Africa is the third fastest growing crypto market in the world, with crypto adoption growing more than 1,200% in the last two years. Countries such as Nigeria, Kenya and South Africa are primarily responsible for skyrocketing adoption rates as citizens seek to build wealth and counter currency devaluation.
Despite the shaky stance of African governments on cryptocurrencies, these countries are home to many of the continent’s crypto and blockchain startups. In the latest development, one such firm, Bitmama, has raised a pre-seed extension of $1.65 million, adding to the $350,000 it received last October, bringing the round to $2 million.
Africa-focused venture capital firms Unicorn Growth Capital and Launch Africa led the investment in Bitmama. Other investors include Adverse, Flori Ventures, Techedia Capital, Greenhouse Capital, ODBA, Five35 Ventures, Chrysalis Capital, Enrich Africa, Thrive Africa, Angelist Ventures and angel investors, Rene Reinsberg, Marek Olszewski and Honey.
The US- and Nigeria-based firm, which has built a remote team distributed across Nigeria, Ghana and Kenya, says it is working to democratize Africa’s highly fragmented payments system by leveraging blockchain-based solutions.
Chief Executive Officer Ruth Iselema founded the Africa-focused blockchain payments startup in 2019. Adam Umar is the CTO of the company while Akinbola is the actual COO. According to executives, Bitmama started as a WhatsApp group where members learned about crypto, particularly Bitcoin, and transacted. Subsequently, they built a crypto exchange platform and allowed these users to officially access virtual assets and explore other use cases such as buying, selling and exchanging crypto and peer-to-peer transactions. Recently, the company introduced Changera, a social payment solution that allows users to use stablecoins to facilitate payments and international payments on Netflix and Amazon via virtual cards.
“We launched Bitmama to make it easy for anyone on the African continent to buy and sell cryptocurrency. But as time went on, we saw some use cases that we could use this technology to solve,” CEO Iselema told Technology Flow on a call. “Many people wanted to do transactions other than buying and selling crypto, so we built things that allowed them to buy local and international airtime and data. Then, with a monthly cost of $20 due to local bank card restrictions, we gave Nigerians virtual dollar cards to make international purchases.
The company says its Changera virtual crypto debit cards, funded with stablecoins, have monthly spending limits above $10,000 and can “work anywhere in the world for online transactions.” According to the CEO, Bitmama launched Changera at the intersection of blockchain payments and lifestyle, mainly targeting non-crypto-savvy people who are more comfortable using platforms with basic UI interfaces and less crypto jargon to communicate.
Earlier this year, Bitmama had less than 20,000 users across the two platforms. That number has grown to more than 70,000, with two products, Bitmama Exchange and Changera, also seeing huge growth with minimal marketing, Iselema noted. Revenues come from margins on transactions made by its users on the platform.
African blockchain startups raised $91 million in the first quarter of 2022 alone, compared to $127 million received from investors in 2021. But new upstarts in the Web3 space like MARA, Nestcoin and Jambo have grabbed headlines with new but unproven business models. , exchanges and remittance platforms are highly supported in the space, for example, Afriex, Yellow Card and VALR. Other notable names include YC-backed Buycoins, Quidax and Busha.
While Bitmama isn’t among the continent’s most funded blockchain platforms, Iselema boldly claims it’s one of the most innovative blockchain companies around — and the new investment will allow it to be even stronger on that front.
“One thing that is the backbone of Bitmama is that we are very innovative. Since we got into the ecosystem, we’ve been doing a lot of things where we were in the first place,” she said. “For example, we were the first to launch QR codes for offline onboarding. Even when we launched crypto cards, we did it first. And we have some innovative products that we’re first to market and we want to continue that momentum.
Currently, Bitmama is working on the B2B play through APIs, which helps businesses in various industries who want to offer crypto-based services to their customers without building from scratch. Executives say Bitmama is testing the feature with some clients in beta.
The blockchain company will use the pre-seed to expand its operational presence, strengthen its team, consolidate its product offerings and increase market penetration across Africa, while rapidly scaling new use cases for cryptocurrency on the continent, it said in a statement.
Managing General Partner at Pan-African Fund Launch Africa, said he sees his firm’s partnership with Bitmama as a way to allow Africans to trade and manage cryptocurrencies and digital assets conveniently and globally. “This is something that we particularly value in our fund and what BitMama offers in particular.”