A Nigerian Fintech startup Sudo Africa has raised $3.7 million pre-seed to build its card-issuing API for developers and businesses in Nigeria. The pre-seed round was led by San Francisco-based Global Founders Capital (GFC) with participation from venture capitals like Picus Capital, Lofty Inc Capital, Rallycap Ventures, Kepple Africa, Berrywood Capital, ZedCrest, and Suya Ventures. Several African fintech founders such as Olugbenga ‘GB’ Agboola, Ham Serunjogi, and Odun Eweniyi are investors in the company too.
Like many application programming interface-led fintech, card-issuing APIs are getting increased attention from investors who think it’s the next big thing in a sector that has attracted the most venture capital dollars in Africa. The Kaduna-based fintech startup offers programmable cards at affordable prices to all types of businesses regardless of their size or profit level. It enables businesses to build unique features with an open application programming interface (API) and a readily available sandbox environment. In 2020, Aminu Bakori and Kabir Shittu co-founded the company as a result of their frustration from not being able to issue cards and a mobile wallet system that allows users to aggregate existing financial institutions into a single platform and perform transactions at their previous startup. Recognizing that other founders encountered the same problem strengthened their confidence to launch the service. Another reason that spurred them to action is the fact that the Fintech sector in Africa is one where startups create silo interfaces that allow their customers to send or receive funds between themselves and not to others. This causes issues to constantly arise when the need to use them in the global financial systems comes into play. For example, using a mobile wallet or local card in Nigeria to purchase on Amazon is always an unpleasant experience. But with the introduction of virtual dollar cards in a few digital banks and fintech platforms, this has become less of an issue. Fintechs that issue API cards such as the Kaduna-based Sudo Africa are behind this technology.
Traditionally, issuing debit cards is a very expensive, slow, and inflexible process reserved as a privilege for only large companies. This means that smaller businesses and startups would not usually have access to this, but things are beginning to change. With Sudo, any small business can start issuing cards to its staff and customers for different purposes including, but not limited to loyalty programs for customers, management services for corporate expenses, buy now and pay later schemes for retailers, digital wallets for virtual banks, amongst other use cases.
Its pitch to customers is that banks take weeks or months to give cards but Sudo Africa takes only days. So while partnering with licensed card issuers, the company’s infrastructure allows itself and any developer or merchants that come on its platform to issue virtual and physical cards to their customers. And on the platform, allows businesses to control and program cards to their taste, build their features, and securely integrate with other services. For proper comprehension, Say a company uses Sudo Africa to issue cards for managing the expenses of its employees; what happens is that employees are given cards with a low balance so whenever they need to use the card, an API is called each time to decide whether to approve or deny that transaction in real-time. Another example is that of a delivery company that sends its dispatch rider with a programmable card to make a transaction and spend a certain amount of money at a particular mall. Sudo’s API works such that if the rider decides to use the card in another mall for any reason or spend more than the intended budget, the card won’t work.
Sudo Africa is currently the only player in the card-issuing space that offers its virtual and physical cards service solely in Nigeria. Most startups that offer the same services such as Union54, despite being based in Zambia, have customers across Africa and Flutterwave claims to help merchants in its 35 African markets issue physical cards but only issues to those in Nigeria. Thus, it is expected that Sudo Africa operating in a niche market should try making a name for themselves outside Lagos. They will need to expand to other African markets with this investment, not as a result of competition, but because it is necessary considering the massive clamour for the service.
According to its Chief operating officer Shittu, their major concern right now is to expand into other African countries before the end of this year; three or four African countries.
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