But what if my virtual friend, feeling we are not buddies as such or having been scarred by online money doubling scams, hesitates to share such personal information? Can I thrill them on their special day by using public information I have about them?

Sometime in June, I tried Vendly, a web app that is trialling a solution for this need (or desire, if you’re not yet persuaded). ‘Payments made Social’ the landing page declares on a light green background. Bob Nzelu, the brain behind it, described it to me as a way to share and receive items of digital value – money, crypto, airtime, e-tickets – over social media.

“Like sending money through email addresses using PayPal, Vendly hopes to replicate that using social media handles,” he said.

But that is just the basic use case he anticipates, cutting in to assuage my skepticism that money transfer on social media is a compelling enough value to build a (potentially venture-backed) company on. Long-term, Vendly will help social media users monetize their social media presence, the CEO said.

Back to social money vending. Nzelu believes Vendly is similar to Cash App and Venmo because it seeks to simplify transfers between people who don’t know each other. “Vendly is not built for chummy friends who have each other’s account details.” 

For this type of relationship, creating a ‘vend’ with a social media handle and sharing the link with a beneficiary walks a fine line of not being too personal or invasive while caring. 

It’s the online equivalent of a co-worker dropping a birthday cake with a card at your desk but not inside your drawer. 

Someone who receives a vend can decide to either make a claim for or ignore it by clicking the link in their DM. The message states the amount sent; recipient inputs the bank account where they want the cash to go. And like cakes, the link expires after some time (Nzelu sent me a vend of about $1 as a demo).

Vendly stores the recipient’s bank details to make future transfers seamless but the sender never sees the account information. Because a sender can create one vend to go to multiple social media handles, Nzelu thinks it should appeal to brands or influencers who target giveaways at 3 million Nigerian social media users who have a bank account and phone number.

Vendly is part of a crop of social gifting apps seeking to delight people online. 

A few months ago, after my managing editor promised to get me a book, I got a Tweet from Showlove, a Lagos-based company, with a voucher to claim my books at a particular bookstore (thanks again, KK). Getcards, a product of the cryptocurrency startup Buycoins, was floated last December for people who want to gift services like a Netflix subscription, an Amazon or Delta airlines ticket to friends and family.

Like these two services, Vendly hopes that its first platform for traction will be Twitter, because the platform is the most friendly for services that require people to click links to claim rewards. 

But Nzelu knows that can’t be the long-term plan. After all, Twitter is officially banned in Nigeria at the moment, an event that currently hampers Vendly’s ability to be fully functional. An alternative is to send vends using phone numbers, although that option might raise privacy concerns. Integrating other platforms – Instagram, Facebook – is on their roadmap.

Right now, Vendly is a prototype undergoing iteration. It may yet face hard questions about monetization, like Abeg’s mobile app which launched last year to enable peer-to-peer money transfers using social handles. But Nzelu says Vendly will answer most user concerns at launch in a few weeks. 

He’s been working at it for two years now and feels the time is right to tap into the social and creator economy bump that started last year. Being Nigerian, his home country is the market of choice. But if it proves tough for a start, Vendly will seek initial users in Ghana, Kenya and Uganda. 

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The evidence is on the streets of Lagos today where motorcycle transport has returned. If GRide had a death certificate, the cause of death would be head-on collision with sudden government policy. It was a near-death experience but Gokada scrapped itself for parts and started a rebirth in March 2020. 

It has now been 18 months since the company pivoted from being a ride-hailing provider to a logistics company. 

GRide became GSend to help businesses and individuals in Lagos with intra-city deliveries. Since this pivot, delivery volume has increased by a hundred fold, revenue has increased 10 times and $100 million has been realised in annualized transaction value, according to the company.

But in its boldest step since it was founded in January 2018 by Fahim Saleh, Gokada now identifies as a super app. In addition to other items that can be packaged in a motorcyclist’s delivery box, food is taking the centre stage. 

Gokada’s super app is entering the market at a time when Lagos residents are consuming ₦5 trillion ($12 billion) worth of food annually. “If the population is to grow to about 30 million by 2030, Lagos will likely need food worth ₦6.3 trillion on an annual basis,’’ the state’s commissioner for Agriculture said in May.

Dika Oha, a former senior executive at Andela and Konga who leads Gokada’s product development, says Gokada delivers more food than any other delivery service in Nigeria. 

The claim is hard to verify without numbers from other players. But Gokada’s evolution from transport provider to food aggregator could help ecosystem players understand the future of super apps in Africa.

