“In 2023, we moved from negative to positive gross profit, and we want to be profitable by the end of the year,” Abdul Hassan, founder & CEO of Mono, told TechCabal. The startup expects to achieve profitability by scaling the adoption of its open finance tools. “We have more partnerships like this in the pipeline.”

The startup, like its competitors, has been expanding its focus from providing lenders with open banking APIs to servicing a wide range of fintechs to increase revenue. 

Before partnering with Mastercard, it had partnered with Flutterwave, one of Nigeria’s largest payment providers, to enable merchants to receive payment through the account-to-account (A2A) option which it calls DirectPay Pay with Bank. According to Mono, this payment option has facilitated payment transactions exceeding ₦5 billion since it launched in 2022. Mono can expect to facilitate even more volume as the Mastercard Payment Gateway System services numerous merchants across several African countries, including Kenya, Ghana, South Africa and Nigeria, where Mono currently operates.

On the other hand, this partnership is advantageous for Mastercard, as it has been finding new ways to digitalise spending. Through partnerships with payment providers, Mastercard has been exploring non-card payments in Africa for years: mobile money wallets, contactless payments, and QR payments. Around 2020,  over 1 million merchant locations across Africa were accepting  Mastercard QR payments.

”In three years, cards will mostly be used for offline payments,” said Hassan, who claims that Mono has connected more than 3 million financial accounts across Nigeria, Ghana and Kenya. He predicts that this account-to-account payment method will see even quicker adoption, especially in Nigeria, where  QR payments and contactless payments have slower uptake rates.

This optimistic outlook might be a breath of fresh air for established card networks like Mastercard and Visa, whose deployment of account-to-account payment in developed markets like the US and UK has met reluctance from users. Experts believe the consumer market in those regions favours the familiarity and ease of card payments for everyday spending and argue that users might require more incentives to adopt A2A options.

In contrast, in Nigeria, a lot of merchants are enabling the pay with bank option, which is repeatedly used even when there are USSD and card options, according to Hassan. “I think it is because of the ease and perceived security.”  Also, the settlement is instant and much faster than cards.

Hassan reasons that the success of this payment method for Mastercard spells good tidings for Mono’s dream to become a household name. 

“We currently have a web-based app that allows users to see how many fintech apps their bank details are linked to.” The four-year-old startup hopes to gain familiarity with the larger consumer market and eventually launch the web app as a mobile app with added features.

Existing investors Entree Capital, Lateral Capital, GPIC, Acuity VC and Ingressive Capital also participated in the round, joined by new ones, including Target Global, General Catalyst and SBI Investment. 

Founded in 2020 by Abdul Hassan and Prakhar Singh, Mono is one of several startups—including OnePipe and Okra—that have created open banking solutions in Nigeria. Its technology enables businesses and individuals to gain access to financial information stored at commercial banks.

The Series A investment is the latest in a list of successive fundraises and brings Mono’s total raise to over $17 million. 

In May, it raised a seed round of $2 million from a number of investors including Entrée Capital, Lateral Capital, and Babs Ogundeyi, co-founder and CEO of Kuda. 

Both investment rounds added to the $500,000 Mono raised in September 2020 and the $125,000 received as part of the Winter 21 cohort of Y Combinator.

Pan-African expansion

Last week, Hassan confirmed Mono’s expansion to Ghana to TechCabal. It’s currently in private beta with fintechs Oze and Tranzo in the West African country as well as other financial institutions, including Guaranty Trust Bank, Ecobank, Fidelity Bank Ghana, Stanbic IBTC, Paystack, Flutterwave, and Standard Chartered. 

That means Ghanaian businesses can now link the companies with their apps to fetch transactions, statements, balance, income, and identity data.

“A year ago, we launched Mono, and we’ve grown rapidly since,” the company said in a statement made available to TechCabal. “Our vision to power businesses with access to financial data and direct bank payments has progressed with a lot of learning.”

The launch in Ghana is part of Mono’s broader expansion plan to make its open banking solution available across sub-Saharan Africa. 

Mono plans to go after other markets like Kenya, Egypt, and South Africa by next year.

Mono was one of 10 African startups to pitch at YC’s Demo Day in March. Hassan, the startup’s CEO, told TechCabal at the time that YC was an opportunity to make strategic connections.

In terms of numbers, Mono claims to have processed over 200 million financial data transactions from over 270 businesses, developers, and fintechs as well as connected over 150,000 bank accounts in the last two months.

If you enjoyed reading this article, please share it in your WhatsApp groups and Telegram channels.

Babs Ogundeyi, co-founder and CEO of Kuda; Gbenga Oyebode, partner at The Continent Venture Partners; and Eric Idiahi, co-founder and partner at Verod Capital, also invested according to TechCrunch.

Mono was founded in 2020 by Abdul Hassan, a former product manager at Paystack, and Prakhar Singh. The company’s technology enables businesses and individuals to gain access to financial information, such as account statements, stored at commercial banks. Mono is one of out a number of startups creating open banking solutions in Nigeria.

The seed money adds to the $500,000 Mono raised in September 2020 and the $125,000 received as part of the Winter 21 cohort of Y Combinator. Mono was one of 10 African startups to pitch at YC’s Demo Day in March. Abdul Hassan, the startup’s CEO, told TechCabal at the time that YC was an opportunity to make strategic connections.

But beyond making connections, Mono appears to be expanding its focus beyond financial data. 

“We’re thinking of how we can power the internet economy with data that isn’t necessarily financial data,” Hassan said.

One thing on his mind is “open data for telcos,” a framework that enables customers to easily move their data between mobile network providers. 

Hassan could not be reached for comment at press time. On the surface, an open data for telcos plan rings close to and could be looking to build on the existing mobile number portability (MNP) service in Nigeria.

Launched by the Nigeria Communications Commission in April 2013, MNP enables customers to freely switch network providers while retaining their phone numbers. A consortium of three companies (Interconnect Limited, Saab Grinteck and Telecordia) currently acts as the Number Portability Clearing House (NPCH) for the industry.

Hassan also told TechCrunch that Mono will be going live in Ghana by June and that they already have five banks and MTN Ghana’s mobile money service as partners.

It wasn’t a difficult prediction as Mono had already raised $500,000 in a pre-seed round. The company also got into one of the most important accelerator programs globally, Y Combinator, where they received $125,000 for 7% equity. 

Alongside companies like OnePipe and Okra, they’re helping businesses to get customer financial data. It means that some of these startups have a place in Nigeria’s recent conversations on Open banking.

According to Abdul, “Open banking is a fantastic idea. The CBN’s new draft regulations about it are quite good because we now have regulators looking at this as a viable way for them to bring in more people into the fintech space.” 

Open banking is a concept that compels banks to share their customer transaction data with fintechs and other third parties. By opening up access to customer transaction data held by banks, customers can compare banking services for instance and decide what bank’s service works best for them. 

Additionally, access to this data can spur fintechs and third-parties to create new and interesting products that are customer-centric. Yet, one question people ask of Open Banking is; why should they share all of this information with third parties?

Incentives to share data 

One recurring question I have heard in the past week since writing on Open banking is, why would a bank that is making billions give their competitors access to data? One possible incentive is the revenue the banks stand to earn but some argue that it’s not compelling enough. 

It is a question that regulators have to think about.  The way Abdul sees it, “the banks need to be incentivized to share data because it is something they have to commit time and resources to.”

“You might argue that the banks have to do whatever the Central Bank says but they might not do it in a way that is scalable.” 

These incentives are necessary because there’s a long road to efficient data sharing. “Right now, none of the banks have public APIs yet for developers and businesses to have access to customer financial data.”

Without public APIs, integrations are difficult. One PwC report says that integration often takes weeks and months. But it is an assessment Abdul disagrees with. “The PwC report is probably wrong because it doesn’t take weeks or months; there’s nothing for you to integrate so it will probably take years. I would say that in terms of integration, it is nonexistent right now.“

As to how Mono works around the absence of public APIs, Abdul simply says they have figured out their way around it without going into details. But one thing he’s willing to speak about is his company’s recent YC experience. 

Mono’s Y Combinator experience 

Mono was one of the ten African startups in Y Combinator’s Winter class of 2021 demo day. Getting accepted into YC is often seen as a stamp of approval for startups and is an opportunity for founders to speak to over 4,000 investors. 

For Mono, YC was an opportunity to make strategic connections. “Without YC, we have investors who would have introduced us to some of these people, but it wouldn’t be a fast connection. You present to 4,000 investors on the same day and I’m not sure any kind of investor in Africa can pull that off.” 

If you’re already imagining what it would feel like to handle that kind of pressure, Abdul shares that it was a different experience for him and his team. He says they simply applied and forgot about it. 

He adds that it doesn’t speak to an absence of rigour. “The thing is that if you know your business before applying to YC, the process will be easier. Know your business, know what your metrics are, know what you’re solving for. You need to understand what makes you different and what you’re trying to sell.”

“If you know those things, applying to YC is like having a conversation with someone about your business.” 

