Zazuu, a United Kingdom-based and Africa-focused fintech startup that aggregates cross-border and remittance platforms, has raised $2 million in a new venture round to scale its cross-border payment marketplace.
The pan-African investors, Launch Africa and Founders Factory Africa, British rapper Tinie Tempah, iROKOtv founder, and CEO Jason Njoku, and Kuda chief executive, Babs Ogundeyi participated in the round.
The fintech, which claims to be the world’s first cross-border payment marketplace, was created in response to the unfavorable financial system that emigrants, particularly African emigrants, face in Europe and America when performing financial activities such as building credit or sending money home.
Nigeria is Sub-Saharan Africa’s largest recipient of remittance inflows, receiving over $17 billion from its 800,000 migrant population. According to Zazuu CEO, Kay Akinwunmi, he and his co-founders founded the startup in 2018 after encountering institutional biases as Africans living in the diaspora.
“This is something we’ve seen. “Seeing my mom send money and the friction there is pretty much the story of millions of Africans and migrants sending money,” said the startup founder, who co-founded the startup with Korede Fanilola, Tola Alade, and Tosin Ekolie. “Whether you’re sending money to another part of the world or trying to get a loan here in the UK, Africans in the diaspora are at a disadvantage.”
Furthermore, the remittance market has fragmented. Over the last few years, there has been an increase in remittance products, with digital upstarts like NALA, Lemonade Finance, and Chipper Cash joining legacy platforms like WorldRemit, Remitly, and Western Union.
Zazuu first launched as a chatbot in 2020, informing users of the daily remittance rates of various platforms via Facebook and Telegram groups, to help users search these various money transfer options in their region and compare rates and fees.
“We looked at the typical African customer to understand their behavior and discovered a fascinating trend,” Akinwunmi explained. “We discovered that Africans have a pathological tendency to shop around, compare our options, and try different options before making a decision.”
According to the CEO, the initial product assisted in dispelling customers’ preconceived notions about which service provided the best rates as they were introduced to new providers. The product has now evolved into a full-fledged aggregator, listing over 17 service providers (money transfer companies that serve multiple corridors). It offers money transfer options from Canada, the United States, and seven European countries, including the United Kingdom, allowing customers to use its “Search and Compare” service to find providers that can move money from these countries to Africa.
“The core of Zazuu is to take power away from biased financial institutions and money transfer companies.” We want to give customers this bird’s-eye and transparent view so that they can see all of their options in one place, including rates, speed, and reviews, for the first time. “Their onboarding experience will be much smoother and much better,” he said, comparing Zazuu’s processes to those of traditional market players.
Customers understand Zazuu’s proposition; however, it can be difficult to see what’s in it for platform providers. However, Akinwunmi claims that his platform addresses the most significant pain points for providers: churn and high customer acquisition costs. “Zazuu is a marketplace, and the reality is that customers shop around for multiple entities to send money to.” However, it is an opportunity for providers to reinforce their brand message or advertise aspects of their business other than low rates. And, rather than just a referral, we’re bringing them real transactional value,” he explained.
The startup claimed to have grown 2.3x in the first quarter of 2022 compared to the entire year of 2021. The new investment will be used to maintain these numbers, hire more talent, and scale its Pay with the Zazuu feature, which allows users to complete transactions in-app. Although this service is currently only available to senders in the United Kingdom and receivers in Nigeria and Ghana, Zazuu plans to expand access to other sender and receiver countries in the future. A couple of products that address financial challenges faced by African immigrants, such as access to credit, are also in the works.
“The goal is to create completely non-biased financial well-being for African immigrants all over the world,” the CEO said.
Zach George, managing partner of Launch Africa said, “Zazuu is building a true marketplace for financial services, starting with remittances and payments. We believe their business will bring fairer, more transparent pricing and better cross-border mobility of money across the African continent.”