Emerging economies face trade deficits, with demand for dollars, which account for the majority of global trade, exceeding supply. This imbalance raises costs and slows trade. In Africa, the problem is exacerbated by a lack of technology solutions to serve the liquidity needs of large corporations and multinationals, with many cross-border payment platforms opting to develop consumer-facing products.
Waza, a Y Combinator-backed payments and liquidity platform, has emerged from stealth with $8 million in seed funding. The startup claims to make it easier for African businesses and traders to manage and pay suppliers globally. The company says it is targeting a $7 trillion market that could generate $250 billion in revenue.
As TechCrunch reported earlier this year, cross-border fintech and payments are currently a hot area for startups, particularly those backed by Y Combinator. And with the market predicted to exceed $250 billion by 2027, fintechs are increasingly challenging traditional banks, especially in the B2B sector.
Waza, which joined Y Combinator's winter batch in January 2023 and launched its business the same month, aims to capitalize on this trend and make its presence known in the global payments market, starting with Africa.
Co-founder and CEO Maxwell Obi told TechCrunch that in the first month, Waza's total payments volume reached $280,000. He added that in May, the fintech was up to $70 million in monthly payments and $700 million in annualized transactions. The CEO also said that Waza's transaction volume and revenue, which comes from FX spreads and fees of 0.75% to 1%, is growing an average of 20% month over month.
The startup facilitates business payments and liquidity management for hundreds of clients across six continents, spanning three distinct categories of needs.
The first are multinational companies, such as US-based airlines, that have liquidity challenges and operate locally in Africa. The second are importers and traders who work with suppliers in countries like India, China, and the UK. The third are other fintechs and developers who need API infrastructure to build cross-border payment solutions. Fintechs offering similar solutions include AZA Finance, Verto, and Conduit, which have recently expanded into Africa from Latin America.
“Cross-border payments in trade mean companies want to pay their suppliers quickly and expect their products to arrive quickly because exchange rates impact their bottom line. So our value proposition has always been about affordable rates and speed of payments,” Obi said on the conference call, noting that Waza's global banking relationships and partnerships are also strengths. “We also have much more control over the payments infrastructure than our competitors, which is why we can offer a cheaper option in the market and why we've been able to dominate our customers so far.”
Prior to founding Waza, Obi held various roles as founder and operator: he was co-founder and briefly worked at Amplify, a Nigerian fintech company that was acquired by Carbon, before joining Zepz subsidiary Sendwave.
Obi, who managed Sendwave's partnerships and regulatory affairs before and after its $500 million acquisition by Zeps, says he came up with the idea for Waza while working at a remittance startup. As head of operations, he traveled around the markets Sendwave operated in, engaging with various partners, banks and fintechs across Africa, Asia and Latin America. One thing that kept coming up, he says, was the need for a service to process payments for global suppliers and vendors. As a peer-to-peer remittance company, Sendwave wasn't able to fill that need.
“I decided to delve into the sector to learn more. I went on the ground, spoke to different players, importers, exporters, big and small companies, and it became clear to me the depth of pain these players were facing,” Obi said. “It was a bigger problem than I had imagined, so I decided to do something about it.”
Obi founded Waza alongside Emmanuel Igbodudu, a senior engineer and CTO at Revolut who led the Vaults team. Igbodudu has previously worked at Carbon and in engineering roles at prominent Nigerian fintech companies including Moniepoint and FairMoney.
Both founders have strong technology backgrounds, which will be valuable as the fintech diversifies its revenue streams by branching out into other trade finance and cross-border payment solutions. “We want to get one thing done really well before we branch out into other areas,” he said. “And that's getting money from point A to point B in the fastest, cheapest way possible. But we're also at a stage where we have to build products across other areas that address B2B payments.”
Without providing details, Obi said Waza could develop corporate banking products, including credit and lending similar to Brex and Mercury for Africa, or stablecoin banking products for the digital economy.
The seed investment will fund these efforts and expand into new markets in addition to current operations in Ghana and Nigeria. The round includes $3 million in equity from Y Combinator, Byld Ventures, Norrsken Africa, Heirloom VC, Plug and Play Tech Center and Olive Tree Capital. Lagos and New York-based Timon Capital is providing $5 million in venture debt financing, which Waza will use to pilot trade finance for large corporate clients.
“The Wazza team has extensive experience in cross-border capital flows and is targeting one of the biggest opportunities in frontier markets,” Chris Muscarella, managing director at Timon Capital, said of the investment.