Tanzanian fintech NALA has secured $40 million in Series A funding. The funding boost was announced on the US stock exchange NASDAQ and is meant to support the fintech’s global expansion plans as well as to enhance its payment systems across the continent. The $40 million funding follows a $10 million seed round in 2022.
Headquartered in Kenya, NALA is a remittance startup that allows users to transfer money from the UK, US, and EU to 249 banks and 26 mobile money services in 11 African markets, including Nigeria, Tanzania, Kenya, and Rwanda.
According to NALA’s founder and CEO Benjamin Fernandes, the cash injection will help the company build its new B2B payment platform Rafiki, which was launched in March 2024.
“It will enable us to go beyond remittances and extend our reach beyond Africa, building a robust payments ecosystem. We’re reinvesting this money to enhance our infrastructure, ensuring reliable, low-cost payments for all. With the launch of our own payment rails and the expansion of our B2B platform Rafiki, we’re not just talking about change, we’re building it,”
Fernandes stated.
The startup received funding from several investors including San Francisco-based VC firm Acrew Capital, DST Global and Amplo as well as several angel investors, such as fintech founders, Chime’s Ryan King and Robinhood’s Vlad Tenev of Robinhood.
When Nala launched in 2017, the idea was to provide local money transfers within Tanzania. However, the company pivoted to foreign remittances in 2021. NALA’s CEO says its consumer business currently accounts for over 90% of its revenues and has seen significant growth over the past year.
“For the first time, we became profitable and cash flow positive. Over the past 20 months, our transaction volume has increased 34 times,”
he explained.
Moreover, the fintech was granted a Payment Service Provider (PSP) license to operate by the Bank of Tanzania in March 2023, enabling it to directly integrate with banks and mobile money providers like M-PESA.
African startups that shut down due to funding challenges
NALA’s million-dollar cash injection comes at a time when several African startups are struggling to secure funding. In 2023, around 30 startups shut down due to a funding drought. 2024 has seen even more firms close, mostly due to a lack of funding and an inability to pay debts.
In Kenya for instance, the B2C e-commerce platform Copia Global the parent company of Copia Kenya went into administration and announced it would fire over 1,000 employees due to a lack of capital to sustain its operations.
Another Kenyan startup Gro Intelligence closed in June after failing to secure new funding. The company had been struggling for months and could not meet its employees’ payroll and pension payments.
Similarly, Nigeria.’s first women-only cab-hailing app Her Ryde went into “hibernation” after just a year of being in operation. The company said it would reassess its business plan and secure funding before a potential relaunch.
Africa’s largest e-commerce company, Jumia also shut down its food delivery service in seven African countries: Algeria, Côte d’Ivoire, Kenya, Morocco, Nigeria, Tunisia, and Uganda leaving several of its employees jobless. The company cited problematic macroeconomic conditions.
Several other startups Kenya’s e-commerce platform RejaReja, B2B agritech startup iProcure, and Nigeria’s cryptocurrency trading platform Buy Coins Pro have also been forced to close down over the past few months.
