Institutions have a way of being exported because of globalization. If there are institutional changes abroad, it's only a matter of time before such trends surface in Africa. This is what is happening with fintech in Africa, as the digitization of financial services takes shape in this region. A perfect example is digital banks.
Digital banks or Neobanks are on the rise. In Nigeria, names like Kuda, Carbon, Fairmoney, Sparkle, and Vbank have surfaced in the digital banking space recently, with Kuda boasting of a better valuation than some incumbent banks thanks to the close of a Series B round which valued the digital bank at $500 million.
Speaking of Seed rounds, Sparkle, a digital bank, has closed a $3.1 million seed round to scale its operation. This takes the company's total funding to $5.1 million thanks to a $2 million pre-seed round and the latest series A funding.
Sparkle Series A round is a deviation from the norm. Unlike most seed rounds for most startups in Nigeria, where foreign investors dominate, Sparkle series A round consists of investors from Nigeria alone.
Leadway Assurance led the round with Trium Network and a few unnamed high-net-worth individuals also being a part of this round.
“Collectively, as a group of investors and business builders, we are Nigerians who are bullish about Nigeria and the opportunity the country presents in terms of building global networks and communities, all via one app." Sparkle's CEO, Uzoma Dozie
Launched in 2020, Sparkle operates a model that combines providing banking services to individuals and businesses on a single platform. Think of Sparkle as Kuda(provides banking services to individuals) combined with Prospa(provides banking services to business) in a single platform.
Since launching last year, Sparkle claims to have acquired over 42,000 customers, 40,000 individual customers, and 2,000 businesses. According to its CEO, the company began charging individual customers small fees to keep their accounts running and plans to charge businesses for most features except taxation services.
Sparkle plans to use the investment for building robotic process automation to help with mundane and repetitive processes and hiring talent across engineering, finance risk, and marketing, Dozie opined.