Nigerian fintech startup, Cleva, specializing in providing a banking platform for Africans to receive international payments by opening USD accounts, recently secured $1.5 million in pre-seed funding. The investment round was spearheaded by 1984 Ventures, a San Francisco-based early-stage venture capital firm. Other key contributors include The Raba Partnership, Byld Ventures, FirstCheck Africa, and various angel investors. Notably, Y Combinator, a renowned accelerator, participated in Cleva’s pre-seed round as the company embarks on its involvement in the accelerator’s winter 2024 batch.
Aaron Michael, a partner at 1984 Ventures, emphasized the unique qualifications of Cleva’s founders, Tolu Alabi and Philip Abel. Their product aims to address hyperinflation challenges in Africa, providing a valuable solution to navigate this issue. Michael highlighted the founders’ prior experience at major tech companies, including Stripe and AWS, as a testament to their ability to execute across both the African and U.S. markets.
Why The Investors Invested
Market Opportunity and Potential Returns:
Investors were drawn to the substantial market opportunity identified by Cleva’s founders. The persistent challenges faced by Africans in receiving international payments, estimated at an $18 billion market for remote workers and freelancers in Africa, presented an attractive prospect for investors seeking substantial returns.
Founder-Market Fit and Expertise:
The founders, Tolu Alabi and Philip Abel, possessed a unique blend of market insight and technical expertise. Born and raised in Nigeria, their firsthand understanding of the African market, combined with valuable experience at major tech companies such as Amazon, Stripe, AWS, and Twilio, signaled to investors that they were well-positioned to tackle the global issue of facilitating international payments.
Execution Capability:
The founders’ track record in building banking products at Stripe and robust platforms at AWS instilled confidence in their ability to execute. Investors recognized Cleva’s founders as uniquely qualified to navigate the challenges posed by hyperinflation in Africa, viewing their experience as a crucial asset for successfully expanding their fintech solution across both African and U.S. markets.
Differentiation through Customer Experience and Business Model
Cleva’s emphasis on providing an exceptional customer experience and its distinctive business model set it apart from competitors. Investors acknowledged the importance of customer-centricity in fintech and appreciated Cleva’s commitment to going “above and beyond” for its users. The capped fee structure also distinguished Cleva from competitors, showcasing a thoughtful approach to its revenue model.
Early Growth and Traction:
The fintech demonstrated impressive early growth, facilitating the opening of U.S.-based accounts for thousands of Nigerians within just four months. The month-on-month revenue growth of 100% underscored the viability of Cleva’s business model and fueled investor confidence in the company’s potential to capture a significant share of the market.
A Look at Cleva
Cleva was founded in August by Tolu Alabi and Philip Abel, both Nigerian-born individuals who moved to the U.S. for their education. The startup primarily focuses on the Nigerian market, allowing users to open USD accounts. Despite a competitive landscape, Cleva has experienced impressive early growth, facilitating the opening of U.S.-based accounts for thousands of Nigerians in just four months.
The fintech differentiates itself through a strong emphasis on customer experience and a unique business model. It has processed over $1 million in monthly payments, achieving a month-on-month revenue growth of 100%. Cleva plans to diversify its revenue streams with upcoming products such as USD cards and savings in U.S. assets. Looking ahead, the company aims to target Africans in the diaspora and expand its services globally, envisioning a future where it evolves from a product-only service to a platform issuing APIs for broader service distribution.
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Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard.