Chaka - Afrikan Heroes

Why Nigerian Investment Startup Chaka Was Acquired: A Key Insight

October 3, 2023

In a significant development within the world of global finance, Rise, a prominent player in the investment industry, has made a strategic move by acquiring Chaka, a rapidly growing fintech company based in Africa. This acquisition marks a pivotal moment in Rise’s expansion strategy, with the focus squarely on tapping into Africa’s burgeoning investment market.

Africa, often perceived as one of the least accessible continents for investments, has been a challenge and an opportunity in equal measure for global financial firms. Recognizing the untapped potential and the unique dynamics at play in this region, Rise has taken a decisive step toward solidifying its presence on the continent.

The Motivation Behind the Acquisition

At the heart of this acquisition lies the motivation to bridge the gap in equitable investment options within Africa. Rise has long been committed to fostering borderless investing opportunities worldwide. However, Africa has presented unique challenges, including regulatory complexities, currency fluctuations, and limited access to global markets. Chaka, with its established presence and pioneering solutions tailored for the African market, was seen as the ideal partner to overcome these hurdles.

Eke, a well-known figure in the investment landscape, and Tosin Osibodu, the founder of Chaka, engaged in thoughtful discussions that revealed a shared vision for the future. The alignment of their business objectives and missions became evident as they explored synergies between the two companies. With a digitally savvy, globally connected youth demographic in Africa, Rise recognized that the potential for growth was boundless in this partnership.

A Promising Outlook

Both Chaka and Rise are committed to maintaining distinct product offerings in the immediate future, ensuring that existing customers experience minimal disruption. The goal is to harness the collective strengths of both companies to create a financial powerhouse capable of reshaping the investment landscape in Africa and beyond.

Rise’s acquisition of Chaka underscores the growing importance of Africa in the global investment ecosystem. The decision to create a new license category by regulatory bodies, with Chaka being the first to obtain it, further indicates the positive shifts occurring in the Nigerian financial sector, facilitating innovation and investment opportunities.

As this exciting chapter begins, it holds the promise of a future without financial borders, where African investors can access a broader range of opportunities and the global investment community can participate in the continent’s growth story. The acquisition of Chaka by Rise marks a significant milestone in the journey toward achieving this vision, and it is a development that will be closely watched by financial experts and investors worldwide.

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Charles Rapulu Udoh

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

Newly Licensed Nigerian Stock-trading Startup, Chaka, Raises $1.5m Pre-seed Funding

July 19, 2021

Chaka, a Nigerian stock-trading startup recently licensed by Nigeria’s central bank, has secured $1.5 million in pre-seed capital from Breyer Capital, a worldwide venture firm focused on stimulating growth in high-impact firms such as Spotify and Facebook. 4DX Ventures, Golden Palm Investments, Future Africa, Seedstars, and Musha Ventures are among the other investors in the round.

With this funding, Chaka will be able to focus on its aims of building a strong partner roster and expanding into new markets in West Africa. This investment also allows it to attract top staff and provide more advanced features to its investing and wealth management solutions.

“This is a significant milestone for us at Chaka and we could not have come this far without our users, partners, early investors, and a talented, achieving team of Chaka Champions. We see digital investments as a means to boost economic transformation in Africa, and we’re very keen to bring this vision to life,” Chaka noted in a statement.

Why The Investors Invested

“We are proud to align ourselves with a company that is levelling 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.

The Nigerian Securities and Exchange Commission (SEC) recently issued its first license for the operation of digital platform for buying and selling stocks. Chaka was the first to obtain the digital sub-broker license, which was introduced by the SEC in April of this year. Sub-brokers who use digital platforms to serve numerous brokers were recognized by the SEC as part of a substantial update to its Consolidated Rules and Regulations.

The acquisition took “a significant amount of effort,” according to Tosin Osibodu, the startup’s CEO, and is the result of constant contact with the capital markets regulator.

The Securities and Exchange Commission (SEC) issued a statement on December 19, 2020, effectively prohibiting Chaka from operating in Nigeria. Chaka operated “beyond the Commission’s regulatory scope and without the appropriate registration, as stipulated by the Investment and Securities Act 2007,” according to the SEC’s statement.

