Novogratz backing was just the start for Nigerian upstart Alerzo
Alerzo, an e-commerce and payment solutions startup, backed by billionaire Michael Novogratz ’s family office, plans to raise between $50 million and $100 million to expand across Africa’s most populous nation.
“We have started talking to people,” Adewale Opaleye, 27, Alerzo’s founder and chief executive officer, said in a virtual interview from Ibadan in southwest Nigeria, where the firm is headquartered alongside Singapore. “Possibly it could be this year or next,” Opaleye said. The company has raised $20 million so far.
The goal is to extend services to more than half of Nigeria’s 36 states — from about 10 currently — by next year. Asked if the company will reach the coveted unicorn valuation of at least $1 billion, Opaleye said it is possible as the company has been growing faster than expected.
Nigeria and its huge informal economy have been Africa’s breeding ground for tech unicorns as companies catering to a large unbanked population revolutionize the way people transfer money and pay for goods and services.
OPay and Andela are among firms that needed only a few years to cross the valuation threshold. Payments firm Flutterwave Inc. is already seeking fresh funding at a valuation of $3 billion or more, roughly triple what it achieved just months ago, people with knowledge of the matter said this month.
Nigeria, a nation of about 200 million where over a third of all adults lack access to banking services, is appealing to startups promoting financial inclusion and ease of payments. The government is meanwhile increasing spending on tech infrastructure to boost innovation, create jobs and revive growth.
The company services clients in the nation’s smaller cities and towns, where poor state of roads and lack of supply-chain infrastructure may hurt Alerzo’s ability to ramp up business.
Alerzo is providing goods delivery services, cashless payments and mobile airtime top-up to more than 150,000 informal mom-and-pop stores in Nigeria and processing more than 400,000 transactions per month. Its annualized transaction value for September exceeded $155 million, according to an emailed statement.
“Instead of retailers walking around a central market to buy products, they just sit in their shops and order products via phone calls, text messages and right now a mobile app,” Opaleye said.
A physics graduate who also studied computer science in China, Opaleye says he started Alerzo to help his mother, a single parent who ran two informal retail stores in Ibadan to support him and three siblings. The vast majority of the company’s retail customers are women.
“Women are often victims of theft because street boys know retail store operators often carry cash,” Opaleye said. “I wanted to apply what I learned in China to make life better for working mothers in Nigeria.”
Alerzo sources products from manufacturers and delivers them to retailers, adding to its income from transactions on the digital platform. It acquired Shago Payments, another local fintech, in the third quarter to strengthen its digital offerings.
The firm projects the number of its customers could triple by next year from 150,000, according to the CEO.
“Our goal is to empower a broad community of retailers across the country, especially those that are underserved and unbanked,” he said. Other investors in the company include Nosara Capital based in the UK and US investor FJ Labs, according to the CEO.