrawals, cash deposits, bill payments, and account opening, bridging the gap for financial inclusion (6m29s).
• These agents are essential in helping people with less technological background make the jump from cash to digital banking, providing a human face to digital financial services and serving as trust centers (7m42s).
• Agents are not Moniepoint employees but rather separate business owners running their own small businesses, with Moniepoint powering these small businesses and helping to build new ones (8m58s).
• Moniepoint's focus on small and medium-sized businesses (SMBs) and mid-market companies allowed them to service these companies while also helping to build new ones, creating a full-circle moment (9m10s).
• Moniepoint's agents are crucial in providing digital financial services to customers who may not have access to traditional bank branches, allowing them to access services like cash withdrawals and deposits, and card issuance (8m29s).
• Moniepoint's initial clients were businesses that needed a point of sale device to offer cash withdrawal services, similar to how a Square device is used in the US to charge cards and dispense cash, especially for human ATMs (9m34s).
• The team behind Moniepoint, including the speaker and co-founder Felix, had prior experience with point of sale systems from their time at Team Apt, where they built a point of sale acquiring solution (10m0s).
• This prior experience gave them the necessary expertise and understanding of the market's problems, allowing them to identify what was needed to improve point of sale systems (10m26s).

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• OpenPhone is a modern business phone that works through a single app on existing phones and desktops, allowing users to separate business and personal communications, and offers features like texting, with over 50,000 businesses using the service, priced at $13 a month, with a 20% discount for Twist listeners for the first 6 months (10m30s).
• Moniepoint launched a new brand and scaled it in the Nigerian market, which is one of the most populous nations with rapid digitization and economic growth, but also has a competitive banking sector (11m35s).
• The initial growth of Moniepoint was challenging, competing against well-funded startups and banks, but the company focused on having a great product at an accessible price point, innovating, and building an excellent distribution network (12m5s).
• Moniepoint was initially bootstrapped, with the founders self-financing the company and reinvesting profits, but later decided to raise capital to grow the business and increase the value of their stake in the company (13m1s).
• The decision to raise capital was made to partner with venture capitalists, grow the business, and retain a good portion of the company, while maintaining profitability to avoid being at the mercy of venture capital or private equity (13m17s).
• Moniepoint prioritized profitability to ensure that the business was not under pressure to raise extra funding, and only raised funding when necessary, with a focus on injecting extra factors of production to drive growth (14m7s).
• Moniepoint's growth philosophy is to balance growth and profitability, ensuring that the company remains profitable even after raising new venture capital, with the goal of not being at the mercy of external capital (14m25s).
• When raising capital, the company focuses on injecting extra capital to grow production, rather than expanding headcount, marketing, or increasing expenses, which can lead to burning more money (14m30s).
• Moniepoint's approach is to maintain profitability, with the longest period of unprofitability being six months after the first fund raise, after which the company quickly returned to profitability (15m26s).
• The company's unit economics are positive, and the only reason for unprofitability would be due to operational expenses (Opex), so as long as growth targets are met with a burn rate less than the gross profit, the company is fine (16m13s).
• Moniepoint's philosophy is to avoid burning all margins and to ensure that the company is not in a position where it is at the mercy of external capital, which is particularly important in Africa where venture capital is not as readily available as in Western countries (16m38s).

Digitalization's impact on Moniepoint's growth (16m48s)

• Many startups choose to remain unprofitable due to the fear of being valued on the basis of gross profit or revenue as multiples, which can lead to inflated valuations, and the expectation of accountability that comes with profitability (17m27s).
• When startups become profitable, they are often valued on the basis of earnings before interest, taxes, depreciation, and amortization (EBITDA) multiples, which is inevitable as they mature, as investors ultimately want returns (17m54s).
• Startups that have easy access to capital may choose to burn cash for growth, but this approach can be risky, and even startups that raise large amounts of money may not always have access to the next round of capital (18m10s).
• Moniepoint has achieved impressive growth, with a compound annual growth rate of 321% from 2018 to 2021, and 332% from 2019 to 2022, making it one of the fastest-growing startups in the world (18m58s).
• Moniepoint's growth can be attributed to a combination of hard work and luck, including riding a massive wave of digitalization, which was driven by the need for convenient and secure digital payments (19m48s).
• The company also benefited from a serendipitous moment when Nigeria and India implemented policies to increase the adoption of digital payments, leading to a massive influx of people adopting digital payments, which Moniepoint was able to absorb due to its cloud-based infrastructure (20m25s).
• Moniepoint has experienced compounded growth, increasing the general digital payment volume in the ecosystem, and the hard work being put in is preparing the company for future growth (21m5s).
• The COVID-19 pandemic was a factor in the company's growth, driving digitalization and increasing the adoption of digital payments, with many fintech companies seeing a massive increase in their volumes during this time (21m42s).
• Moniepoint has managed to continue growing at a triple-digit growth pace since 2022, with the company still onboarding more businesses daily and adding more services, including a digital bank for customers and cash advance and working capital floats for businesses (22m40s).
• The company has launched various products and services, including business tools, debit cards, savings, and cross-border payments, making it closer to what Square and Cash App offer (23m1s).
• As the company grows, maintaining the same growth rates becomes harder due to a stronger base, but Moniepoint aims to continue adding growth and maintaining its past growth rates (23m41s).
• According to data shared by the Financial Times and Statista, Moniepoint's revenue in 2022 was just under $149 million, which puts the company at an IPO scale, and the company is considering an IPO in the near future to provide liquidity for its venture capital and private equity backers (24m8s).
• An IPO is one of the options being considered to return funds to investors, but for now, the company is focused on continuing to make its customers happy and growing the business (24m41s).
• Moniepoint is working towards expanding its operations to more geographies and launching additional products to continue its growth rate (24m57s).
• The company prioritizes profitable growth, considering it extremely important (25m3s).
• Moniepoint also focuses on the positive impacts it has on society (25m9s).