Naturally, Abdul Hassan then talks to me about Mono, what makes the startup different and the size of their ambitions.

A Pan-African play

“Even though I believe in Open banking, what we’re trying to do is not Open banking. Our mission is to power the internet economy in Africa. What this means is that as individuals and businesses are coming online and the internet is cheaper, we want to serve as a bridge between both.”

What this bridge really means is that when businesses want to access the personal financial account of an individual, Mono provides the API to make it possible. Think digital lenders who want to confirm personal information of prospective lenders for instance. 

That is only one example of what the startup wants to achieve. While it is providing this service for Nigerians, the startup is already looking at the rest of Africa. Abdul confirmed to TechCabal exclusively that Mono plans to expand to Ghana and Kenya in Q2 2021. 

While that is still in the works, the company is launching MyPass, a product that will modernise the Know Your Customer (KYC) and onboarding process for businesses. 

Mono was founded by Abdulhamid Hassan and Prakhar Singh. They launched the company in August 2020 and a month later, closed a pre-seed round of $500,000. Lateral Capital, Rally Cap Ventures, Golden Palm Investment, and Ventures Platform invested in that round.

After leaving a product manager role at Paystack in 2019, Hassan joined Voyance, a data science company. He and Singh identified a gap; Nigerian digital businesses found it difficult sourcing financial data about their customers from banks. 

They started Mono to give these businesses tools to access customer bank accounts, obtain statements, and set up recurring payments through direct debit. They list Carbon and Flutterwave among their current users, and plan to extend their presence beyond Nigeria to Ghana and Kenya.

Mono joins a list of at least 22 Nigerian startups like Paystack, BuyCoins, 54Gene, and Kobo360 who have participated in previous batches of YC’s famed programme. 

Nigerian startups dominate YC’s Africa portfolio of about 40 startups, with Egypt and Kenya following at a distance. Stock trading app Thndr and Marketforce, from Egypt and Kenya respectively, were the only African startups at the summer 2020 batch.

YC will invest $125,000 in Mono for 7% equity, and expose the startup to a global network of founders, investors, and customers. The winter programme will be done virtually unlike other years due to the COVID-19 pandemic. 

As such, key activities like office hours with YC partners and hangouts with Silicon Valley bigshots will happen over video conferencing. 

Mono’s YC journey is remarkable in the relatively short time it has taken since the company was founded. But the funding journey – from a $500k round to a $125k accelerator programme – shows the pride of place YC continues to hold in Africa’s startup ecosystem.

The three month programme will end with a virtual demo day on the 23rd of March. At the one-day event, Mono will have one minute to pitch to a virtual room of investors who, if they like what they see, could invest in the company.

YC’s investment remains a valuable source of funding for early stage African startups. But in Mono’s case, it is more about receiving a badge of validation that opens doors to the world.

YC-backed companies are currently valued at over $300billion and include publicly-traded companies like AirBnB and DoorDash, and super unicorns like Stripe and Instacart. Access to this network provides a gateway to receiving funding from institutional venture capitalists around the world.

Mono’s pre-seed investors also stand to benefit from the YC journey. 

A seed round after the three months programme will give the company a significantly higher valuation (according to people familiar with the process), and increase the investor’s expected long-term returns.

Mono is one 12 African fintech startups we think you should watch in 2021. Check the list here.

Correction: An earlier version of this article stated that Mono’s valuation reduced due to Y Combinator’s investment. In fact, it is unclear how the investment affect’s the startup’s valuation. Also, we have clarified that Hassan did not meet Singh at Voyance, and that Mono is not the only African startup in YC’s winter 21 batch.

—

In its 2020 African tech startups funding report, Disrupt Africa identifies 99 fintech companies across 11 countries that raised some form of external funding from investors. 

While the list includes fairly established startups like Flutterwave, the majority are new ventures with some receiving funding barely six months after launching operations in 2020.

Most of these startups have been allowed to build in peace with little inquiry. Building and growing any product in Africa takes time, and fintech is one of the ultimate hard-knock challenges. 

But in 2021, the intensity of scrutiny about these startups and their value proposition to users will increase.

This style of scrutiny is good. Africa’s tech ecosystem is drawing more interest from industry leaders around the world. Paystack’s landmark sale increased consciousness that Africans can build for the world. 

As such, the hunt for new companies with Paystack’s potential requires us to examine the emerging class of fintech companies. We need to understand what they are pitching to immediate users and their potential for global reach.

Out of the list of 99 companies, we present four categories of products that we hope to dive into their backends over the coming months. Each category lists three products to watch and relevant questions to ask.

