Carbon, formerly Paylater, is making a powerful stake in the African startup ecosystem by creating a $100,000 fund that guarantees the company a total of 50 percent equity in ten fintech startups across the continent.
The digital banking firm said in a statement BusinessDay received, that the pan-African fund tagged ‘Disrupt Fund’, is to address the lack of funding and support holding back budding tech entrepreneurs on the continent.
The Disrupt Fund will invest up to $10,000 per startup for five percent equity and access to Carbon’s API, allowing investors to leverage the company’s growing customer base and innovative technology platform, to get to market faster.
The fund which is targeting start-ups mostly in healthcare, education, health, and insurance and expected to spark more collaboration and further investment that should drive growth across the ecosystem, is not “altruistic, unfortunately” as the company noted in the statement.
That fund could, among other things, put Carbon, a local company controlled almost exclusively by local investors, in the league of fintech leaders on the continent presently dominated by foreign-backed firms.
Chijioke Dozie, CEO and co-founder of Carbon also makes no secret of the company’s ambitions.
“Common investor wisdom is to stay in your market and dominate,” Dozie said.
The path to dominance, for him, however, is through deliberate collaboration and partnership. Carbon and other tech companies can scale faster and build more enduring platforms this way.
It would be recalled that in 2019, two weeks after it secured a $5 million debt facility from Lendable, Carbon had made its first notable power move with the acquisition of Amplify, a Nigerian payment solutions company. The acquisition gave Carbon access to Amplify’s IP, team, product transfer and client network of over 1000 merchants.
It also eased the way for Carbon to become a full digital bank offering services beyond its traditional lending.
Today, Carbon’s service portfolios range from loans to savings, bill payments, credit reporting and investment.
Since it was launched, Carbon has amassed 2.1 million users, deployed $63.7 million across 750,000 loans, approving over 1,500 loans a day with an average of $80 per loan, and processed over $140 million in transactions.
It was the first fintech company in Nigeria to make its audited financials public, an act of transparency that is uncommon in the country’s tech ecosystem.
Beyond loans, re-branding and transparency, it has also grown it’s physical presence to three African countries including Nigeria, Ghana and recently Kenya.
But the company says it is eager to expand to other countries. It just might have found the best way with the ten start-ups that will eventually emerge recipients of the funding. Apart from Nigeria, Ghana, and Kenya, applications are also being expected from start-ups in Uganda, Egypt and Cote d’Ivoire. Start-ups hoping to be selected must have a functioning product, post revenue and they must be looking to operate in multiple countries.
“The investing environment for early-stage start-ups has improved in recent years. However, a key issue for most start-ups that has not been addressed is the cost of customer acquisition,” said Ngozi Dozie, co-founder of Carbon. “A lot of money is spent on acquiring customers, mainly via social media, when a more collaborative approach among tech companies could be more efficient.”
The second Dozie sees the fund creating a mutually beneficial relationship in which selected start-ups are able to tap into Carbon’s customer base to market their products.
“As the saying goes, “if you want to go fast, go alone. If you want to go far, go together,” he said.
While $100,000 may seem like a long stretch for an ecosystem that is recently attracting investors with million-dollar wallets, it is certainly a proud beginning for Carbon. Perhaps one day soon, one of the ten start-ups will hit the big times and Carbon will be there to clean out.