Nigeria’s Piggybank.ng raises $1.1M, announces group investment product
Seeking to tap into Africa’s informal savings groups the Nigerian investment startup Piggybank.ng closed
$1.1M in seed funding and announced a new product — Smart Target, which
offers a more secure and higher return option for Esusu or Ajo group savings clubs common across West Africa.
The financing was led with a $1 million commitment from LeadPath Nigeria, with Village Capital and Ventures Platform contributing $50,000 each.
Founded
in 2016, Piggybank.ng offers online savings plans — primarily to low
and middle income Nigerians — for deposits of small amounts on a daily,
weekly, monthly, or annual basis. There are no upfront fees.
Savers
earn interest rates of between 6 to 10 percent, depending on the type
and duration of investment, Piggybank.ng’s Somto Ifezue told TechCrunch
in Lagos with co-founders Odunayo Eweniyi and Joshua Chibueze.
Users
need an account with one of PiggyBank.ng’s bank partners to use the
products. The startup generates returns for small-scale savers
(primarily) through investment in Nigerian government securities, such
as bonds and treasury bills.
PiggyBank.ng generates revenue through asset management and from the float its balances generate at partner banks.
The startup looks to grow clients across younger Nigerians and the country’s informal saving groups.
“The
market that we are trying to serve is largely the millennial market,
though we do not exclude anyone,” said Eweniyi, the company’s chief
operating officer. The venture also looks to meet a demand in Nigeria
for accessible investment options, citing a survey they conducted
indicating that as a top priority for people with discretionary income.
“Piggybank
offers savings, but our vision is not just savings, but to become a
holistic platform — a financial warehouse — where other financial
providers can plug in their services for PiggyBank users,” said Eweniyi.
She cited banks, investment houses, insurance, and pension funds as
possible partners.
The company
currently has 53,000 registered users — 60 percent of whom are Nigerian
Millennials — who have saved in excess of $5M since 2016, according to a
release.
PiggyBank.ng will use its $1.1M in new seed funding for “license acquisition and product development.”
The
startup has taken preliminary steps to launch in other African
countries (Kenya in particular) but could not offer exact details.
Groups
will be able to choose savings options and goals through PiggyBank.ng’s
app and receive automated disbursement of returns across their
individual bank accounts, according to COO Eweniyi .
As
for how the company assures savers it won’t become another Ponzi
scheme, Piggybank.ng and its lead investor point to the startup’s
pending banking license with Nigeria’s Central Bank. The company is in
the process of acquiring a micro-finance banking license, something
LeadPath Nigeria founder Olumide Soyombo confirmed on a call with
TechCrunch. He also pointed to Piggybank’s client balances being held
with registered banks, which are protected under Nigeria’s own FDIC type banking insurance.
Soyombo
will take a role on Piggybank.ng’s board and he’d like to see them open
up new options for individuals to input money on the platform. “The
agent network business is a huge play we plan to go into. They’ve
basically become like human ATMs,” Soyombo said. He referenced Nigerian
digital payment company Paga and Safaricom’s M-Pesa with large agent network stations where clients can fund digital accounts with cash.
While
digital payments products have caught on in certain parts of Africa,
E-Trade type citizen investment platforms have yet to emerge at any
scale.
Soyombo doesn’t see Piggybank.ng
moving from fixed income investments to equities just yet. “Maybe down
the line stocks could be an interesting play, but not right now. People
are currently looking for a more risk free place to e-tail,” he said.
Soyombo believes Piggybank.ng has the potential to become an acquisition target.
“They
usually only happen in our market with two main players: banks and
telcos,” he said. “The banks have been slow to try new things in this
savings space. Piggybank is coming in…and filling a particular need, so
they are in a very acquisitive space.”
Image Credits: PIUS UTOMI EKPEI / Stringer via Getty Image
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