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Moniepoint's office and IPO strategies (26m43s)

• Moniepoint has a UK office and a US Corporation, making it a micro multinational, and if it were to go public, it would have various options for listing (26m43s).
• The company's multi-geography setup would open up typical places to float, such as the US, Europe, or Africa, but it's hard to say which one would be the first choice without consulting lawyers (27m5s).
• All options, including listing in an African index, Europe, or the US, are being considered, and dual listings in multiple places, such as the US and Africa, are also a possibility (27m40s).
• Dual listings are not common, partly because the American markets are so deep, but it would be interesting to see companies with roots in different parts of the world list in more than one place (27m54s).
• The decision on where to list will be made in the future, possibly in 18 to 24 months, when Moniepoint is ready for an IPO (28m7s).

Launch of consumer banking services (28m18s)

• Moniepoint initially focused on the business side, particularly small businesses, and later expanded to consumer banking services, which was a strategic move to continue servicing businesses well by providing their customers with access to digital payments in real-time (28m38s).
• The launch of consumer business in Nigeria was facilitated by existing infrastructure, including onboarding, KYC, AML, transaction processing systems, distribution networks, and a brand, which reduced the need for extra work and allowed for a quick launch within 6-8 weeks (29m12s).
• The consumer banking app has seen massive growth, with a 20x increase in customer growth over the past year, and this growth trajectory has persisted, with Moniepoint rapidly becoming one of the top consumer banking or digital banking wallets in the country (30m37s).
• Moniepoint's core focus remains on businesses, especially small to midsize businesses, and the consumer business is seen as a way to support this focus by helping businesses have customers who accept and pay more digitally (29m57s).
• The existing infrastructure for businesses is similar to that used for consumers, making it relatively inexpensive for Moniepoint to add consumer banking services as an extra product (30m24s).
• As of the last ranking, Moniepoint is one of the top three digital banking wallets in the country, and the company is continuing to add more customers and expand its services (31m3s).

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The recent fundraising round and valuation insights (32m7s)

• Moniepoint raised $110 million in funding, which is a significant amount, especially considering the decline in Venture Capital numbers for African-focused companies in 2024 (32m8s).
• The funding round was not the easiest to raise due to factors such as valuation, understanding opportunities and risks, and exposure to currency devaluation risks (32m25s).
• The company had a good cohort of potential investors, a great investment banker, and found investors who understand the business and have the capital to back it up (32m32s).
• Private Equity deals are typically longer than Venture Capital deals, and finding the best investors is crucial for the company's success (33m10s).
• The investors understand the business and are willing to support the company in making massive returns (33m26s).
• Moniepoint's business model has a natural hedge against inflation and currency devaluation risks, as revenue increases with the take rate charged (34m22s).
• The company's management team, pan-African ambition, and growth-driven strategy also contributed to investors' comfort with the investment (34m55s).
• The investors in the funding round include DPI, Google, IFC, and Raco, with a strategic investor that has not been announced yet (35m32s).
• The valuation discussion took some time, and the company's growth and success may not have been fully reflected in the valuation due to its focus on a region that many Venture Capitalists are not familiar with (35m57s).
• The company's revenue base and growth history may have warranted a higher valuation, but the regional focus may have affected the valuation (36m10s).
• Valuations are a combination of science and art, and are ultimately determined by a willing buyer and seller, with demand and limited supply driving prices up (36m33s).
• When there is high demand for equity, prices naturally increase, and being able to raise a significant amount of capital is an important milestone for a company (36m57s).
• The company raised capital from private equity, which typically values mature companies growing at a slower rate, and uses an EBITDA basis for valuation (37m22s).
• This valuation method is similar to how public markets value companies, and preparing for this type of valuation is important for companies that may eventually go public (37m44s).
• The company's valuation is likely many multiples of the valuation given the revenue and growth rate, but ultimately, it is determined by a willing buyer and seller (38m16s).
• The company is based in Silicon Valley, which may have influenced the valuation, but the exact details of the valuation are not disclosed (38m13s).