These are not the absolute best (fintech) startups in Africa at the moment. But aspects of their product and user segment stir curiosity about their purpose and Africa’s fintech trajectory. 

Connector APIs: Okra, Mono, OnePipe  

Fara Jituboh-Ashiru was on practically every fintech Africa panel in 2020 and earned a Forbes cover. 

She’s the CEO and CTO of Okra, the Nigerian startup that helps individuals to connect their bank accounts to lending and banking apps, and serves businesses by facilitating services like Direct Debits. 

The startup lists Access bank, Interswitch, and uLesson among its list of “hundreds” of businesses using their platform. An impressive feat for a startup that has intentionally stayed under the radar. 

Mono and OnePipe are two other startups in the bank connector business. Mono helps businesses access customer accounts for data and payments, while OnePipe focuses on connecting banks to other banks and fintech products.

Like Okra, Mono has also pitched direct debit integration to businesses. One of Mono’s distinct products is helping businesses collect bank statements from customers.

Unlike these two, OnePipe is a strictly business solution; like its name suggests, it wants to build a unified channel for banks and financial institutions to exchange data. Will it become the private sector organisation to make a commercial case for open banking in Nigeria?

Banking: Umba, Eversend, Brass

Monzo, Starling, N26 and Revolut lead the global rise of challenger banks who are valued for building digital-only, modern solutions. In Africa, a few candidates have joined the race.

Umba is seeking to push the envelope in Kenya and Nigeria. It launched with the promise of free bank accounts, free and easy money transfers, cashback on all transactions. 

It sounds similar to the model also being used by another Nigerian digital-only bank, but is free banking sustainable?

Eversend joins the debate from Uganda. It defines itself as a “multi-currency e-wallet” that allows holders to send and receive money to mobile money and bank accounts everywhere. 

Last July, CEO Stone Atwine said his goal is to build a “one-stop-shop for financial services” not just a money transfer service. That demands experimentation with products that intersect across sectors, a challenge Atwine is relishing.

Unlike Eversend, Sola Akindolu’s Brass is not aiming to be a digital bank, yet. The startup is a current account provider and growth partner for Nigerian SMEs. The accounts are backed by First City Monument Bank, a Nigerian bank, and are insured. 

Businesses who sign up with Brass get a Mastercard debit card and receive growth analytics tools to help entrepreneurs with their performance reviews. In Akindolu’s words, Brass’s pitch is to help SMEs “handle their money and make it work for them.” Sounds like the job banks set out to do some years ago. What’s changed? 

Credit infrastructure: CARMA, Pngme, Indicina

Speaking of banks relinquishing roles, a host of fintech startups are taking over the part of the financial sector that deals with retail lending. 

It’s not really a 2020 trend; before CARMA, Pngme and Indicina, there was Migo which has extended its presence to Brazil. But these three companies foretell an increase in credit infrastructure builders in Africa.

CARMA, a Kenya-based startup, unabashedly claims to be “the world’s first credit data marketplace” and is positioning to fill the credit bureau gap in Africa. It joins the race in Nigeria where formal sector credit penetration as a ratio of the adult population in Nigeria was below 5.3% as of 2017.

Pngme and Indicina have similar Africa ambitions for credit: credit modelling, loan origination, KYC, and disbursement. While it’s good to see this burst in competition, I wonder if these companies will get in each other’s way. 

Payment & Money transfer: Chipper Cash, OnePay, ZeePay

Two of the biggest African fintech acquisitions in 2020 involved payments companies. MFS Africa, Beyonic, and Paystack waved the banner of Africa’s maturing payments ecosystem to the world, and we are proud of them.

But payments, as an African problem, will hardly be solved by one or two companies considering the fragmentation of markets. Solutions from various corners of the continent are needed. 

A number of startups are answering the call. 

Chipper Cash launched in 2018 and has extended its peer-to-peer mobile payments services to reach 7 countries. Chipper’s pitch of free transfers has invited questions about how they make money.

Chipper Checkout seems to be the answer to that; they want to follow Paypal’s playbook of using a fee-based merchant-focused product to support cross-border transactions. How has that worked out so far?

In Morocco, OnePay launched in the first quarter of 2020 to enable digital payments for offline and online businesses. Ghana’s ZeePay is setting up as an all-in-one financial services hub; the Interswitch or MFS Africa of Ghana if you like. They are plotting an expansion to South Africa and Rwanda if they can raise $10m.

There we have it: the top 12 startups to pay attention to in 2021. Be sure to check often for extended reviews on each of these and more. What first impressions have they made on you in terms of usefulness and usability? Let us know: alex@bigcabal.com