Cowrywise, a Nigerian, YC-backed, fintech startup just secured a sum of US $3 million in a pre series A funding round announced today, January 28, 2021. Led by Quona capital with contributions from Tsadik foundation, Sahil Lavingia (CEO of Gumroad) and several Nigerian angel investors, this stands as the company’s most lucrative investment so far and brings their total funding up to US $3.3 million. Cowrywise was established to scale investment facilities to millions of Nigerians, an action that couldn’t be carried out by existing investment management platforms in the country primarily due to their restricting size.
Purpose of the Investment
Equipped with this investment, the startup plans carry out the following activities.
- Significantly expand their product offerings
- Increase their customer base
- Further improve their investment management framework
- Provide support to more fund managers in the country
Products & Services offered
Over the years, the quality of investment management platforms provided by banks in the country have been mediocre at best with interest rates as low as 3% to 5% per annum. This development left the investment management market of the country largely underserved and stands as the chief reason for the establishment of Cowrywise.
After plans to leverage the power of the telecoms industry in up-shooting their platform failed due to high cost, Cowrywise decided to switch focus. The company built upon existing platforms such as Paystack and Flutterwave. Their first launch consisted of savings related products supported by fixed income instruments such as treasury bills. The founders claimed that these offerings yielded 10% to 15% interest, significantly more than that of banks. According to the founder, Cowrywise has the largest portfolio of mutual funds in the country, holding about 20% of the total mutual funds in the country and about 19 different mutual funds on their platform.
Finally, the Catalyst fund and YC-backed startup offers advisory services to users, recommending various funds to customers based on their purchasing power and penchant for taking risks.
Growth and Trends
The four year old company has really come far in the investment management sector of the country. The startup currently boasts of about 220,000 users, a seriously accelerated growth from just 2000 users in their first year. While this growth is really impressive, a quick comparison with the 40 million accounts of the banking sector shows there’s still room for improvement in the US $3 billion market. In the words of a partner, Johan Bosini, “The Cowrywise team is currently providing the average Nigerian with convenient access to strong and flexible wealth-generating instruments that have typically been reserved for the wealthy class. In the current market of about 200 million citizens, we believe this service will go a long way in granting people financial independence and control.”
Founder’s Insight
Razaq Ahmed, CEO and co-founder of Cowrywise said, “Wealth management has been strange to a lot of Nigerians because the existing players were not built for the mass market. That has always been an issue we felt required a solution,”
“Our mutual fund partners understandably recognize the value of being part of an inclusive digital program that allows retail investors to carry out investment regardless of financial status or trustworthiness.” he added.
Company Profile
Cowrywise is a fintech startup that grants free and equal access to wealth management services. Headquartered in Lagos Nigeria, the startup was established on January 1, 2017 by Edward Popoola and Razaq Ahmed. After just 2 years, the YC-backed startup has established itself as a powerful player in the quest for financial security in Nigeria. The journey started with micro-investments and automated savings in government treasury bills/bonds with as low as NGN100 and collaboration with one of Nigeria’s top-tier trustees to operate with the same security system as pension funds.
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