Beyond insurance: How TopCheck aims to transform Nigeria’s financial services industry

In a country where online sale of services is still arguably unpopular compared to retail and other services, TopCheck is attempting to achieve profitability by selling financial services to Nigerians. And the company is starting with insurance specifically car insurance. But the company’s journey did not start in any of the incubation centres or skyscrapers on Victoria Island, TopCheck’s was essentially created on the West African leg of the AMPION Venture Bus by Thomas von Pilar, and his co-founder. According to him, he had already been attracted to the West African market after conducting research.

“I knew before that West Africa and Nigeria in particular is the largest and most important economy on the continent and by the number of population it has the largest domestic market, and that was basically the reason why I chose to go to West Africa,” says von Pilar.

According to him, he discovered that the financial services market in Africa is currently worth US$120-billion and is currently growing at a double digit percentage rate annually. At the same time, he said TopCheck’s business model has been around in Europe for decades and has been the model for some of the most successful internet companies in the world.

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“Now that we see the competitive space is heating up, I think it is very easily understandable that this is an excellent business model and one of the largest opportunities at this point in time,” he told Ventureburn in Lagos.

Statistics versus reality

There are many foreign startup founders in different African countries who decided to launch their companies based on reports, statistics and data they got about the country and city they are choosing to launch from. Nigeria’s large population (largest in Africa) is probably the only major reason why some foreign entrepreneurs are choosing to launch in the country.

Von Pilar confessed he was attracted to Nigeria because of its 140 million people. But on ground, he said there is a wide difference between Nigeria on paper and graphs and Nigeria itself.

“Everything was different than we thought because it was not so much the case. What is not the case is the practical reality of selling in any market — interacting with customers, getting customer’s feedback, marketing the product accordingly, seeing traction growing at a very fast pace, it feels very differently from theorising about it before hand. The statistics that this is an interesting market proved to be true,” he said.

The experience so far

Even with the peculiarity of the Nigerian market, he said several citizens are quickly warming up to their products as they are becoming available. The company is also being strategic with its platform and products.

“We chose to build our platform around one product first, which is car insurance only, and it is still the case although we are planning to expand into other verticals and additional countries are also in preparation. But we specifically chose to build a product around car insurance,” the co-founder says. “We felt setting up infrastructure, company, processes around one product is the way to go and now that we have figured that out we are ready to launch to other products.”

Currently, TopCheck works with all of the top insurances in Nigeria and once they expand to other geographies, they plan to work with all of the top players in the financial services sector.

“And once we expand into other categories, for example bank accounts, we will surely strive to work with the best players in the market as well because we see ourselves as serving the customer. We want to deliver the best products that are out there to the customers as a mutual platform. The customer can rely on us to deliver the most reliable transfer information only of the top products in the market,” he said.

TopCheck is not being bootstrapped by the co-founders. Instead, they’ve been able to secure funding from foreign investors who are impressed with the company’s figures and future potentials. Earlier this year, they secured an investment of about US$1.2 million.

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“We started seeing traction in the first half of the year and we already knew that based on the customer feedback we started to feel we are on to something and the customer feedback was overwhelmingly good so we knew that this is a path to follow and we actually have the right product for the right market at the right time.

The company started seeing traction in the first half of the year, with “overwhelmingly good customer feedback”.

“Based on that we were able to get some of the world’s investors on board for TopCheck including some of Europe’s most prolific investors,” says von Pilar. “They were convinced just like us that financial services in Africa is really the right market to be at this point in time.”

Advice for local startups seeking investors

The startup earlier this year secured a US$1.2-million investment which he said was achieved because investors considered TopCheck to be a very good product; a very good technology which he said they will continue to develop because they see it to be a very strong and competitive advantage in the future when there is relevant competition which they currently don’t really have.

“We will invest money in the product of course; a lot of the money is being spent on marketing — making the product known. We see that when we put a lot into marketing, we also see more sales so it is justified to put more budget into that exponentially and that I think based on this, it makes sense to have more cash to have larger visibility among our targeted customers,” von Pilar says.

When asked whether they still need more money, he said no, with some clarification. “We are not actively seeking for additional investments, but our business model already justifies to have more capital. And based on that, I think we will have another financing round in a not so distance future,” he said.

Interestingly though, the ability for TopCheck to secure over a million dollars in foreign investment in less than a year of operations isn’t a familiar tale in Nigeria’s tech ecosystem as several entrepreneurs with good products are perennially on the lookout for investors, angel investors in particular. For such entrepreneurs, von Pilar has a word of advice:

I really think raising money would probably not have been possible two years ago because there is now international awareness on Africa as one of the largest opportunities arising and this is only a recent development. What is also remarkable is none of our investors is actually African — all of our investors are Europeans which kind of leads to the suggestion and conclusion that maybe African companies should not only look to Africa for investors but should also look beyond that because it is possible. Investors are scouting in Africa and they are very open and accessible to speak to African companies.

The industry

Even though all eyes seem to be on retail, ecommerce in particular, he said he believes that retail has experienced by far the largest growth in Nigeria and Africa altogether. But now that consumers are getting used to buying products online, he predicted that the next step, which is something his company is fostering, is when users will start buying services online just like in Europe and the rest.

“60% of all car insurance in Europe is sold over internet platform and in Nigeria currently the percentage is basically only us so the percentage is very low but we expect over the course of the next five years to see a similar development as we saw in retail for services — basically a demand for buying services online,” he said.

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Even with numerous risks, many foreign entrepreneurs continue to check-in daily at the immigration post of the international wing of the Muritala Mohammed International Airport in Lagos with high hopes of striking gold in the Nigerian market. For such category of entrepreneurs and investors, von Pilar said they could be right on a number of things.

“There is this popular notion that Nigeria is a land of opportunities and I think it is absolutely true, so every day, at least once a week, me and my co-founder we drive to meetings somewhere, buy something somewhere. Every week we come up with new ideas which just happen naturally because there are so many opportunities out there. Retail is still a massive opportunity — even in developed countries like Germany there is still ecommerce growth of 10% annually and I think Nigeria for the next 10 to 15 years, will experience enormous growth still in retail.”

Von Pilar says that every business that is done offline can somehow be done online. “If you look closely at your daily life, what happens around you, where you buy… everywhere you can apply digital to solve problems, enhance process or customer experience and I think this is where the opportunities are and I think there are millions of opportunities like this.”