FinanceFintech

Mobile money tech startup, Wave, becomes Francophone Africa’s first unicorn

Wave: Africa's newest and fastest unicorn - Startup Lagos

Africa’s mobile money unicorn

In the largest Series A round in Africa, Wave, a US- and Senegal-based mobile money tech startup has raised over $200 million. This new funding has raised the company’s valuation to a whopping $1.7 billion, to propel it to unicorn status in just three rounds. The investment is not only the largest Series A for the region but for the whole of Africa. The company is said to have completed this rise to unicorn status in just two rounds.

Backed by Sequoia Heritage, Founders Fund, Stripe, and Ribbit Capital, along with others like Partech Africa and Sam Altman, CEO of OpenAI, this successful round has catapulted to prominence the mobile money startup.

Mobile money growth in sub-Saharan Africa

With the massive growth and expansion of the mobile money market in sub-Saharan Africa. According to a report by GSMA, as of 2020, Africa had recorded a growth of over 18% in registered accounts, from the previous year, of about 159 million registered mobile money accounts, and a massive transaction value of over $490 billion.

Just this September, Kenya’s M-Pesa had risen to become the biggest fintech in Africa with over 50 million active users monthly, and a wide geographical spread across the Democratic Republic of Congo, Egypt, Ethiopia, Ghana, Lesotho, Mozambique, South Africa, and Tanzania. The mobile money market in Africa is, observedly, expanding in leaps and bounds. By offering Africans the option of ease in banking, mobile money technology is increasing financial inclusion across the continent. And this is spurred further by the growth in mobile penetration on the continent.

Growth of mobile money accounts globally (2006 – 2020)
Source: GSMA Report, 2020

Wave: Riding the waves

Founded by Drew Durbin and Lincoln Quirk in 2014, Wave was initially known as Sendwave, and offered little or no remittance fees for transfers from North America and Europe to certain African and Asian countries. The company aimed at building a mobile payments alternative that would be readily available and accepted everywhere. After raising over $500 million in cash and stock for Sendwave, through Y-Combinator, the company became a WorldRemit subsidiary in 2020, and the focus shifted to growing a new product, Wave.

Wave was piloted in Senegal, in 2018, and was geared at providing a better and more affordable service than was being offered by the telecommunication companies across sub-Saharan Africa. With a similar model to Paypal, which is far cheaper than what the telcos offer, Wave enables users to deposit and withdraw money with a meager charge of 1% when they send across money. This model, according to Durbin, is 70% cheaper than telecom models, and a refund system is automatic, when transfer challenges emerge, eliminating the disaffection that comes from waiting days for a refund of payment. Operating through its app and QR card system, the platform also improves on the USSD model of the telcos. As Durbin is quoted on TechCrunch,

We saw an opportunity to make a bigger impact by trying to build a better, much more affordable mobile money service than the telcos are building throughout much of sub-Saharan Africa. We didn’t see any companies besides the telcos trying to solve that problem.

With its consolidated growth in Senegal, making it the largest mobile money player in the country, the company is looking at expanding across Africa (Uganda, Mali, and other African markets), as well as growing considerably in Ivory Coast, where it expanded to in 2020. With this funding, the company is looking at increasing its team’s strength across all its departments.

I think there’s a pretty broad array of countries that have strong central banks and clear regulations are open to new players, or even want new players to come in and try to compete with the telcos. And so we have a lot of licenses that are in progress, and we’ll try to prioritize the countries we’re able to get started sooner over the ones that it takes longer.

Drew durbin, co-founder wave

A fintech future

While it is important to note the growth that fintech in Africa is making, especially this year, attracting huge chunks of investment, it remains to be seen, how fintechs are innovating into newer blue ocean markets, and drawing in potential customers.

In an earlier post, it had been emphasized that for African fintechs to consolidate on their wins, it is important for them to constantly offer value, not merely in payments infrastructure (payments and lending services) but to expand into other areas of services tech, in the interfaces with various other sectors of the economy. African fintechs should be willing to look at the bigger picture and create products that disrupt the traditional banking infrastructure, and not merely offer alternatives. While regulatory modifications will help to ease this objective, it is important that fintech in Africa is thinking in that stead.

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