Barely a month after it was issued the first fintech licence by the Securities and Exchange Commission (SEC), Chaka Technologies has secured a $1.5 million in pre-seed funding round from a mix of foreign and local investors.
Leading the funding round is Breyer Capital, a global venture firm and private equity investor. Breyer had in the past invested in high-impact companies like Spotify and Facebook.
Other participants in the Chaka round include 4DX Ventures, Golden Palm Investment, Future Africa, Seedstars, and Musha Ventures.
Read Also: What Chaka’s licence means for Nigerian investors
Chaka said in a statement that the funding will enable it to focus on its goals to build a roaster of formidable partners and accelerate its expansion to other markets within West Africa. The company also plans to hire top talent and integrate more advanced functionalities into its investment and wealth management solutions.
Founded in March 2019 by Tosin Osibodu, Chaka is a platform that provides opportunities for Nigerians to invest in dollar assets and allow foreigners to invest in Nigerian assets. The platform gives Nigerians access to more than 10,000 stocks and ETFs trading on local and foreign capital markets.
“We are proud to align ourselves with a company that is leveling the investment playing field for Nigerians (and Africans at large). We’re confident in the value Chaka provides through its digital tools, and we look forward to playing our part in supporting Tosin, Bo, Olaolu, and the Chaka team,” Jim Breyer, CEO of Breyer Capital, said.
Until June 2021, Chaka was operating in a regulatory void despite offering a solution that helped Nigerians hedge their investment against a weakening naira, play on a global market scene, and also opened the door for foreign investors to participate in the Nigerian stock exchange. The big problem was not having a licence.
Every now and then, the SEC would bring out its sledgehammer on non-licenced securities operators. On one of such occasions in 2020, the hammer fell on Chaka and the commission asked it to suspend its operations pending when it was considered a legitimate player in the market. Similar players like Bamboo and Risevest were also constantly looking over their shoulders.
The commission later in April 2021 directed capital market operators to desist from supporting online investment trading platforms providing access to foreign securities in Nigeria. The commission said those securities were not registered in Nigeria, and platforms giving access to these were acting against the law.
Through a series of engagements between the commission, Chaka, and a few stakeholders, a new fintech licence was born. The licence titled Digital Sub-Broker/Sub-Broker Serving Multiple Brokers through a digital platform is the first fintech licence to be issued by the SEC whose aim is now on increasing the number of Nigerians that are financially included and are investing in the Nigeria capital market.
On June 23, Chaka announced it was the first recipient of the new fintech licence from SEC. Cowrywise, a wealth management platform that offers its investors mutual funds was to obtain its licence a week later.
“We are pleased to inform our stakeholders and the general public that Chaka has taken the necessary steps to register with the Securities and Exchange Commission (SEC) for a newly created licence, as SEC continues to maintain its avowed intention to encourage innovation within the market space,” Osibodu said.
Haven secured the licence, Chaka is now cleared to offer investors stocks on the Nigerian capital market and foreign securities. The licence is likely to have given investors like Breyer Capital the confidence to back Chaka in the latest pre-seed funding round.
This is the first round the company has ever raised since it was founded in 2019 according to data from Crunchbase, in a fintech ecosystem that has never lacked investors’ attention and attracted the most investments of all the segments in the tech ecosystem. With its licence in the bag, it is likely the funding tap is just starting to flow.
