Africa's Fintech Landscape and Appzone's Rise

Investment in Africa’s financial technology sector has significantly increased in recent years. However, startups continue to face challenges in delivering consistently high-quality products.

Despite these hurdles, African fintech companies are demonstrating strong performance, particularly when contrasted with traditional banks burdened by outdated cost structures and operational inefficiencies.

Appzone Secures $10 Million in Series A Funding

Appzone, a provider of fintech software solutions, is a key player in this evolving landscape. The company specializes in building proprietary solutions for financial institutions, focusing on banking and payment services.

Appzone has recently announced the successful closure of a $10 million Series A investment round, marking a significant milestone for the company.

Addressing a Critical Need: Localized Technology

Historically, many African financial institutions have relied on technology solutions originating from outside the continent.

However, these solutions often present issues related to pricing, limited flexibility for innovation, and a lack of readily available local technical support.

Appzone has strategically positioned itself to fill this gap, offering tailored solutions designed specifically for the African market.

Company History and Evolution

Founded in 2008 in Lagos, Nigeria, by Emeka Emetarom, Obi Emetarom, and Wale Onawunmi, Appzone initially operated as a services firm.

The company provided custom software development services to commercial banks before launching its first core banking product for microfinance institutions in 2011.

Product Development and Expansion

Appzone continued to innovate, introducing a branchless banking product for commercial banks in 2012.

Further advancements included the launch of mobile and internet banking services in 2016 and an instant card issuance product in 2017.

In 2020, the company expanded its offerings to include services for end-to-end automation of lending operations and blockchain switching.

A Focus on Proprietary Technology

“We started Appzone with the intention to build out innovative local solutions for banking and payments on the continent,” stated CEO Obi Emetarom to TechCrunch.

“The focus was to leverage our ability as an enabler to create proprietary technology for both segments.”

Current Impact and Reach

Currently, Appzone’s platforms are utilized by 18 commercial banks and over 450 microfinance banks across Africa.

These institutions collectively process an annual transaction value of $2 billion and disburse $300 million in loans each year.

Pioneering Fintech Innovations

Since its inception, Appzone, an alumnus of the Google for Startups Accelerator, claims to have achieved several global firsts originating from Africa in the fintech sector.

These include the creation of the world’s first decentralized payment processing network, the first cloud-based core banking and omnichannel software, and the first multi-bank direct debit service based on single global mandates.

The Appzone Ecosystem

Emetarom describes Appzone as a fintech product ecosystem centered around proprietary technology.

This ecosystem comprises a digital core banking service – providing software for the complete operation of financial institutions – and interbank processing, integrating these institutions into a blockchain-powered decentralized network.

Expanding into End-User Applications

Alongside this investment, Appzone is introducing and scaling a third layer focused on applications for end-users.

Having developed both banking and fintech layers, the company aims to connect individuals and businesses directly to its services.

Competitive Advantage

“Most of these companies operating in end-user applications have to depend on services from core banking and interbank processing to be able to get their own offerings out there,” explained Emetarom regarding the competitive landscape.

“For us, I think we have an advantage in terms of costs and flexibility because we are already operating in both layers.”

Scaling for Pan-African Growth

After operating in a relatively stealth mode for over a decade, Appzone is now poised for rapid scaling of its products and services.

A key component of this strategy is a serious commitment to pan-African expansion, building upon its existing presence in Nigeria, the Democratic Republic of Congo, Ghana, Gambia, Guinea, Tanzania, and Senegal.

Previously, limited resources hindered aggressive expansion into these promising markets, but the Series A funding will facilitate growth across the continent.

Investing in Talent

Another crucial aspect of Appzone’s scaling plan is expanding its engineering team, a department the company highly values.

Engineers comprise half of Appzone’s 150 employees, and the company intends to double this number.

Appzone prioritizes hiring senior engineers but also invests in training promising junior talent to enhance their expertise.

The Importance of Local Expertise

“Our proprietary tech allows us to innovate at a fraction of a cost, and they are built by essentially the best local talent available,” Emetarom emphasized.

“Because those systems are really complex and the level of innovation required is on another level, we literally seek out the top 1% of talent in Nigeria.”

“We know that even though the expertise isn’t there, we can accelerate acquiring that expertise when we train the very best talent. The more we train our engineers, the faster they grow in terms of expertise, and they will be able to deliver at the same level of world-class quality we expect.”

Investment Details and Key Investors

The investment round is notable for being largely led by Nigerian-based investors, representing arguably the largest round of its kind led by domestic investors.

CardinalStone Capital Advisers, a Lagos-based investment firm, spearheaded the Series A investment.

Additional investors included V8 Capital, Constant Capital, and Itanna Capital Ventures, with participation from Lateral Investment Partners, a New York-based firm focused on Africa.

Previous Funding Rounds

Prior to this round, Appzone secured $2 million from South African Business Connexion (BCX) in 2014 and raised $2.5 million in convertible debt in 2018, subsequently buying back shares from BCX.

In total, the company has raised $15 million in equity funding.

Investor Perspective

Yomi Jemibewon, co-founder and managing director of CardinalStone Capital Advisers, highlighted Africa’s potential as a future hub for world-class technology.

“Appzone is building a disruptive fintech ecosystem that will be the backbone of Africa’s finance industry with products across payments, infrastructure and software as a service,” he stated.

“The impact of Appzone’s work is multifold — the company’s products deepen financial inclusion across the continent whilst providing best-fit and low-cost solutions to financial institutions. Its emphasis on premium talent also helps stem brain drain, rewarding Africa’s best brains with best in class employment opportunities.”

A Thriving Fintech Ecosystem

Appzone’s funding contributes to the accelerating investment activity within Africa’s fintech space following a slower January.

Over the past two months, more than eight fintech startups have secured million-dollar funding rounds, including significant investments in South African digital bank TymeBank ($109 million) and African payments company Flutterwave ($170 million).