Private Equities: Paystack Payments Limited Raises $8 Million to Fund New Businesses

Paystack Payments Limited, a Nigeria-based FinTech company that processes payments for businesses in Africa, has raised 8.0 million dollars which translates to 806.3 million shillings in Series A funding, which is the first round of financing given to a new business after the initial capital used to start the business.

Paystack Payment Limited, founded in 2015, is a Nigeria-based company that allows businesses to accept payments from around the world via credit card, debit card and direct bank transfer on web and mobile.

The platform was officially launched for use in 2016 and currently processes over 15 percent of all online transactions in Nigeria, powering payments for over 17,000 organizations in Nigeria, which include telcos, government agencies, and airlines. It processes an average of 20.0 million dollars which is 2.0 billion shillings worth of payments per month on behalf of its clients.

The round of funding was led by Stripe, an American online payment processing company, and also included funding from Visa Incorporated, a global payments technology company. The company also received follow-on funding from Y Combinator, Tencent and angel investors Tom Stafford (Managing Partner at Digital Sky Technologies Global), Gbenga Oyebode (Founding Partner of Aluko and Oyebode and Board Member of MTN Nigeria and Dale Mathias (Co-founder of Innovation Partners Africa).

The investment is expected to facilitate the expansion of Paystack across Africa and scaling up of its engineering team. This is the second time the company is receiving funding after it received seed capital of 1.3 million dollars which is 131.0 million shillings in 2016 from international investors Tencent, Comcast Ventures and Singularity Investments.

The capital investment was used to build out its engineering team in Lagos, as well as grow its sales and marketing operations, to accelerate product development and customer on-boarding.

The investment in Paystack Payments Limited comes in the wake of accelerated investment in the tech-startup ecosystem in Sub Saharan Africa. According to The Mobile Economy: Sub-Saharan Africa 2018 Report, 124 tech startups across Africa raised a total of 560.0 million dollars which is 56.4 billion shillings in 2017, a 53.0 percent increase from 2016.

Sub Saharan Africa accounted for 515.0 million dollars which are 51.9 billion in more than 100 deals. Of this amount, FinTech accounted for 21.0 percent, solar for 21.0 percent, e-commerce for 19.0 percent and Educational Technology (Ed-Tech) for 12.0 percent.

This endorses the increasing investor interest in solutions that work towards solving social challenges, such as limited access to financial services, education, and energy. Kenya, Nigeria and South Africa remain the most popular investment destinations, accounting for 76.0 percent of total funds raised by tech start-ups in the region.