South African Fintech Application Programming Interface, Stitch, has stunningly raised a sum of $4 million with major international investors to diversify into other regions of the African continent.
The funding of $4 million is almost four times that raised by pacesetter, Paystack, which was a record at the time, making it the highest ever funding for an API Fintech startup on the continent.
The Stitch API provides tools that dramatically reduce the effort required for apps to connect to users’ financial accounts, ensuring complete connection in minutes. The API has features functionalities, such as the ability to read balances, account holder details, transaction history, recent debit order payments and more. It was founded by CEO Kiaan Pillay, CTO Natalie Cuthbert, and CPO Priyen Pillay.
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It also allows applications to interact with user’s bank accounts in a uniform, bank agnostic manner. The company profits by charging developers and companies per API call.
The start-up reportedly claims that the seed round investment is the largest raised by a pure play African fintech infrastructure company and one of the largest at this stage in Africa, although this falls light years behind the $10 million raised by Nigerian fintech, Kuda, in November.
The investment was jointly championed by firstminute capital and The Raba Partnership, with secondary partnership from CRE, Village Global, Norrsken, Future Africa and 500 Fintech.
The angel cohort includes Magdon Ismail, co-founder of Venmo, some founding members at Plaid, executives at Coinbase, Revolut, Fast, and Paystack.
Speaking about the seemingly strong competition on the continent, Pillay welcomed the abundance of similar fintech companies, believing it creates an healthy network of progression,
“Unlike the U.S. where Plaid is dominant, I think Africa needs many players. Europe is a good example; many sizeable companies are providing similar banking API services. For us, I think what we would start to see happen is that some companies will be known to do a particular thing well like payments, data enrichment, or merchant identification.”
On how the fledgling business was able to attract investors while in temporary state of secrecy or stealth mode, Pillay acknowledged that the companies network in the United States sold the idea which was bought by investors who believed in the potential of the startup,
“Spending a lot of time in San Francisco when working with Smile has helped us to get in touch with these globally world-class founders and investors. There’s an opportunity for us to provide a new generation of financial services in markets across Africa, and we’re really fortunate to have them back us.”
Brent Hoberman, co-founder and general partner of firstminute capital, however believes that the range of capabilities that finance technology provide in applications cannot be overlooked and will be adopted by online businesses in the coming years as Africa maintains its growth towards a more developed continent. He also alluded to his South African descent as a motivating factor,
“As a fellow South African, I’m excited to be partnering with a team of exceptionally talented local engineers with pan-African ambitions.”
Africa is currently the fastest growing economical climate in the world, which has seen investors ramp up pre-seeding funds into millions with Egyptian startup, Casablanca, getting a test of this new development in January 2021 when they raised $1 million in pre-seeding round.
In 2020, Nigerian auto tech startup, Autochek Africa, was able to raise a whooping $3.4 million fund in pre-seeding round, a massive improvement from Paystack’s breakthrough in 2016, although theirs was at a more established stage.
Adewale Yusuf, co-founder and CEO of TalentQL, perfectly explained the reasoning behind this surge in investment in a session with Techcrunch. Emphasising that Stripe’s $200 million acquisition of Paystack was era-defining, Yusuf said,
“More people are willing to take risks now in the market, especially angel investors. They can easily let go of $10K-$50K because of success stories like Paystack.”
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