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Middle-East-Only Investor Enters Nigeria As Payments Startup VertoFX Raises $10m Series A

October 2, 2021

Middle East Venture Partners (MEVP) rarely invests in sub-Saharan African startups, but it has made an unexpected departure. The former investor in music-streaming company Anghami has extended its funding pipe to VertoFX, a Nigerian B2B payments platform that enables small and medium-sized businesses (SMEs) to pay their suppliers in a $10 million Series A funding round.

Ola Oyetayo and Anthony Oduwole founders of VertoFX — Ola Oyetayo and Anthony Oduwole, founders of VertoFX

Other investors in this round led by Quona Capital — a fintech-focused venture capital firm — include The Treasury, founded by Betterment’s Eli Broverman and Acorns’ Jeff Cruttenden; U.K.-based TMT Investments; Unicorn Growth Capital; Zrosk Investments; and P1 Ventures.

The funding will be used to further develop VertoFX’s platform to let businesses move money across borders more efficiently, according to a statement.

Why The Investors Invested

Investors’ confidence in VertoFX mostly stemmed from the traction it has garnered since its previous $2m investment.

Over 2,000 businesses use its cross-border B2B payments, with each transaction averaging $30,000, according to the company in a statement, which also noted that the startup has facilitated billions of dollars in transaction volume each year.

VertoFX’s user growth has grown 11x and revenue has grown 8x since the start of the pandemic, according to the CEO, without providing specific figures.

Quona Capital, lead investor in this round, is a scale-up stage venture firm focused on fintech for inclusion in emerging markets. To date, Quona has supported more than 20 financial technology companies expanding access for underserved consumers and small businesses in Latin America, South and Southeast Asia, and Sub-Saharan Africa. The firm recently announced the final close of the Accion Quona Inclusion Fund at US$203 million in commitments from an array of leading investors. So far this year, the VC has invested in South Africa’s Yoco and Egypt’s Capiter.

Monica Brand Engel, co-founder and managing partner at lead investor Quona Capital (also a backer of Nigeria’s Cowrywise), praised the platform’s ability to address problems with low visibility, slow speeds, and high costs of cross-border payments in a statement. She described VertoFX’s work as “vital and significant.”

Based in Dubai, UAE, MEVP is a Middle East-focused venture capital firm that invests in innovative technology firms managed by exceptional entrepreneurs in the Middle East Region, with a concentration on the GCC and Levant countries.

TMT Investments is a UK-based investment firm which has also announced it is raising $18.5 million in a placing and subscription for its pipeline of new and potential follow-on investments.

P1 Ventures a San Francisco-based early stage investor has most recently invested in Nigeria’s OnePipe and Egypt’s WorkPay.

Zrosk Investment Management is a Lagos-based investment firm, whereas Unicorn Growth Capital founded most recently in 2020 is a Delaware-based VC firm investing in the future of FinTech.

A Look At What VertoFX Does

The YC-backed firm was founded in 2018 by Ola Oyetayo and Anthony Oduwole as a currency exchange platform to assist businesses trade illiquid currencies into liquid pairs.

However, based on user feedback, the startup added a cross-border payments solution after gaining traction and raising a $2 million seed round two years ago.

Businesses may now convert money in over 200 countries and 39 currencies on the VertoFX platform, up from 120 countries and 19 currencies the last time we spoke with the company.

VertoFX is a payment, exchange, and multi-currency account provider for freelancers, SMEs, and corporations, according to its website.

The startup makes money by taking a small commission when businesses use its currency exchange service and charging a 1% commission when they use its price discovery marketplace solution, despite the fact that cross-border payments are free.

VertoFX “will potentially start collecting income from API calls, as well as revenue from payments made on the platform” in the future, according to the CEO.

Only six African currencies are available on VertoFX’s platform, but they account for 60% of the continent’s GDP. With the B2B global payments sector estimated to reach almost $200 trillion by 2028, VertoFX intends to expand geographically into more African and Middle Eastern nations.

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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

Startup VertoFX Raises $2M For African and Emerging Market Currency Trading Platform

July 20, 2019

More startups that are either Africa-based or Africa-focused are really having a good time raising funds to scale their businesses. Indeed, this funding goes to show that even startups with very remote niches can raise funds. VertoFX, the startup that focuses on currency trading and payment for African and emerging markets has just raised a $2.1 million seed round, led by Accelerated Digital Ventures.

Here Are The Funding Details And What This Means For Similar Startups With Remote Niches

The $2.1 million seed round of funding was led by Accelerated Digital Ventures.
The startup is simply a bureau de change for African and emerging market businesses.
The startup will use the round for platform development, expanding the currencies and gaining licenses in new countries. It will also use the round for hiring, primarily in compliance and regulator type roles. VertoFX already has a developer team in India and is looking at local developer talent for its Africa offices.
Although London-based company, with a subsidiary in Lagos, Nigeria, the startup’s platform allows businesses and banks to exchange and make payments in exotic foreign currencies that don’t often convert or trade conveniently across businesses or banks.
For example, South Africa’s Rand is Africa’s most convertible and traded currency — with lower spreads and transaction costs — while currencies of countries such as Ethiopia or Egypt may be difficult or expensive to trade or transact B2B payments.
All around the world, there are around 40 currencies that are considered exotic or illiquid, most of them in frontier markets in Asia, Africa, and the Middle-East, says Oyetayo, VertoFX founder.

“That’s the reason we are utilizing technology to create a marketplace model and price discovery to create liquidity for these currencies,” VertoFX founder Ola Oyetayo said in an interview.

And there’s a revenue opportunity to creating a convenient online marketplace for trading and payments in these currencies.

“Our research says there’s about $400 billion being done by small and medium-scale businesses in Africa alone in transactional volume on an annual basis. If we take 1% of that as a commission or transaction fee, that’s a $4 billion addressable market, just in the continent,” said Oyetayo.

A Look At VertoFX

VertoFX was founded in 2017 by Oyetayo and Anthony Oduwole — both ex-global bankers born in Nigeria. The company was part of Y Combinator’s 2019 winter cohort and processed around $7 million in transaction volume last month, according to Oyetayo.

VertoFX is registered as a payment services provider with the U.K.’s Financial Conduct Authority. Current clients include several undisclosed banks and San Francisco-based payment venture Flutterwave.

VertoFX doesn’t release revenue figures but confirmed it earns a commission, or spread, on each transaction processed on its platform. There are currently 19 currencies on the platform and the ability to settle in 120 countries, including China and the U.S.

VertoFX is also moving into offering market research — toward potential subscription services — on the currencies it trades, according to Oyetayo.

On the possibility of becoming acquired by a big bank, VertoFX isn’t so interested, according to Oyetayo.

“We both come from big banks and if we’d wanted to go down that route we’d have developed this more like a software as a service platform,” he said.

“We’re playing the long game here, and I don’t think the acquisition is the end game,” he said.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.

Afrikan Heroes

Tag: VertoFX

Middle-East-Only Investor Enters Nigeria As Payments Startup VertoFX Raises $10m Series A

Why The Investors Invested

A Look At What VertoFX Does

Charles Rapulu Udoh

Startup VertoFX Raises $2M For African and Emerging Market Currency Trading Platform

Here Are The Funding Details And What This Means For Similar Startups With Remote Niches

A Look At VertoFX

Charles Rapulu Udoh

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