Nigerian fintech company Cleva, which specializes in creating a banking platform that allows African businesses and local individuals to access international payments by opening dollar accounts, raised $1.5 million as seed funding.
This financing round was conducted by 1984 Ventures, which is an early-stage venture capital firm based in San Francisco. Raba, Byld Ventures, FirstCheck Africa, and Y Combinator also provided investment funds for the Nigerian fintech company.
Aaron Michael, partner at 1984 Ventures, supports the initiatives of Cleva founders Tolu Alabi and Philip Abel, believing that the product they created will help to cope with the problems associated with hyperinflation. He also stated that the team of specialists of this fintech company has unique qualifications, with which it is possible to solve the problem of overcoming difficulties that have arisen against the background of excessive growth in the cost of goods and services. In this context, Aaron Michael mentioned the experience of Cleva representatives at Stripe, where they participated in the creation of banking products. He also noted that employees of the company developed reliable platforms in AWS.
Aaron Michael stated that the impressive early growth is a testament to Cleva’s unique ability to operate in the United States and Africa.
The fintech company is participating in the Winter 2024 program, which was launched by Y Combinator. This business accelerator has experience in supporting African startups. Y Combinator helps freelancers and remote workers on this continent to open bank accounts in the United States to receive payments, savings, and currency exchange.
Tolu Alabi, while talking to media representatives, said that the Cleva platform was launched in August, despite strong competitive pressure from brands such as Geegpay and Payday, because Africans still face problems related to payment transactions transferred for their skills and products. According to her, these difficulties are a kind of pain point, identified by the results of personal experience and extensive research. Tolu Alabi and Philip Abel estimate the payment facilitation market for freelancers and remote workers in Africa at $18 billion.
Also, in this case, an important factor is the compliance of the founders of Cleva with the market. Tolu Alabi and Philip Abel were born in Nigeria. After a while, they moved to the United States. Philip Abel studied at the Massachusetts College of Technology. Tolu Alabi enrolled in business school at Stanford. They have valuable product knowledge and technical experience gained while working for large companies, including the above-mentioned Stripe and AWS, and also Amazon and Twilio.
Tonu Alabi, during a conversation with media representatives, said that there are currently market opportunities in Africa. According to her, the problem of receiving international payments is relevant not only for Nigeria in particular and Africa in general but also for Latin America and Asia. For people who receive salaries in dollars, it is important to have access to the infrastructure of global transactions. Tolu Alabi stated that Cleva begins its mission with Nigeria, as the company perfectly understands the specifics of the local market which is a large-scale space. At the same time, she noted that the brand has the potential to solve the problem of international payments on a global level.
Cleva initially launched its services for consumers living in Nigeria. The company’s clients have the opportunity to open an account in dollars. For registration, consumers need a bank verification number and a government-issued identity card. An important circumstance is that other fintech platforms offer African clients to open accounts not in dollars, but in euros and pounds sterling.
During the first four months after the launch of Cleva, thousands of Nigerians opened accounts in the United States. Currently, the company processes monthly payment transactions of $1 million. The firm’s revenue growth is 100%. In this case, it means an increase in the indicator in monthly comparison.
Tolu Alabi says that Cleva has advantages over competitors in such aspects of its activity as customer service and business strategy. She stated that the company believes that it must be doing everything possible to improve the consumer experience. Tolu Alabi noted that Cleva customers know that their sent email or interaction with the support service will not be an excessively lengthy process.
The company charges a 0.9% fee on deposits into consumers’ accounts when exchanging dollars for local currency. In this case, a notable feature is that the firm has a fee limit of $20. Competitors often charge 1% regardless of the transaction amount.
Philip Abel, during a conversation with media representatives, said that Cleva has several new products to diversify income sources, including dollar cards and savings in US assets.
The company had to overcome a number of difficulties, which are something like standard problems for fintech firms with a similar functional purpose. In this case, it means searching for a banking partner and qualified specialists.
The new Cleva product line, which has not yet been launched, includes providing users with the ability to create professional invoices and send dollars around the world. If this intention is successfully implemented, the company will enter the category of competitive financial service providers, where players such as Flutterwave Send, Chipper Cash, Lemfi, and Afriex are present.
Philip Abel says that the common financial technology market, focused on freelancers and Africans from the diaspora, is ready for sustainable growth. According to him, this trend is supported by such a process as the globalization of the world, in the context of which young people from African countries are actively improving their skills and exporting their talents. Philip Abel noted that Cleva is ready to transform from a service for products into a platform that releases APIs to perform many other tasks that help scale operations on the continent.
As we have reported earlier, Soum Raises $18 Million.