As accounting space continues to digitize, open finance continues to play a significant role in the world of fintech as businesses take advantage of APIs to access customers’ financial accounts with the aim of providing a range of integrated, and financial services. Based on the latest development, one of the prominent players building and operating these APIs in Africa – fintech Stitch has confirmed it has closed $21 million in Series A funding.
The fresh fund follows the company’s raised $4 million in February 2021, in addition to the $2 million extension round it secured four months ago, bringing its seed round to $6 million. This meant that the API builder has raised a total of $27 million to date.
Primarily, the South African API fintech is one that enables businesses to build, optimize, and scale financial products. However, based on the statement released by the company, which says that it plans to create a “financial graph” ecosystem across Africa with the fresh fund.
As a result, the company described the financial graph as an infrastructure structured for financial blocks that allow businesses to write code once, launch in multiple markets and scale faster on the basis of interoperability across regions, providers, banks, which includes other types of financial accounts.
“We sort of view the broader financial ecosystem as a bunch of different nodes-bank accounts, merchants such as fintechs or end-users-which are all intrinsically connected”, the company’s CEO ‘Kiaan Pillay’ told a source familiar with the matter in an interview. “Often, we think about the fact that these connections between geographies and institutions don’t exist yet. And a lot of what we try to do is to bridge those connections and to make those connections ubiquitous”.
The startup made clear that it views this graph in three stages. The first, which is launched from stealth: the pure infrastructural play of connecting financial and bank accounts with an API. While the second seeks to acquire merchants and businesses to build use cases and applications on top of that infrastructure. The last is getting end consumers to link their accounts via the subject businesses.
“On the high level, people moving from cash to digital for the very first time causes more fragmentation. Our view is that encompassing this all in one network or graph helps to open the space up and break down the silos”, Pillay said. “And the way we ultimately think about that is that people can easily move money between various applications between various geographies and institutions”.
Meanwhile, the company offers solutions to e-commerce companies, marketplaces & platforms, fintechs, and its leading clientele. However, these business customers use fintech Stitch for use cases like KYC & onboarding, personal and business financial management, lending, wallet top-ups, and e-commerce checkouts. Furthermore, the platform’s data coupled with identity products allow businesses to access customer transaction histories and balance data, perform fraud checks, and verify account information. Equally, the payments product enables bank-to-bank transfers for one-click pay-ins and payouts.
Moreover, looking at the company’s growth, the CEO who co-founded the startup with ‘Priven Pillay’ and ‘Natalie Cuthbert’ made clear that the company has witnessed a 104% month-to-month growth in payments value since the product was launched in April. Also, in Q4 2021, the platform saw a 44% month-to-month customer growth and a 72% month-to-month increase in linked financial accounts.
“We’re proud of the partners and customers we have here as we continue to deepen the payments product and look at monthly and recurring payments, which are interesting feature sets for us”, Kiaan Pillay noted.
“We recently had a few customers go live in Nigeria, which has been very exciting for us. We just offer payments there but are eager to deepen the products. We will look at adding data and identify this year, as well as deepening the payments set similarly to how we have it in South Africa”.
The latest round of investment was led by the New York-based hedge fund The Spruce House Partnership, which also witnessed participation from new and old investors such as PayPal Ventures, TrueLayer, The Raba Partnership, CRV Venture Capital, Firstminute Capital, Village Global, which also include fintech founders and companies like Quovo and Unit, TrueLayer, founders of Chipper Cash, and Guillaume Pousaz’s Zinal Growth.
In view of this, ‘Ben Stein’, co-founder of The Spruce House Partnership said: “We have been following startups in Africa for many years. Our diligence was very clear that this is one of the most talented teams on the continent, and we are excited to be a part of what they are building at Stitch”. Responding to this development, Pillay says raising money from VC firms and operators that have scaled fintech products across multiple geographies gives the company “something pretty special” as it enters its next growth phase.
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