South African fintech startup, Paycode, has secured an undisclosed investment from one of Nigeria’s leading financial services providers, Investment One Financial Services Limited (Investment One). This deal was made through its Venture Capital subsidiary, Investment One Vencap Limited.
In a statement, Paycode said this latest investment will be used to execute its pipeline deals and drive business expansion across Africa.
Paycode plans a Series A capital raise in the First Quarter of 2022. The plan is to expand globally and achieve a target of serving over 50 million people by 2025
“Our investment in Paycode represents both our drive to achieve excellent returns for our clients, but also our commitment to bringing financial services to excluded sectors in Nigeria,” Nicholas Nyamali Investment One Group Managing Director said. “Paycode’s unique approach to solving the most complex challenges of the financially excluded fits perfectly with our own innovative DNA” he added.
Based in South Africa, Paycode provides technology solutions that utilize biometric digital identity to guarantee proof of life and enable low-cost, last-mile delivery of basic financial services. Paycode addresses three critical problems for the unbanked and underserved by providing low-cost solutions to those without formal identification in areas with little or no mobile or internet connectivity.
Paycode enables access to basic financial services including cash pay-outs, mobile money, remittances, insurance, microloans, airtime, electricity, and social grants by providing a platform that combines biometric digital identity and payments in one convenient platform.
With over 6 million card users registered, a partnership with Mastercard, and a strong pipeline of fee-driven grant and social programs under its belt.
Commenting on the deal, Paycode CEO, Ralph Pecker said “We see Investment One as so much more than just an equity partner to Paycode. Investment One is a significant and innovative player in the financial services sector of Nigeria, a key growth market for us. We believe that having them on board will greatly accelerate our expansion objectives in Nigeria and that we, in turn, can provide an excellent return on their investment.”
Investment One says it was particularly attracted by the technological USPs of Paycode, a valuation that focused on current revenues and users while reasonably discounting cashflows (in an environment where fintech valuations have noticeably sky-rocketed during 2021) and the scope for growth in Nigeria through projects already won. The Nigerian Financial Services company analyzed Paycode’s future growth trajectory in Nigeria alone to conclude its relative value.
Currently, Paycode’s active users are in Ghana, Zambia, and Mozambique but the pipeline in larger countries, such as Nigeria and the DRC, is a key growth driver.