Stitch, one of Africa’s leading players in the development and operation of API s, has raised $21 million in Series A funding. This round of funding was spearheaded by The Spruce House Partnership, a hedge firm based in New York. PayPal Ventures, TrueLayer, firstminute capital, The Raba Partnership, CRE Venture Capital, Village Global, as well as fintech founders and firms including TrueLayer, founders of Chipper Cash, Quovo, and Unit, and Guillaume Pousaz’s Zinal Growth, all participated in the round.
“We sort of view the broader financial ecosystem as a bunch of different nodes–bank accounts, merchants such as fintechs or end-users–which are all intrinsically connected,” Stitch CEO Kiaan Pillay said in an interview. “Often, we think about the fact that these connections between geographies and institutions don’t exist yet. And a lot of what we try to do is to bridge those connections and to make those connections ubiquitous.”
This announcement comes after Stitch raised $4 million in a secret round in February 2021, which was a prelude to the $2 million extension round it received four months ago, bringing its seed round to $6 million. Stitch has raised a total of $27 million to date.
The funds will enable Stitch to expand its team across offices in Cape Town, Johannesburg, and Lagos, as well as develop new product offerings and explore new markets across Africa, according to the company.
Why The Investors Invested
The startup continues to gain traction. Pillay, who co-founded Stitch with Natalie Cuthbert and Priyen Pillay, didn’t provide an update on the metrics, but did say that since the product’s launch in April, Stitch has witnessed a 104 percent month-over-month growth in payments value. In Q4 2021, the platform had a 44 percent month-over-month increase in customers and a 72 percent increase in linked financial accounts.
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“We’re proud of the partners and customers we have here as we continue to deepen the payments product and look at monthly and recurring payments, which are interesting feature sets for us,” said Pillay.
“We recently had a few customers go live in Nigeria, which has been very exciting for us. We just offer payments there but are eager to deepen the products. We will look at adding data and identity this year, as well as deepening the payments set similarly to how we have it in South Africa.”
“We have been following startups in Africa for many years. Our diligence was very clear that this is one of the most talented teams on the continent, and we are excited to be a part of what they are building at Stitch,” said Ben Stein, co-founder of The Spruce House Partnership.
A Look At What The Startup Does
The South African API fintech enables businesses to build, optimize, and scale financial products.
Stitch is used by business clients for KYC and onboarding, personal and business financial management, financing, wallet top-ups, and e-commerce checkouts, among other things. Businesses can access consumer transaction histories and balance data, verify account information, and perform fraud checks using the platform’s data and identity solutions. One-click pay-ins and payouts are possible with the payments product, which allows for bank-to-bank transfers.
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Wallet-based firms like Chipper Cash and Luno, embedded finance providers like ImaliPay, subscription platforms like FlexClub, and payment aggregators like Yoco are among the company’s customers.
Stitch debuted its payments solution in South Africa in April 2021, and the next six months saw a 50 percent increase in payments volume month over month. Stitch launched its payment service in Nigeria in October, with plans to process $10 million in monthly payments by the end of the year.
With the new capital, the company wants to also develop a “financial graph” ecosystem across Africa, according to a statement made by the company.
The financial graph, according to the company, is an architecture for financial building blocks that enables businesses to develop code once, launch in numerous markets, and scale more quickly thanks to interoperability between geographies, providers, banks, and other forms of financial accounts.
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This graph is viewed by Stitch in three stages. The first is the sheer infrastructure play of integrating financial and bank accounts with an API, which it launched from stealth. The second is to attract merchants and businesses so that use cases and applications can be built on top of the infrastructure. The final step is to encourage end users to link their accounts with these businesses.
“On the high level, people moving from cash to digital for the very first time causes more fragmentation. Our view is that encompassing this all in one network or graph helps to open the space up and break down the silos,” said Pillay. “And the way we ultimately think about that is that people can easily move money between various applications between various geographies and institutions.”
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Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer