QED Investors, a U.S. fintech-focused venture capital firm, has led a new investment in TeamApt, a Nigerian fintech that provides business payments and banking platforms. The investment was over $50 million, according to sources familiar with the matter, though neither QED nor TeamApt would confirm the figure.
Existing investors from the company’s Series B last year (Crunchbase pegs it at $30 million+) — Novastar Ventures (co-lead), Lightrock and BII — all participated in this round.
While TeamApt wouldn’t prescribe any “letter” to this latest round, it can perhaps be described as a pre-Series C round because sources say the company is still in the market to raise a Series C next year.
“We always approach our fundraising effort opportunistically and want to make sure the market context, cash needs of the business and investor profile match our strategic growth views,” said the company’s Tosin Eniolorunda when quizzed whether the current market downturn affected the company’s Series C fundraising efforts initially planned for this year. “Given the overarching cautious market environment, we were not in active fundraising mode. As a profitable company, we did not need the cash, but we were happy to take an opportunity to add a new high-profile investor.”
Final piece of the puzzle
With almost $5 billion in assets under management (AUM) and a recently closed $1.05 billion seventh fund, QED has backed more than 180 companies (of which 27 are unicorns). In a move rarely made by Western VCs, QED announced the hiring of Gbenga Ajayi and Chidinma “Chid” Iwueke to lead its investments in Africa this January. Nigel Morris, the firm’s co-founder and managing partner, in an interview with TechCrunch, said Africa was the final piece of the puzzle for transforming QED into a global fintech-specialist VC firm.
TeamApt operates one of Nigeria’s largest business payments and banking platforms and processes a $100 billion annualized run-rate transaction value via its products Moniepoint and Monnify. Moniepoint now serves 400,000 small and medium-sized businesses across Nigeria, allowing them to access various features to manage operations: working capital, business expansion loans and business management tools such as expense management (business payments cards), accounting and bookkeeping solutions and insurance.
In TeamApt, QED finds a company that bootstrapped for four years before raising a venture round in 2019 but has grown 300% annually to build one of the largest fintechs in Africa (in revenue and market cap) — and is profitable. The company generated over $100 million in annualized revenue last year and saw its valuation jump almost four times from its previous priced round, according to sources.
“From our bootstrapping days, we built products where we can see positive unit economics from day one, which has continued to be reflected in our profitability,” the chief executive said in an email response to TechCrunch. “This has put us in the realm of the few attractive cash-flow-positive hyper-growth companies — even as we continue growing at triple digits year-on-year, while at the same time expanding our margins.”
Eniolorunda said this new financing round would help TeamApt widen its credit offerings. The company’s lending portfolio is still small as it continues to lend from the balance sheet of its microfinance bank subsidiary. But as its portfolio expands, the company plans to leverage multiple lending partnerships, including banks, development finance institutions and securitization structures, to access debt facilities. https://jac.yahoosandbox.com/1.2.0/safeframe.html
QED is also a renowned credit operator and has helped develop strong credit functions for portfolio companies such as Brazil’s Nubank and India’s Jupiter, which, according to Eniolorunda, fit TeamApt’s lead investor profile. In a January interview, QED said it expects upcoming portfolio companies to “take advantage of its specialization in fintech, operational expertise and willingness to roll up its sleeves” to build and scale financial products for Africa’s needs, which is precisely at the core of TeamApt’s business.
Nigeria is leading the way in widescale adoption of digital payments across Africa, with over $800 billion in digital transactions annualized for the first four months of this year. It’s a large fintech market, with countless companies providing numerous services across the country, such as Flutterwave, Chipper Cash and OPay. TeamApt, in subsequent rounds, may present QED with the opportunity to mint another unicorn.
“I am proud to bring Africa to QED and QED to Africa. I could not think of a better way to enter the continent than with our investment in TeamApt,” said Gbenga Ajayi, QED Investors partner and head of Africa, in a statement. “Tosin and his team have steadily built an impressive payment and distribution network across Nigeria over the past five years. Their strong and positive unit economics, coupled with a deep customer focus, will enable them to continue to build out an even more expansive network.”
Meanwhile, as discussed last year, TeamApt’s pan-African expansion play is still in motion, said Eniolorunda; the company is targeting its first wave of international expansion within the continent in the coming months.
First published in Tech Crunch, https://techcrunch.com/2022/08/10/fintech-vc-qed-makes-its-first-african-investment-backing-nigerias-teamapt-in-50m-deal/