A standing fleet is an asset in emergencies

In August 2019, Gokada took a two-week break to readjust its business strategy following OPay’s sensational entry into Nigeria’s ride-hailing market. 

A new fleet of 200cc motorcycles were fitted with new tracking features. A higher standard of quality was demanded of drivers who, in many users’ eyes, looked rather unkempt for a technology business. 

Perhaps not anticipated at inception, but these changes would serve the company effectively six months later.

Facing existential questions about its future, Gokada repurposed the tracking feature from the ride-hailing business to begin winning customers over to GSend. “We decided we could not launch without that ability for customers to track,” Victor Daminabo, Gokada’s head of operations, tells me.

Building on that foundation, Gokada set an audacious target: have drivers pick-up and complete every delivery in Lagos within two hours. They set up a goods-in-transit insurance policy to cover cases of damage or loss of items in their custody, Daminabo explains.

Starting off as a service for sending individual packages, Gokada iterated to enable one driver to book and fulfill multiple deliveries. That iteration birthed ‘Gokada for business’ which helps enterprises create different user profiles for staff in various branches. The organisation uses one Gokada account but each unit can monitor deliveries separately.

This was how Gokada acquired Fan Milk and Jumia Foods as enterprise customers. Rather than invest in their own assets, these companies readily adopted Gokada’s logistics fleet of over 1,000 motorcycles which is already integrated with payments systems like Paystack and Flutterwave. 

Eating into other verticals 

As the ghosts of GRide gave way to a thriving GSend, the data showed something interesting: Gokada says it has recorded over 1 million deliveries so far in 2021 and about 40% have been food deliveries.

This volume may have been triggered by formal partnerships, like with Jumia Foods, but small and medium restaurants that used Gokada to find delivery drivers would become the core. (Gokada’s partnership with Jumia ended in April 2020)

Susan*, who lives in the Surulere area of Lagos, tells me the food she ordered directly from a restaurant in her neighborhood in May was delivered by a Gokada driver.

With this happening frequently, it encouraged Gokada to float GShop, a service that aggregated restaurants, opening the door for the company to bundle all it offers onto one app.

So why a super app? On one level, it is a practical decision. 

Users enter the company’s ecosystem of services through one channel. That singular funnel makes it easier for the company’s developers to manage updates. Growth and sales teams focus resources on selling one app.

But Oha, Gokada’s VP of product, explains their motivation is also to take advantage of Nigerians’ increasing familiarity with ecommerce as more businesses – food, fashion and furniture outlets – use Facebook, Instagram and WhatsApp to find and sell to customers. 

Social media platforms grow through network effects – the presence of more users doing more things improves the quality and usefulness of the platforms. Super apps emulate this playbook too, following users’ lead to add more products to the stack.

But as Yinka Adegoke explained in this insightful piece, apps become super by offering essential services within large markets. WeChat and Alibaba serve 2 billion users a month across China and parts of Southeast Asia; but can Gokada find a market that large and homogenous?

From food, back to ride-hailing

The only way to reach those exalted heights, then, is by aggressively focusing on customer satisfaction for high-demand products, making the app sticky and top of mind. 

Or as Oha puts it, ensuring Gokada is the first thought a user has when they need to order food – arguably a bigger need than sending parcels. 

To assure users, Gokada is sticking with the simplicity and transparency that has made ride-hailing platforms universal: tap to order, input destination and track your order in real time as it arrives. 

And yes, pay on delivery.

Perfecting this cycle also means paying attention to renowned global food delivery services like Doordash, Grubhub, UberEats and Deliveroo. The reward is that perfecting a time, quality and culture-sensitive business like food delivery in Africa can be a springboard for getting people to trust and use other products en masse.

Those other products, according to Oha, could be groceries, fashion and electronics. And in cities that permit, motorcycle-taxi – the company’s first love.

In a statement, the company said Falade’s role will be to provide “strategic oversight and government relation strategies, while ensuring that the interest and needs of the business are aligned with that of the regulators.”

Falade joins Flutterwave from a similar role at IHS Towers, the Nigerian company that owns 29,700 telecom towers across nine countries in Latin America, the Middle East and Sub Saharan Africa. 

Before IHS, he spent 10 years at MTN in various government and regulatory advisory roles, and four years representing VISA in conversations with West African regulators. 

In appointing a regulatory lead with broad industry experience, Flutterwave expresses an enthusiasm for deeper engagement with African governments. Like other private organisations, tech companies have to answer to the constituted authorities wherever they operate. 