Moniepoint's expansion plans in Africa (38m32s)

• Moniepoint has aspirations of spreading across Africa, and the continent's startup scene is vibrant with lots of energy and entrepreneurs looking to make a change, despite facing infrastructural and micro challenges (38m43s).
• The top-funded countries in Africa include Nigeria, Kenya, Egypt, South Africa, and Ghana, with Nigeria going through a macro turnaround and expected to be an attractive destination in the future (39m32s).
• The same themes seen in other regions, such as merchant acquiring, payment gateway, credit, consumer credit, and business banking, are also present in Africa, with merchant acquiring online and offline being particularly attractive (40m40s).
• Companies like Paystack, Flutterwave, and Opay are examples of successful startups in Africa, with the continent's fintech scene being similar to other regions but with unique twists due to regulatory and currency control differences (40m52s).
• Africa's fintech scene is estimated to be around three to four years behind other regions, with Nigeria being around five years behind, and other African countries being around seven or eight years behind (41m49s).
• The same themes and trends seen in other regions are present in Africa, but with a unique set of challenges and opportunities due to the continent's diverse markets and regulatory environments (41m57s).

Fostering the early-stage startup ecosystem (42m17s)

• The early-stage startup scene in Nigeria, Kenya, and Egypt has incubators, angel investors, and places where people congregate and build communities, with capital and cool companies present, although visibility into the earliest stage is limited (42m17s).
• Y Combinator (YC) has a quote of early-stage startups, and its geographic diversity has increased with in-person setup, with interesting cohorts coming in yearly from different regions (42m38s).
• Local startups and accelerator hubs are also present in these regions, providing opportunities for founders to build and apply to accelerators, with successful startups reaching later stages and leading to increased angel investing (42m58s).
• Founders who have reached later stages, such as Series C and Series D, are giving back through angel investing and advisory, contributing to the growth of the ecosystem (43m40s).
• Family offices are also setting up small arms to invest in early-stage startups, with an example being Quantum Capital Partners, which invested in Moniepoint's first round (43m58s).

Tosin's journey in angel investing (44m18s)

• Many founders in the US, after reaching a certain scale, begin to angel invest in early-stage companies, and this is also something that Tosin has been involved in by putting funds into some startups to help them grow (44m18s).
• Tosin describes himself as a measured investor, meaning he likes to understand a bit about the company before investing, and views angel investing as closer to gambling, but still important for providing initial capital to startups (44m40s).
• Angel investing is crucial for providing the first $25,000 checks to startups, which opens up more chances for luck and is still important capital, even if it's a bit like gambling (45m5s).
• As one becomes more mature in investing, it moves from being closer to gambling to being more about mathematics and logic, and Tosin's risk tolerance and investment approach sit somewhere in between (45m24s).
• Tosin generally likes to have a clear reason why he thinks a startup will be successful and is willing to take calculated risks, which makes him have a stronger selection of people he wants to work with (45m44s).
• Due to being busy with his current role, Tosin can only work with a smaller cohort of startups, but he believes having focus on his day job as a CEO of a growing startup is reasonable (46m2s).
• There is a lack of attention given to startups that focus on Africa, despite companies like Moniepoint doing well, and other companies also showing promising growth, such as the Paystack exit (46m26s).

Spotlight on African startups in the global market (46m38s)

• Africa, with a population of 1.5 billion people, rapid digitization, and a young population, seems like an obvious place to deploy capital and build technology companies, yet it doesn't receive enough attention from the world (46m39s).
• The lack of attention can be attributed to the perception of risk, which is often assigned to things that are not well understood or seem obscure, and telling the story of Africa can help reduce this perception (47m30s).
• Latin America receives more attention from the US and North America due to factors like awareness, time zone closeness, and geographical proximity, while Africa receives more attention from Europe for similar reasons (47m46s).
• To increase investment in Africa, more work needs to be done to understand the continent, its markets, and its risks, which can be underwritten, and this understanding will make investors feel more comfortable investing (48m27s).
• QED, a well-known fintech investment firm, has invested in Moniepoint, marking their first deal in Africa, and this investment is seen as a positive step towards increasing attention and investment in the continent (48m37s).
• It is essential for Africa to tell its story more and for investors to learn about the opportunities and risks in the continent, which can lead to increased investment and growth (48m58s).
• The success of Moniepoint and other African startups can serve as a catalyst for increased attention and investment in the continent, and it is essential to continue sharing their stories and progress (49m19s).

Angel University - Apply now (49m37s)

• Angel University is a workshop that teaches people how to become professional Angel Investors, with the next course scheduled for November 6, and it's based on the speaker's book and their experience investing in over 400 startups (49m40s).
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• The speaker has a set of criteria for investing in a company, including 13 reasons to invest and about 30 reasons not to invest, which are referred to as pink or red flags (50m32s).
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• The speaker's Angel Investing Syndicate, syndicate.com, allows accredited investors to see the deal flow and invest in startups (51m24s).
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• The speaker is proud of the work done by the team over the last six or seven years, and the impact it has had on people's lives (52m35s).
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• Angel investing offers a flexible schedule, allowing individuals to choose how many hours they want to dedicate to it, and provides the opportunity to meet interesting people and potentially hit big winners (53m40s).
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