Nigerian fintech Stealwhich focused on creating a banking platform for African individuals and businesses to receive international payments by opening USD accounts, raised $1.5 million in pre-funding.
The round was led by 1984 Ventures, an early-stage venture capital firm based in San Francisco. Other participants in the round include The Raba Partnership, Byld Ventures, FirstCheck Africa and several angel investors.
Aaron Michael, partner at 1984 Ventures, expressed his support for Cleva’s founders, Tolu Alabi and Philip Abelnoting that their product provides a means for Africans to address the challenges of hyperinflation, which he describes as a huge opportunity. “The team is uniquely qualified to tackle this, given their experience building banking products at Stripe and strong platforms at AWS. The impressive early growth is a testament to the team’s unique ability to execute across Africa and the US,” he added.
Y Combinator also participated in Cleva’s pre-seed round, as the fintech begins participation in the accelerator’s Winter 2024 batch this month. The renowned accelerator has previously backed African startups that help freelancers and remote workers on the continent open US bank accounts for receiving payments, savings and currency exchange, such as Gray Finance and Elevate (formerly Bloom).
CEO Alabi, in an interview with TechCrunch, explained the reasoning behind launching the platform in August despite a competitive landscape with other platforms such as Geegpay and Techstars-backed Payday.
First, it highlighted the persistent challenges Africans still face in receiving international payment for their skills and products, a pain point both founders identified through second-hand experience and extensive research. They estimate that the market to facilitate payments for remote workers and freelancers in Africa is an $18 billion opportunity.
Image Credits: Steal
Another critical factor is founder-buyer fit. Both founders share a strong connection with the African market. Born and raised in Nigeria, they moved to the US on college scholarships, where Abel attended MIT while Alabi then went to business school at Stanford. In particular, they bring valuable technical and product experience from their roles at major technology companies, including Amazon, Stripe, AWS and Twilio.
“Then there’s the market opportunity,” Alabi noted in the interview. “The problem we are trying to solve, which is enabling people to receive international payments, is not a Nigerian problem or an African problem. It’s a global problem. People in Latin America, Asia and even Canada need to receive dollars for their work and service. We are starting with Nigeria because we know the market and it is also a big market. But we feel that because of our background, we are very well positioned to solve this problem on a global scale.”
Cleva initially launched its services to Nigerians, allowing users to open accounts in USD, with onboarding requiring a Bank Verification Number (BVN) and a government-issued ID. (It’s worth noting that while Cleva exclusively provides USD accounts, other players offer GBP and EUR accounts.) In the four months since its launch, the Delaware and Lagos-based fintech has made it easy to open US-based accounts for ” thousands” of Nigerians, processing over $1 million in monthly payments while experiencing 100% month-on-month revenue growth, according to the CEO.
As Alabi points out, fintech differentiates itself from the competition in two key areas: customer experience and business model. “We believe in going above and beyond to give our customers a great experience. This is the feedback we received from customers. They know that when they email us or contact our customer support, it won’t take a week or two,” he observed.
Meanwhile, the YC-backed startup, which generates revenue when users trade and exchange their money (in USD accounts) for the local currency (in naira at present), also charges a 0.9% fee for deposits to customer accounts in USD. It’s worth noting that Cleva caps fees at $20, standing out from competitors who often charge a 1% fee with no cap, regardless of the amount received.
Looking ahead, Cleva has several upcoming products in the pipeline to diversify its revenue streams, including USD cards and savings on US assets, CTO Abel said in the interview. Also, Cleva, which has had to scale through challenges common to fintechs in its category, such as finding the right banking partner and talent, will soon target the African diaspora. To that end, other upcoming products, according to its website, include the ability for users to create professional invoices and send USD globally, they enter a competitive remittance category where platforms such as Flutterwave’s Send, Chipper Cash, Lemfi and Afriex operate.
The overall addressable market for fintechs focused on freelancers and Africans in the diaspora is poised for continued growth. This trend is fueled by a globalizing world where more young Africans are upgrading and exporting their talents to meet the growing demand for skilled people. “In the long term, we are open to Cleva evolving from a product-only service to a platform that issues APIs to do many other things that help us distribute services to other African countries or around the world,” Abel said, providing more details on Cleva’s future roadmap.