The duty is arguably more pressing and sensitive if the company operates in the financial services industry, where consumer protection and fraud prevention are government priorities. 

Flutterwave’s payments processing business is live in 33 African countries. That spread commands a regulatory burden similar to what multinational financial services companies and telecommunications networks have to contend with. It may have figured in their selection process for a regulatory lead, choosing someone with experience spanning these sectors.

Flutterwave’s CEO, Olugbenga Agboola, has high hopes for Falade’s impact on the company: “[He is] well placed to strengthen our existing relationships as well as support us create new relationships.”

Agboola has been intentional about praising regulators publicly. 

When the company announced its $170m Series C in March, he cheered the Central Bank of Nigeria for being “at the forefront of the significant efforts that are currently being made by African governments to create the enabling environment for technology, innovation and financial inclusion.”  

He described the regulator as being part of the “backbone upon which companies like Flutterwave have been able to thrive” in addition to employees, customers and investors.

No surprises then that Flutterwave would seek to strengthen its relationship with regulators like the CBN in Nigeria and those in the other countries the company operates in. 

Falade, in Flutterwave’s statement announcing his appointment, said he believes companies and regulators share the same goal of growing businesses and economies through technology and is relishing his new opportunity to make that happen.

One model is a vendor relationship: a bank that needs to quickly go to market with an innovation opts to ride on a fintech’s technology, avoiding the hassle of building from scratch. 

In a distribution model, a digital-only bank (say Kuda) partners with traditional banks to offer in-branch deposits, ATM withdrawals and card issuance. Chaka, the recently licensed stock trading app, has been able to provide investment options to users by working with brokerage partners. 

Other partnership models from McKinsey’s research include strategic Investments (like Visa’s 20% stake in Interswitch); joint ventures (where two entities create a common product together); and outright acquisitions – the popular example over the past year being Paystack’s acquisition by Stripe.

Whatever the partnership type, the aim is to win. For a startup, a long term win might be a successful exit or Initial Public Offering (IPO). Otherwise, the immediate goal is to accelerate growth at a rate they wouldn’t be able to achieve if they worked alone. 

But partnerships don’t automatically work just because two parties have good intentions or similar ambitions.

Not a piece of cake

“Success should not be taken for granted and both parties need to be well prepared,” says Mayowa Kuyoro, partner at McKinsey and head of its West Africa financial services practice. 

Alignment on resources, culture and regulatory compliance, among other factors, is key.

It’s a consideration that is always on Abubakar Suleiman’s mind. As CEO of Sterling Bank, Suleiman receives partnership offers regularly and believes himself open to having many conversations. 

But he has identified a problem: “More often than not, we are not clear about the problem we are trying to solve,” Suleiman said. “We are trying to jump into partnerships because we think there is profit to be shared.”

Partnership conversations have worked better for Suleiman when the initial focus was on problems and the capacity to solve them. And so he wishes to encourage an approach that frames partnerships in terms of capabilities, not institutions. 

For example, a startup that needs a partner for regulatory issues should go for the most capable and experienced firm on the subject. It should not matter whether this firm is a big bank or whatever else. 

What’s on the table?

That said, the size of rewards at stake for both parties matters.

“It is important to make sure the economics work out for everybody,” says Tayo Oviosu, co-founder and CEO of Paga.

He cites the example of Paga’s partnership with Interswitch in the 2010s which, though initially successful in terms of returns to both parties, tapered off for a while. It raised a need for a review after which Paga decided it was in its best interest to plug directly into every other billing services provider in Nigeria. 

Ria, the money transfer service provider, operates in 43 African countries. According to Robert Kotei, operations director for Africa, startups and companies present beyond one country can be more appealing to multinational companies looking for partnerships.

However, sometimes a startup may need to patiently prove itself before landing big partnerships.

While getting Bankly off the ground in 2019, Tomilola Majekodunmi faced the dilemma of deciding what partners she needed for the startup’s ambition to digitalise contributory savings networks known as ajo. To achieve this, Bankly planned to work with telcos.

It didn’t work out, partly because the potential partners were already looking to directly offer services similar to what Bankly proposed. They did not see a unique advantage to entice them towards a partnership.

“We couldn’t get a fair or just partnership either because we were too young or too small for these big players,” Majekodunmi said. So Bankly spent two years building an agent network which now numbers 15,000 agents across Nigeria.