A Look At What Chaka Does

Founded in 2019 by Tosin Osibodu, Chaka’s mission is to enable digital borderless investing for African businesses and individuals. The startup is powering the digital investment landscape in Africa through partnerships with asset managers, financial technology firms, and regulators with whom it has a shared mission. It achieves this by providing trading solutions that are easy to use and easy to integrate.

Chaka’s operations were based on a relationship with Citi Investment Capital Ltd, a Lagos-based broker regulated by the SEC, prior to the SEC’s license. The startup is now directly supervised by the SEC as a result of the formal license.
Over 4,000 equities from publicly traded firms in Nigeria and the United States are available on Chaka’s app.

Anyone with an internet-connected smartphone may download the app, register, and start investing with as little as $2 or as much as $1,000. Chaka is currently only accessible in Nigeria.

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Nigeria Regulates Foreign Stock-trading Startups Out Of The Country. Here Is What It Means

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

Chaka is First Startup to Get SEC License for Digital Stock Trading in Nigeria

June 23, 2021

The Nigerian Securities and Exchange Commission (SEC) has issued its first license for the operation of digital platform for buying and selling stocks. The license was given to Chaka making it the first to acquire the digital sub-broker license introduced by SEC in April of this year. As part of a major amendment to its Consolidated Rules and Regulations, SEC recognised sub-brokers who use digital platforms to serve multiple brokers.

According to Tosin Osibodu, the startup’s CEO, the acquisition took “a tremendous amount of effort” and is the fruit of frequent engagement with the capital markets regulator.

On the 19th of December 2020, the SEC published a statement that effectively barred Chaka from offering its services in Nigeria. SEC’s complaint was that Chaka operated “outside the regulatory purview of the Commission and without requisite registration, as stipulated by the Investment and Securities Act 2007.”

SEC ordered Chaka to stop advertising to users, justifying it as a need to prevent “unscrupulous actors” from harming the investing public. Though the order was particular to Chaka, it was the first major signal that regulation was coming to the investment-tech sector.

That December warning enabled Chaka to take the lead and open talks with the SEC. With the license now acquired, Osibodu says it affirms Chaka’s commitment to full regulatory compliance and provides clarity to the market.

“We’ve built a great relationship [with SEC] that we think will be beneficial for the whole ecosystem moving forward,” Osibodu said.

He said the license also means Chaka could now enable other stockbroking firms who want to have a digital presence. “We want this benefit to accrue to as many stockbrokers as possible.”

Until now, Chaka’s operations were based on a partnership with Citi Investment Capital Ltd, a Lagos-based broker licensed by the SEC. An official license now places the startup directly under SEC’s supervision.

Chaka’s app hosts over 4,000 stocks from publicly traded companies in Nigeria and the US. Founded in January 2019 by Osibodu with Olaolu Ajose as the chief technology officer, the startup bills itself as an “investment passport” which powers borderless investing for users.

Anyone with an internet-enabled smartphone can download the app, sign up and begin investing with $2 or ₦1,000. Chaka is only available in Nigeria at the moment.

Osibodu did not specify what Chaka did, in terms of fees or filings, to receive the license. But according to the SEC’s recent amendment (pdf, page 3), a sub-broker license for digital platforms involves a minimum capital of ₦10 million and a Fidelity Bond covering at least 20% of the minimum capital.

Other requirements include four separate fees totalling ₦500,000, a number of SEC forms, company documents and other documentation about people involved with the company.

Digital sub-brokers are also required to fully describe the technology that their infrastructure is built on, including details about security, backup and recovery processes.

They should have adequate Know Your Customer processes and have documented policies for managing technology risks. Also, they are expected to show how they assess the capacity of potential customers to use its platform for transactions and clearly explain the features, risks, responsibilities, obligations and liabilities that come with using the app.

It is not clear if this license officially permits Chaka (and other fintechs in the sector) to offer stocks listed in foreign markets – like Tesla and Google – to Nigerians. In April, the SEC sounded a warning that seemed to declare such offerings as being illegal.

Osibodu’s coy response was that Chaka is committed to SEC’s objectives for financial inclusion in Nigeria by, among other things, increasing retail investor participation in the financial markets.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry