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Cowrywise Secures Licence From Nigeria’s SEC

June 30, 2021

Cowrywise co-founder and CEO Razaq Ahmed

Nigeria-based wealth management startup Cowrywise has received a licence to operate as a Fund/Portfolio Manager from the country’s capital markets regulator, the Securities and Exchange Commission (SEC) of Nigeria.

The license means Cowrywise’s operations now fall directly under the regulatory scope of the SEC and should help improve trust with potential users. Before now, the startup used a trustee structure to offer investment opportunities, in partnership with regulated investment management companies like Meristem.

Founded by Edward Popoola and CEO Razaq Ahmed to democratise access to savings and investment products to the growing demography of underserved Nigerian millennials and the middle class, Cowrywise boasts a wide range of investment products. These include savings-related products backed by fixed income instruments like treasury bills, which Ahmed has often claimed at 10-15% yield better interests- than what banks offer.

Cowrywise also has about 21 different mutual funds and at least 20% of the total mutual funds in the country are listed on its platform, making it the largest aggregator in the country. These assets cut across five investment company partners – including United Capital Asset Management, Meristem Wealth Management, Afrinvest Wealth Management, ARM Investment Managers and Lotus Capital.

For Cowrywise’s clients, a license from the SEC means greater protection of their assets. “With our own license, the SEC now becomes your “guardian”. They’ll double down on our existing security structure to keep you even safer,” Cowrywise said in a mail to clients announcing its new license.

With the latest development, Cowrywise becomes the second fintech startup in Nigeria to secure a license from the SEC after the regulator granted the inaugural one to Chaka a few days ago.

However, Cowrywise is the first fintech to get a licence in the fund/portfolio management category. Chaka, on the other hand, got a Digital Sub-Broker licence. These developments point to an improving relationship between the Nigerian capital markets regulator and the several fintech players that provide investment services in the country.

Over the past few years, DIY-stock buying platforms such as Bamboo, Trove, Chaka, and Rise have emerged while startups like Piggyvest and Cowrywise, initially focused on providing digital banking services, have dabbled into investment management.

These startups offer Nigerians access to stocks, bonds, and other securities in both local and foreign markets. While they have gained popularity among the young middle class, as they provide a means to protect naira earnings from devaluations, the companies have been subject to a series of regulatory attacks. Regulation of the space has been mooted for some time now.

Efforts have been made to engage each other and, with the awarding of two licences within a week, those attempts are apparently yielding desirable results beneficial to not only both parties, but also the investing public.

With the new license, the startup plans to offer more for its partners (fund managers) and investors on its platform. Cowrywise also said it will be making its APIs public to help fund managers across the world access its services and open up more investment options to serve customers in Nigeria better.

“Digitizing the investment management infrastructure is an important next step in our vision to democratize access to investment products,” the startup said. “These APIs do not just apply to fintechs; any company can embed investment features in their products as our investment API simplifies regulatory, compliance, and technical hurdles.”

Cowrrywise commenced operations in 2017 and has since grown to have over 300,000 users on its platforms. It recently raised $3 million in a funding round led by Quona Capital. By 2025, the company aims to introduce 10 million first-time investors to regulated investments, according to Ahmed.

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

Nigerian Wealth Management Startup Cowrywise Secures $3m Pre-Series A

January 28, 2021

Cowrywise founders (Edward Popoola and Razaq Ahmed)

In pre-Series A funding, Cowrywise, a Nigerian fintech startup offering digital wealth management and financial planning solutions, has raised $3 million. As Tsadik Foundation, Gumroad CEO Sahil Lavingia, and a syndicate of Nigerian angel investors locally and in the diaspora took part, Quona Capital led the round. The business has previously raised over $500,000 through a combination of equity.

“We are excited to announce we just closed a $3M pre-series A funding round, led by Quona Capital. This is Quona’s first investment in Nigeria and we feel humbled to be the vehicle they use in expressing their belief in the investment worthiness of Nigerian startup ecosystem. Others participating in the round include Sahil Lavingia, Tsadik Foundation and a syndicate of Nigerian angels,” the startup announced in a statement.

The new funding round will enable the startup to expand its product offerings, build out its nascent investment management infrastructure, onboard more fund managers in Nigeria, broaden its financial education program and continue to hire top talent.

Why The Investors Invested

Quona Capital is a Washington-based venture capital firm that invests mostly in early stage fintech startups. Although this is Quona’s first investment in Nigeria, it is not its first in Africa. The VC has previously invested in East Africa-focused Sokowatch and South Africa’s Lulalend. It has also invested in Zoona.

“Razaq, Edward and the Cowrywise team are providing everyday Nigerians with easy access to powerful and flexible wealth-generating tools that have typically been reserved for people who are already wealthy,” said Johan Bosini (partner at Quona Capital). “In a market of 200 million people, we think this will be very impactful for individuals to have more control over their financial future. We like the wealthtech space and the impact it can have in Nigeria in particular.”

On its part, TSADIK is a family philanthropy inspired by the ideal of social justice, supporting organizations that provide direct benefits to disadvantaged communities worldwide.

Angel investor Sahil Lavingia is the founder of Gum Road, a San Francisco-based online platform that facilitates the sale of products by creators directly to consumers.

A Look At What Cowryrise Does

Founded in 2017 by Razaq Ahmed and Edward Popoola, Cowryrise democratises access to savings and investment products to the growing demography of underserved Nigerian millennials and the middle class.

“We believe making wealth management mainstream among first-time, retail investors has the potential to positively impact the financial future of any country, especially a country like Nigeria with young demography. Change in digital behaviour, innovation in digital infrastructure and continuous growth in the adoption of digital products have set the stage for a digital-first and scalable wealth management solution for the next generation. We are more than excited to have these tailwinds while we build Cowrywise,” the startup further said in the statement.

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

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