Minimum viable partnerships

Elsa Muzzolini, a general manager for MTN’s mobile financial services, acknowledges the difficulty in partnering with relatively small startups. Three factors, she said, are often at play.

Parties may have different expectations for how long deals take to complete. They may diverge on the initially agreed scope, and finding the precise contact person who can activate decisions can be hard.

Where these factors come together, partnerships can work. But Muzzolini would like startups to seek avenues for collaboration that bypass the formal phases that a typical partnership entails.

“Can we do a lighter form of partnership? Get my API, run with it. Maybe at a later stage as your numbers grow, we can discuss co-branding and other things.”

Follow all TechCabal Live conversations on our YouTube channel. This edition was brought to you in partnership with Chaka and offered expert insights from  McKinsey & Company.

In a statement, co-founder and CEO Tosin Eniolorunda said the funding “allows us to extend our solutions to other parts of Africa.” The company currently operates only in Nigeria but has its sights set on breaking ground in a francophone African country later this year.

Officially undisclosed “for business reasons” according to a TeamApt representative in an email, Eniolorunda had indicated in June that it was “a couple of tens of millions of dollars” in size. Two people familiar with the company’s fundraising process confirmed it is at least $20 million.

Novastar Ventures, the Kenya-based firm, led the round with the participation of Global Ventures (a firm in the United Arab Emirates), CDC Group (the UK’s development finance institution), Soma Capital, Kepple Africa Ventures and Oui Capital. 

Dutch entrepreneurial development bank FMO also got in on the action with a $2 million punt, according to TechCrunch.

This recent funding announcement follows TeamApt’s $5.5m Series A round closed in 2019 led by Quantum Capital Partners, a Lagos-based investment firm owned by Jim Ovia, the founder of Zenith Bank. 

Though under the radar for much of its six year existence, TeamApt boasts numbers that would place it among Nigeria’s most active and best performing financial technology startups. 

TeamApt’s pivotal business at the moment is Moniepoint, a software solution that powers agent banking in Nigeria. The company says that it processed $3.5bn in May and is the leading agent banking platform on volume of transactions, citing an April report from the Shared Agent Network Expansion Facility (SANEF) – the body authorised by the Central Bank of Nigeria to oversee agent banking in Nigeria. 

SANEF’s reports are not public and it is not clear which other companies are captured in it. But the agent banking space is thought to include Firstmonie, Paga and OPay, the Opera-backed fintech.

In March 2021, TeamApt said it processed over ₦1trillion ($2.4 bn) for the first time. The $3.5 bn processed in May was from a base of 68 million transactions. Underlying these transactions is a network of agents numbering about 100,000 across Nigeria’s 36 states.

In the twelve months ended April 2021, the company said it had processed a total of $16bn across its platforms which includes Monnify, a service that provides virtual accounts to fintechs and other service providers to facilitate instant notification of bank transactions. 

But the majority of the company’s operations (and revenue) is from Moniepoint, forming the basis for plans to evolve the platform into the consumer digital banking space. While Moniepoint will continue to power agent banking, TeamApt plans to build a consumer app side of it for individuals as a digital bank. 

Besides geographical expansion and a product launch, what else does TeamApt have up its sleeves?

Last week, the company’s founders were announced as the newest members of the Endeavor Nigeria network, which means they qualified to receive investment from the network’s Catalyst Fund (There’s precedent: Endeavor’s investment in Flutterwave‘s Series B in January 2020).

Plans for more funding are already underway.

A TeamApt representative said “a series C conversation is ongoing [and] should be completed in the coming months and we’ll be happy to announce at that time.”

Eniolorunda, the CEO, anticipates that they could soon rise to become a billion-dollar startup. “We expect the company to reach unicorn-type valuations soon,” he told TechCabal in June. 

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Four years, ₦40 billion (~$97 million) and three million loans later, the business is evolving. 

The company which also operates in Kenya, Tanzania and India acquired a Nigerian microfinance bank license this year. In doing so, Branch has joined the growing number of Nigerian fintechs maturing into digital banks after some years in the lending app nursery. Carbon and Fairmoney are in this class too.

Branch’s mobile app (available only for Android) now includes a wallet that offers users unlimited money transfers and commission-free bill payments, in addition to instant loans (it is quite instant; I have tried it more than once between April and now) that are collateral-free.

But the Branch feature that catches the eye is the “Invest” tab. Clicking the button, users are invited to “Earn 20% per annum by investing with Branch.” 

For example, a user who keeps ₦1 million in this product for a whole year receives ₦200,000 at the minimum. Returns are paid every Monday and if left in the Branch wallet, compound for the next payment. 

20%?! How are they able to offer that?

You are not alone in asking. It was the first question Dayo Ademola, Branch Nigeria’s managing director, faced on CNBC in May. It was the main curiosity as well on a Zoom call with journalists earlier this month. 

According to a June 18, 2021 Central Bank of Nigeria fact sheet, Heritage Bank offers 13.88% on fixed deposits, the highest of any Nigerian deposit money bank. But that’s an outlier; Access Bank’s 7.28% is about the average rate. 

Zenith Bank’s 3.94%, though one of the lowest, is better than what Stanbic IBTC, Standard Chartered and First Bank all offer. So how is Branch, a startup, able to go so high on retail investments?

Investor capital, low costs

To assure customers that their funds are safe, Ademola explained that Branch’s finance money license from the CBN permits them to offer fund management services and they “only invest customer funds in principal securities and low-risk securities.”

She does not specify what these securities are. Low-risk securities could be government treasury bills. But since practically every other bank makes the same claim and that the yield on instruments like treasury bills are stifled by inflation, Branch’s extra margin has to come from elsewhere.

So, on CNBC as with the call with journalists, Ademola offered two reasons why Branch can afford its promise: investor capital and a profitable, lean business operation.

“Our investors have effectively taken a long view of our business in Nigeria,” Ademola said. 

By this she points to the fact that Branch, which is a San Francisco-based company, has been funded by, among others, the International Finance Corporation (IFC) and Andreessen Horowitz (a16z), one of the biggest Silicon Valley venture capital investment firms and early Facebook investor. 

Both organisations participated in Branch’s two big funding rounds – a $170 million Series C round in April 2019 and a $70 million Series B a year earlier, attracted by Branch’s branding as a “$2 loan” service for emerging markets. $50 million of that 2018 raise was a debt facility from a firm that focuses on alternative credit.

VISA is also an investor in Branch and has driven their Nigeria expansion. But beyond leaning on investor capital, Ademola said Branch is able to depend on its balance sheet from lending to support other ambitions. “Our lending business is profitable here.”

This profitability, she explains, has been possible because of the lowered cost of not having to operate physical bank branches across Nigeria. 

“We operate on a lower cost structure than your typical commercial bank and are able to pass some of these savings on to our customers,” Ademola said.

Better than your bank?

Branch Nigeria’s pitch, then, is that it is “better than your bank.” 

Digital banks tend to tease variations of this tagline – Kuda, for example, is the “bank of the free.” But as Ademola said, no other Nigerian fintech startup offers a 20% annual return on investment products. 

Carbon offers a number of options that offer between 9 and 11% earnings. There is not yet an investment product on Fairmoney.

Because I have borrowed easily on Branch, there is an appeal to adventure along on their bold investment claim. But it may be necessary to approach promises of high-returns with a sense of caution. 

“Fintechs don’t have cheap sources of deposits in the form of current and savings accounts (CASA), hence they may try to attract customers with high-reward, yet possibly high-risk deposit products,” Adedayo Bakare, an investment analyst, tells me.

While a 20% return is an enticing high reward, it also signals the high-risk nature of the models fintechs have to adopt in order to beat banks. “Higher risk is also why they charge borrowers high rates on loans. Because it is not backed by collateral,” Bakare adds.

Indeed, Branch’s microloans charge a 20% interest. A ₦2,000 (~$5) loan for one month, for example, will be paid back with ₦2,400 – a 20% interest rate. By contrast, Guaranty Trust Bank is able to lend to its customers at a 1.5% monthly rate.

And how about investor capital as a pillar? Bakare is skeptical: “If you look at the structure of funding for banks, investor capital is not even up to 30% of funding in many cases.” 

Reaching every smartphone

Branch doesn’t have audited accounts in the public domain showing their non-performing loan (NPL) ratio and capital adequacy ratio (CAR). 

Both numbers would give a clearer picture of the returns on their three million loans. Going by its profitability and investor capital, it would appear both metrics are in good health.

It will then be intriguing to see customer reaction to the newly launched investment offer. Nigerians have fallen for ponzi schemes at an alarming rate that suggests legitimate platforms offering high-reward returns can find an audience. 

Ademola, who became Branch’s MD for Nigeria in March, is confident of being the country’s go-to platform, extending financial access wherever a smartphone receives an internet signal.