Anchor, a promising Nigerian banking-as-a-service (BaaS) provider, has successfully secured a $2.4 million seed investment. The round was spearheaded by Justin Kan’s Goat Capital, with substantial participation from other notable investors including FoundersX, Rebel Fund, Pioneer Fund, Y Combinator, Byld Ventures, and Future Africa. Emerging from stealth mode just a year ago, Anchor had already garnered over $1 million in pre-seed funding. Their proposition was crystal clear: offering APIs, dashboards, and tools that would empower developers to seamlessly incorporate banking solutions.
Existing Landscape
- Anchor navigates through a heavily populated fintech space that comprises rivals such as JUMO, Maplerad, OnePipe, and Bloc.
- Legacy banks have lagged behind in adapting to the swiftly evolving world of digital banking.
- Platforms like Anchor see a golden opportunity to provide more customized, flexible services at reduced costs.
Scope and Features
Having launched partnerships with regulated banking entities, Anchor has confidently asserted that they can reduce the time required for businesses to craft banking products from several years down to mere days. Initially focusing on customer accounts, Anchor has now diversified its offerings, introducing features like business accounts, card issuance, bill payments, bulk disbursements, cross-border payments, and developer-centric tools.
Impressive Growth Metrics
Since its debut in August of the previous year, Anchor’s client list has swelled from an initial 30 to a staggering 270, of which 63 are actively transacting on the platform. Among their esteemed clients are fintechs, SaaS companies, e-commerce enterprises, and other tech-powered businesses such as Bujeti, Pennee, SeamlessHR, LifeBank, Waza, and Zit. ng.
- So far, Anchor boasts an impressive annualized total transaction volume (TTV) exceeding $550 million.
- The platform has witnessed a consistent 30% monthly growth in revenue, as revealed by Segun Adeyemi, the CEO of Anchor.
- Revenue sources for Anchor are diverse, spanning processing fees, account and card issuance fees, and interest from the float.
Championing Financial Inclusion
Anchor’s initial vision was to foster embedded financing for major supermarkets and multinational corporations within Nigeria. However, the realization that many of these entities were not yet digitally attuned led to a strategic pivot. Anchor decided to center its attention on businesses that were digital-ready, thereby amplifying its impact.
Future Roadmap
The last year has been a learning curve for Anchor. Insights gathered range from setting the right pricing models to devising revenue streams that enhance client profitability and overhauling compliance mechanisms. With the fresh funds in hand, Anchor aims to bolster its compliance infrastructure, delve into value-added products like their ledger system, and bring more customers on board. A crucial part of their future strategy is a recently forged alliance with MTN, Nigeria’s premier telecom company’s fintech division. Furthermore, the startup is contemplating a pan-African expansion, a move that has intrigued many investors, including Justin Kan of Goat Capital.
The Bigger Picture
Embedded finance is transforming the fintech landscape, enabling non-financial entities to offer a slew of financial services, ranging from payments and savings to insurance. This transition embodies the ethos of fintech-boosting reforms, such as Open Banking, ensuring that consumers and businesses can seamlessly access financial services. As Africa’s business sectors progressively adopt digital methods, fintech companies are in a tight race to cater to this burgeoning market segment. With a local opportunity estimated at $7 billion and a global potential expected to cross a colossal $622 billion in the next ten years, Anchor is ideally poised to capture a significant market share.
Endorsing this sentiment, Justin Kan, Partner at Goat Capital, remarked, “The embedded finance market in Africa is nascent but growing rapidly at over 30% CAGR. Anchor’s growth trajectory is commendable, indicating its potential to emerge as a category leader, a quality we actively seek in our portfolio firms.”
Conclusion
Anchor’s impressive journey in embedded finance, backed by a robust growth rate, positions it as a potential leader in Africa’s nascent but rapidly expanding fintech market. With its visionary approach and strategic partnerships, the future looks promising for Anchor and its clientele.
