Global payment giants are starting to take note of Nigerian fintech companies

Paystack is getting another big boost.
Paystack is getting another big boost.
Image: Reuters/Akintunde Akinleye
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Paystack continues to take advantage of its early Silicon Valley backing.

Less than two years after raising $1.3 million in seed funding, the Nigerian payments company has announced a $8 million Series A round.

Led by global payment giant Stripe with participation from Visa, the round also saw follow-on funding from Tencent and Y Combinator. Snagging investment from Stripe and Visa is key for Paystack is significant validation for a fintech company that launched fully only last year.

Part of an ever-growing generation of African tech startups, Paystack had a significant head-start from the beginning: In 2016, it became the first Nigerian startup accepted into Y Combinator, the renowned Silicon Valley incubator that has backed startups-turned-powerhouses including Dropbox and, as it turns out, Stripe. (Eight Nigerian startups have gotten into Y Combinator since Paystack did).

The Series A round marks major progress for Paystack, which allows developers to create payment tools through its APIs and acts as an aggregator of sorts, connecting to multiple payment processors and handling transactions for  merchants and consumers. Paystack expands the pool of payment processors for merchants. The company says some of the new funding will go to powering growth as it looks to expand beyond Nigeria.

Paystack has quickly won traction, winning merchant sign-ups and credence within the local ecosystem. The company has also sought users beyond established businesses. In March, it announced including “starter businesses” on its platform even without a certificate of incorporation or a corporate bank account. Lowering entry barriers boosts hundreds of businesses, even though Paystack caps limits on transactions for fledgling operations—with an eye toward steering them to permanence.

Paystack’s Series A raise is the latest big-ticket investment win for African fintech startups. In May, Cellulant, a digital payments solutions company operating in 11 African countries, raised $47.5 million in its Series C round—one of the largest for a solely Africa-focused venture-funded company.