Open finance continues to be a major theme in the fintech world as companies leverage APIs to access customers’ financial accounts and provide a range of integrated and integrated financial services. In the latest development, Stitch — one of the prominent players building and operating these APIs in Africa — confirmed to TechCrunch that it has raised $21 million in Series A funding.
This news follows the $4 million Stitch raised from stealth in February 2021, a prequel to the $2 million renewal round it secured four months ago, bringing the seed round to $6 million. In total, Stitch has raised $27 million so far.
The South African API fintech enables companies to build, optimize and scale financial products. According to a statement from the company, it plans to “financial chart” ecosystem across Africa with the new funding.
The company describes the financial chart as a financial building block infrastructure that allows companies to write code once, launch in multiple markets, and scale faster based on interoperability across regions, providers, banks and other types of financial accounts.
“We see the broader financial ecosystem as a series of different nodes — bank accounts, merchants like fintechs, or end users — all of which are intrinsically linked,” Stitch CEO Kiaan Pillay told TechCrunch in an interview. “We often think about the fact that these connections between regions and institutions do not yet exist. And a lot of what we’re trying to do is bridge those connections and make those connections ubiquitous.”
Stitch looks at this chart in three stages. The first is what it secretly launched: the pure infrastructural game of connecting financial and bank accounts with an API. The second focuses on acquiring vendors and companies to build use cases and applications on top of that infrastructure. And the last one is to make sure that end users link their accounts through these companies.
“At the high level, people moving from cash to digital for the very first time create more fragmentation. We believe that bringing all of this together in one network or graph helps open up the space and break down the silos,” Pillay said. “And the way we ultimately think about that is people can move money around with ease. between different applications between different regions and institutions.”
Stitch’s provides solutions for e-commerce companies, marketplaces and platforms and its leading customer base, fintechs. As in previous years, African fintechs outperformed other startups in raising venture capital, particularly in a record year of 2021, where they raised 50-60% of total VC funding per report. Their importance cannot be overstated and iInfrastructure players such as Stitch, Mono, Okra, Plaid and OnePipe – all of whom have raised funds over the past year, some in the starting blocks and others, Series A – are crucial to that collective growth of driving financial inclusion and ease of payment across the continent. .
These corporate customers use Stitch for use cases such as KYC & onboarding, personal and corporate financial management, lending, wallet top-up and e-commerce cash registers. The platform’s data and identity products enable businesses to access customer transaction histories and balance information, verify account information, and conduct fraud checks. The payment product enables bank-to-bank transfers for one-click payments.
Some customers include wallet-based companies such as Chipper Cash and Luno; embedded financial services providers such as ImaliPay; subscription platforms such as FlexClub; and payment aggregators such as Yoco.
In April 2021, Stitch launched its payment product in South Africa and saw payment volume grow by 50% over the next six months. In October, Stitch expanded the payment product to Nigeria and at the time was on track to facilitate $10 million in monthly payments by December.
During the call, Pillay, who co-founded Pillay with Natalie Cuthbert and Priyen, did not provide an update on this statistic, but said Stitch had seen a 104% month-over-month growth in payment value since the product’s launch last April. . And in the fourth quarter of 2021, the platform witnessed a 44% month-over-month customer growth and a 72% month-over-month increase in linked financial accounts.
“We are proud of the partners and customers we have here as we continue to deepen the payment product and look at monthly and recurring payments, which are exciting features for us,” said Pillay.
“We recently had a few clients go live in Nigeria, which was very exciting for us. We only offer payments there, but would like to deepen the products. We will be looking at adding data and identity this year, as well as deepening payments, similar to how we have it in South Africa.”
New York-based hedge fund The Spruce House Partnership led this investment round. The round also welcomed the participation of new and existing investors such as PayPal Ventures, TrueLayer, firstminute capital, The Raba Partnership, CRE Venture Capital, Village Global, as well as fintech founders and companies such as TrueLayer, founders of Chipper Cash, Quovo and Unit, and Guillaume Pousaz’s Zinal Growth.
“We have been following startups in Africa for years. Our commitment was very clear to this being one of the most talented teams on the continent, and we’re excited to be a part of what they’re building at Stitch,” said Ben Stein, co-founder of The Spruce House Partnership.
Pillay says raising money from VC firms and operators who have scaled fintech products across multiple regions gives the company “something really special” as it enters its next growth phase. The funding, Stitch said, will allow it to expand its team across offices in Cape Town, Johannesburg and Lagos, launch new product offerings and enter new markets across the continent.