Last year, fintech API infrastructure players came into the African tech landscape, introducing services like Plaid to businesses and developers.
And the focus on these companies, especially from venture capitalists, increased this year, with each significant player raising big seeds in a Series A round.
onepipe, a fintech API company with a different game from the lot, has joined the list today, raising a $3.5 million seed to double its embedded finance offering.
New investors Canaan Partners, Sasson Capital, Norscan (a fund of Canaan founder Niklas Adelbarth), The Fund and Two CultureCap also participated. Existing investors Chris Edelsbach, TechStars, Ingressive Capital, Equity, P1, Raba and DFS Lab issued fresh checks along with some angel investors.
There are generally three main fintech API infrastructure plays. One is the aggregation of data and financial accounts (Plaid, Okra, Mono, Stitch and Pingme are some of the players in this area),
The other focuses on embedded finance and banking as a service, where Treasury Prime, Marketa conduct their business. Third is core open banking pioneered by the likes of TrueLayer.
OnePipe’s original game plan was to create an API gateway that would connect banks and fintechs under a common standard, a move that would allow the company to perform core open banking.
But the founder &cthis is ope adoye (self-described as the company’s chief plumber), on a call with Nerdshala, on continued integration with these financial institutions, it became clear that the company needed to pivot because it was not generating as many demand cycles. .
And after partnering with a few banks, OnePipe decided to take a step back and move into the world of embedded finance.,
Unlike open banking and data aggregation, where a company needs to collaborate with almost every bank in the country where they operate, this is not the case. necessarily In case of companies offering embedded finance. Therefore OnePipe currently has six partner banks.
“The caveat is as follows, the moment you play a positioning for Banking as a Service, you all Really Need a partner bank that lets you go deep because of the underlying finance [offering] is about depth and not about breadth,” said the CEO.
“If you go for data aggregation or open banking in general, you are going for breadth, not depth. So on our side, we said we’ll go with tier two and tier three bands, where once you describe the concept to them, they get it, This powers their growth and is more valuable to them, unlike other large financial institutions.,
By running the API infrastructure on behalf of these partner banks and helping them monetize it, OnePipe works with non-financial institutions to launch and cross-sell a range of financial services such as credit, accounts and payments within their offerings. does.
“We raised a round last year to focus on one use case of the partnership, which was to pull together the APIs of a certain set of banks and offer embedded banking or banking as a service play, ADO insisted. “Meaning, we make it possible for non-financial institutions, or businesses in general, to provide banking services to their customers.”
An FMCG startup, for example, can plug into a bank’s API managed by OnePipe and begin issuing accounts to customers, allowing them to pay from those accounts and access credit when needed. .
In the 10 months that OnePipe adopted this model, it has processed more than 6.3 million transactions valued at more than $46.3 million, the company said., These numbers are from over 1 million individual accounts and 138+ businesses, ranging from FMCG and retail to lending and agriculture.
OnePipe takes a percentage deduction from the transactions done on these accounts and shares it with its associate banks, For loans offered through its API, OnePipe charges at least 1% of loan interest from its lending partners and also shares it with businesses and partner banks.
With what OnePipe has achieved so far, Atlantica Ventures founding partner, Aniko Szigetvari believes that the company is deepening financial inclusion not only in Nigeria but across the continent.
He added, “In our view, Embedded Finance is the next enabler for both traditional and financial services businesses to increase customer loyalty and revenue by offering a wide range of third party financial products and revenue streams to their clients. “
Although OnePipe currently only exists in Nigeria, it is taking its first steps beyond the country’s shores to align with Szigetwari’s deposition.
OnePipe is going down a strategic partnership route as mentioned by Adeoye. His company inked a deal with the African logistics and freight company Sendi to expand to other African countries. According to the company’s statement, the plan is to “pull a Stripe-Shopify-esque tag team.”
“We made sure we were already going with a customer on the ground before we looked at other African countries,” the CEO said., “We did a deal with Sendi that got them participating in this round, and then we would deploy capital for expansion. So when they go to Egypt, South Africa, we Stay posted with them and grow together. ,