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African fintech startup Zoona has announced a series B funding round of US$15-million.
The round concluded a week prior to the announcement and was led by the International Finance Corporation (IFC), a member of World Bank Group.
Cape Town-based venture capital firm 4Di Capital is one of the investors, having injected an unspecified amount in Zoona. According to Justin Stanford, co-founder and managing director of 4Di, this is the first investment from the firm’s new fund. Stanford holds a four-year non-executive position on Zoona’s board.
Series A investors Accion, consisting of Quona Capital, and Omidyar Network, doubled their investment for the Series B round, with the Lundin Foundation increasing theirs as well.
Patrick Pichette, Chief Financial Officer at Google and advisor to Zoona, also invested in the company for the Series B round.
“This investment round marks a key milestone in our journey to build a billion-dollar business that helps communities thrive. We are thrilled that investors the calibre of IFC, Accion and Quona Capital, Omidyar Network, Lundin Foundation and 4Di Capital buy into and support Zoona’s vision. Having Patrick Pichette invest, a visionary and long-time supporter of Zoona, is also very exciting,” says CEO on Zoona Mike Quinn in a press release.
This new round of funding will be used to strengthen Zoona’s current markets and double them. The company is also looking to develop new products, such as an unspecified insurance option for consumers.
Zoona plans to reach ten markets and over 30-million customers in African by 2020. This expansion will include Mozambique, the DRC, and West Africa as a whole. Due to stiff competition, the company is not looking to expand into East Africa.
Zoona was founded in 2009 by brothers Brad and Brett Magrath, with Quinn brought on board as CEO of the startup.
Since launching, the company has processed over US$1-billion in transactions with over US$20-million a month in transactions. According to Quinn, the majority of transactions are from school fees, medical emergencies, and small business trade.
It has over 1000 entrepreneurs running over 1500 outlets, who have created 2500 jobs. Zoona’s business model is to specifically target young women and make their business as female-friendly as possible. Seventy percent of their outlets are owned by women and 85% of those staff are women.
According to chief marketing officer Lelemba Phiri, when Zoona looks at expanding into a new market, they look to see how friendly and open operators are.
Quinn says the company’s biggest competition, especially in the East African market, comes from telcos, mobile money operators, and cash.
Zoona charges money senders between two and eight percent per transaction, with the recipient not being charged for a cash-out. Agents also receive a fee per transaction, though this wasn’t stated at the press conference.