Djamo Raises $17M to Expand Neobank Services in Francophone Africa

Djamo's Expansion in Francophone West Africa

Djamo is a digital banking startup focused on providing services to the underbanked population in Africa. Unlike many competitors concentrating on larger markets such as Nigeria, Egypt, or South Africa, Djamo has strategically focused on Francophone West Africa.

Specifically, the company operates in the Ivory Coast and Senegal, currently serving over 1 million customers across these two nations.

Recent Funding and Growth

The fintech company, backed by Y Combinator, recently secured $17 million in funding. This investment will be used to broaden its product offerings for both individual customers and the numerous small businesses it has acquired over the past two years.

This equity round represents the largest funding ever received by an Ivorian startup, exceeding Djamo’s previous $14 million Series A round from 2022. It demonstrates ongoing investor trust in the company’s objective of making banking services accessible and affordable.

While the exact new valuation wasn't disclosed, co-founder and CEO Hassan Bourgi confirmed it has doubled since the last funding round.

Addressing the Financial Access Gap

Djamo was established in 2020 by Bourgi and chief product and technical officer Régis Bamba. The founders aimed to address the significant lack of financial inclusion in French-speaking African countries, where a substantial portion of the adult population remains unbanked.

Traditional banking institutions in this region often prioritize wealthier clients, leaving the majority of the population to rely on mobile money. Mobile money offers a more affordable alternative, utilizing phone numbers for financial transactions.

The Limitations of Mobile Money

Mobile money has played a crucial role in expanding financial access throughout Africa. According to the World Bank, as of 2022, 28% of adults in sub-Saharan Africa had a mobile money account, representing over half of the global total.

However, this progress has reached a certain limit. Most mobile money platforms provide only basic services, including cash deposits, withdrawals, peer-to-peer transfers, and bill payments.

These services, while helpful, do not provide access to more sophisticated financial instruments like credit, investment opportunities, or long-term savings plans.

Djamo's Unique Position

Djamo is strategically positioning itself as a bridge between mobile money and traditional banking. The startup aims to combine the convenience of mobile money with the comprehensive financial capabilities of a bank account.

This approach mirrors the strategies employed by SoftBank-backed Opay and Transsion-backed PalmPay, which have successfully scaled to reach tens of millions of customers in Nigeria.

Targeting a New Generation of Customers

The company is focused on a growing demographic, primarily younger users, who have surpassed the limitations of mobile money wallets. These customers often find traditional banks to be costly, outdated, or simply inaccessible.

“These users are evolving,” explained Bourgi. “They are seeking alternatives to the institutions their parents used, institutions characterized by unfavorable pricing and a lack of adaptation to the needs of a new generation of customers.”

He further stated that Djamo is striving to become the preferred banking choice for this expanding group of customers seeking more complex and wealth-building financial opportunities.

Djamo's Broadened Service Offering

Following previous reports, Djamo has significantly broadened its services beyond initial offerings of cards and person-to-person money transfers. The Ivorian fintech now incorporates savings accounts, investment opportunities – facilitated by the first fintech-issued brokerage license in the region – and salary-linked bank accounts, all of which Bourgi identifies as crucial for enhancing customer interaction.

Similar to many neobanks, Djamo initially attracted customers who already had bank accounts, utilizing the platform as a supplementary account for streamlined bill payments and integration with mobile money systems. However, the unbanked population, representing a more challenging segment to engage, demonstrates greater potential for sustained growth.

Over 55% of Djamo’s user base falls into this unbanked category, frequently relying on the app as their primary financial resource. Bourgi notes that 90% of users who consider Djamo their main financial account originate from this demographic.

To expand its reach within this segment, Djamo has implemented a combined strategy. This involves integrating its application with a network of offline agents who provide in-person assistance for transactions, mirroring the mobile money approach increasingly adopted by fintech companies throughout the continent.

Currently, only a small percentage – between 5% and 10% – of Djamo users receive their salaries via the app. Bourgi stated that the company’s next objective is to increase this proportion, aiming for 50% of users to have their salaries directly deposited into Djamo.

Simultaneously, Djamo is enhancing its services for small businesses – currently numbering around 10,000, many of whom began as individual retail users. According to CTO Bamba, the startup now provides functionalities such as bulk payments, payment links, and QR code tools to facilitate merchants in accepting and managing payments directly within the application.

The fintech’s revenue is generated through merchant fees on online card transactions and a premium subscription plan, utilized by 25% of its users. Bamba also indicated that the company is investigating additional revenue streams, including lending and accruing interest on customer deposits. The necessary licenses to offer interest-bearing savings accounts and credit products are currently being secured.

Djamo’s founders report a fivefold increase in revenue since 2022 and have processed over $4.5 billion in transactions since its inception.

Expansion into Senegal

With its recent expansion into Senegal, Djamo has entered a market largely controlled by Wave, a prominent African fintech renowned for its low-cost mobile money transfers. However, Djamo does not position itself as a direct competitor, but rather as a complementary service.

It offers a comprehensive digital banking experience, enabling users to store funds and access more sophisticated tools like savings options, investment platforms, and credit facilities.

Now comprised of a 250-person team, Djamo anticipates that its latest funding round, spearheaded by Pan-African, gender-focused VC Janngo Capital, will facilitate the scaling of these services across French-speaking Africa.

“We are delighted to lead the largest venture capital round in Ivory Coast and further invest in Djamo, a fintech company dedicated to transforming access to financial services throughout Francophone West Africa,” stated Fatoumata Bâ, founder and executive chair of Janngo Capital.

“Given that less than 25% of adults in the region have access to formal financial services, and women are disproportionately excluded – being twice as likely to be unbanked – this represents a critical mission. Djamo, with women constituting a third of its user base, is not only bridging the gender gap but also unlocking economic opportunities on a significant scale.”

Additional investors in this round include SANAD Fund for MSMEs, managed by Finance in Motion; Partech; Oikocredit; Enza Capital; and Y Combinator.