In early 2022, fintech startup Bloom (not to be confused with Gen Z-focused investment apps or heavily capitalized revenue financing platforms) was accepted into Y Combinator, becoming the first Sudanese startup to join the prestigious accelerator. In addition to the track records of its four founders at Amazon, Meta, IBM, and Goldman Sachs, the startup's premise was also notable and crucial: helping Sudanese people protect their wealth.
Now, after a limited initial launch, major political turmoil in its home country, a pivot, a small round of funding, and a rebranding to Elevate, the startup is now open to the public, at least in some emerging markets.
Elevate primarily targets people in East and North Africa, particularly Sudan, and was the first to build a product to hedge against the depreciation of these users’ home currencies through “high-yield” savings accounts, free FX, and related digital banking services, all based in US dollars.
The problem Elevate targeted is pervasive: Inflation and currency devaluation are perennial concerns for banked Africans (one reason the number of unbanked people in Africa is higher than in developed countries). According to the IMF, the sub-Saharan region will see a typical 8% currency devaluation between 2022 and 2023 (with some countries seeing devaluations of 40% or more), and ratings analysts expect a similar situation this year.
Elevate initially aimed to build a pan-African neobank that would integrate with local banks and wallets across Africa, with a USD banking add-on that could help people receive and save USD remittances from friends, family and employers. In addition to Sudan, the company was targeting Ethiopia, Uganda and Tanzania for early deployment.
“We are from the region, we understand the nuances of the market and can navigate seemingly ambiguous situations. I might add that we are also used to operating, and perhaps thriving, in volatile markets. We are powering Africa's growth for the next decade,” Abdigani Diriye, one of Elevate's founders, said at the time.
Building in a volatile market
Between late 2021 and mid-2022, Elevate (then called Bloom) launched its first set of products to 100,000 people and secured $6.5 million in seed funding from YC, Visa, Global Founders Capital, and notable angel investors including Dropbox co-founder Arash Ferdowsi and former N26 CEO Nicolas Kopp.
But those early stages unfolded within a much larger drama: Sudan itself was undergoing a major coup on the cusp of civil war: Under heavy military pressure, Prime Minister Abdalla Hamdok was ousted, kidnapped, reinstated, then voluntarily resigned — all within just three months.
In the wake of this turmoil, Dirie and CEO Ahmed Ismail left the company for personal reasons while Elevate remained committed to the region and pivoted.
Yousef Oujdan, another co-founder who now runs the company with fourth co-founder Khalid Keenan, said in a recent interview with TechCrunch that during the founders' time in Sudan and Ethiopia, they discovered a particular user demographic that was a good fit for USD's vision: the fast-growing freelance and remote work sector.
In Africa and other emerging markets, a growing number of young workers with the technical and language skills are able to land jobs through freelance platforms Upwork and Fiverr. The challenge for them is not opening a local US dollar account, but facilitating payments from overseas employers and online platforms cost-effectively.
“Using a local product means that excessive fees eat up a large portion of many remote workers' income. The solution was clear: don't localize your USD-denominated product,” says Oudjidane, who is also a founding partner at emerging markets fintech fund Byld Ventures. “The product needs to transition to offering a US-based USD account.” The key is an account that can facilitate ACH payments to enable freelance payments, and has the security you get with a US bank, such as an FDIC insurer.
Market Shift
Further political unrest in Ethiopia and the outbreak of conflict in Sudan in 2023 accelerated Elevate's pivot. At that point, the fintech was reevaluating which markets to serve. Emerging markets needed large numbers of freelancers and remote workers who were likely working for far-flung clients and struggled with the payment pain points the team had seen in East Africa. Based on these factors, Elevate chose Egypt, Pakistan, the Philippines, and Bangladesh.
“Remote workers who need to store savings in dollars have a few options: choose an FDIC-insured account or wallet, the latter of which is at risk if the provider goes bust and they lose their deposits. Our core business model is to provide this protection. And remittance services need to move away from traditional USD accounts and the high costs of SWIFT transfers to very low-cost FX transfers,” Keenan said.
“Incumbents like Payoneer don't offer FDIC insurance and often charge high exchange rates, up to 3% in some markets. So a big part of our model is focused on lowering these exchange rates, similar to what Wise has done, to continue to drive more favorable terms for remote workers.”
Since launching earlier this year, Elevate has simplified how non-US residents can receive payments from US employers and platforms like Upwork, Toptal, Fiverr and Deel (one of its customer acquisition partners), and has signed up more than 150,000 people in new markets. The San Francisco-based fintech offers these financial services in partnership with its sponsor bank, Bangor Savings Bank. Its product is similar to those of other African fintechs such as Grey and Cleva.
What’s next for Elevate?
Elevate's strategy shift and change of banking partner from the Egyptian company coincided with a switch from Visa to Mastercard. As a result, the fintech was unable to take full advantage of Visa's milestone-based investment. But the founders haven't ruled out the possibility that the Visa network could support some of the fintech's future products, such as prepaid cards or local cards.
The YC-backed company currently generates revenue from net interest income, FX, and card exchange, and also plans to launch savings and investment products in the coming months. Oujdane said the company has run a lean operation and invested about $2 million since launch, so it has plenty of cash in the bank and is close to profitability.
However, this has not prevented the fintech company from raising a new $5 million equity and debt pre-Series A round from Dubai-based investment fund Negma Group to fuel its expansion into markets such as Indonesia, South Africa and Turkey.
Before the war began in Sudan, Elevate was one of the most highly funded startups, even though its multi-million dollar backing seemed incredibly modest compared to companies in developed countries. Local tech observers subsequently predicted that Elevate's success, along with the Fowley-backed Alsog, would draw further attention to Sudan's nascent tech startup ecosystem, which was finally starting to attract global investors after three decades of international sanctions.
But that didn't happen: While other startups with little recourse have persisted despite the conflict, Elevate, fortunate enough to serve consumers in a range of markets, plans to rebuild a physical headquarters in the country only if political stability is restored.
“Freelancers and remote workers in these markets will undoubtedly be a significant source of foreign exchange to aid in the recovery,” Ujdan said.