Mono, an African startup that helps connect consumers’ bank accounts to financial applications, has raised a $15 million Series A round, the company confirmed to TechCrunch today.
The round, led by Tiger Global — the VC firm’s third major investment in Africa this year after Flutterwave and FairMoney — also had participation from new investors Target Global (an investor in neobank Kuda), General Catalyst, and SBI Investment.
New investors were joined by existing ones including Entree Capital, Lateral Capital, GPIC, Acuity VC, and Ingressive Capital, bringing Mono’s total raise to a little over $17 million since launching last year.
More than half of the population is either unbanked or underbanked. Open finance players in Africa like Mono — mirroring Plaid’s success in the U.S. market to theirs — thrives on the notion that access to a financial ecosystem via open APIs will improve access to financial information and lower entry costs for the underbanked.
With the likes of Okra, Plaid, Stitch and OnePipe also streamlining various financial data in single APIs, the battle to provide customers’ financial information to companies and third-party developers is heating up nicely, hence the need to ship more innovative products down the line.
In Mono’s case, two products give it an edge according to CEO Abdulhamid Hassan. First, DirectPay, a product that helps Nigerian businesses to collect bank transfer payments from customers within their web or mobile app without using their debit cards. Think of what Flutterwave and Paystack have done with cards; Mono wants to do with bank accounts.
Next, Statement Pages allows businesses to access customers’ financial accounts without needing a developer; Hassan calls it the first of its kind in Africa.
But even with these additional features tailored to a Nigerian audience, Mono is going after other markets like Ghana and Kenya which the CEO mentioned in May.
Mono has delivered on only Ghana for now, piloting with a few banks and fintechs such as Oze and Tranzo. Kenya, on the other hand, is still within its radar. The East African country is one out of three (including Egypt and South Africa) that Mono plans to expand in 2022.
Hassan adds that Mono might complete the move to South Africa via a partnership with Absa bank this year.
When open finance startups in Africa began to gain some attention last year, the consensus was that each company could do great business in the big individual markets they had launched in. But it doesn’t seem that way anymore as Mono, Stitch, Pngme and Okra now operate in other African markets outside where they launched first.
“I feel like Nigeria is capped in terms of how many businesses we can target,” said Hassan, who co-founded Mono with Prakhar Singh, over a call.
By the end of next year, Mono will be present in five African countries, a move that slightly suggests that the company might be spreading itself too thin.
Questioned whether investor pressure or competition was fuelling the need for Mono to expand quickly, Hassan reckoned that the company made such decisions solely because of its customers.
“Everything that we do at Mono is mostly customer-driven. Customers who want to launch lending or fintech apps in these countries say they can’t do so unless Mono is there,” he said. “Based on how we’ve built our relationship and the kind of products we’ve built in Nigeria, people rely on us and say when we go to a country, they would also want to launch there.”
There’s also a vertical expansion play for the company as it looks to offer enterprise solutions to FMCGs, law firms — non-tech and traditional industries with the capability to command more transaction volume.
Talking of numbers, Mono claims to have processed over 200 million financial data transactions from over 270 businesses, developers, and fintechs.
The company also said it has connected over 150,000 bank accounts in the last two months and is growing 45x year-on-year in that regard. With around 30 staffers today, Mono doubled its headcount from last year, according to its CEO.
Activity in the global open finance market has been ironically buoyed by Visa’s failed takeover target of Plaid. And investors have not slowed down in backing startups in other regions who they feel could be major acquisition targets for the U.S. company if it decides to expand.
Mono is one such candidate in Africa and lead investor Tiger Global knows that. According to Hassan, the VC firm reached out to lead a new round and though Mono didn’t plan to raise any additional capital this year, the capital from Tiger Global would help it grow faster.
“We feel the team at Tiger felt we were doing something amazing but thought what we had raised wouldn’t help us build a big company. And they were like, ‘we want to help you build a big company,” said Hassan.
Tiger Global confirmed it led the investment in an email to TechCrunch.
Mono, as one of Africa’s fastest-growing startups, has closed early-stage rounds in a manner rarely seen on the continent. Last September, the company had just completed a $500,000 pre-seed investment with a handful of local investors. Then it took part in Y Combinator’s most recent winter batch raising $2 million in seed funding upon graduation before raising this Series A round.
However, not everyone measures growth this way. These days, startups burn a lot of money to scale fast but have little or no revenue to show. And in Africa, side remarks are often thrown about on how such models might lead to long-term unprofitability for high-flying startups such as Mono.
When asked if that was a concern to the company, which has a valuation north of $100 million, Hassan said, “the first thing you look for when you’re building a startup is not profitability but I will say that our revenue has grown 10 times since our last raise in May.”
Mono’s present revenue is equivalent to what it did in the last three months combined, continued the CEO before referencing how the company is pursuing growth, scale and profitability with a lean team to “build the best open banking platform in Africa.”