Due to trade imbalances, demand for the dollar—which drives most of the world’s trade—exceeds supply in emerging economies. Trade is hampered by this mismatch and expenses go up. The lack of technological solutions to meet the liquidity demands of multinational corporations and large companies exacerbates the issue in Africa, where many cross-border payment platforms choose to develop consumer-facing products instead.
Let us introduce Waza, a $8 million seed funded payment and liquidity platform supported by Y Combinator that is coming out of stealth. The startup says it would make managing and paying suppliers internationally easier for African traders and businesses. It claims that it is aiming for a $7 trillion market with $250 billion in potential earnings.
Cross-border payments and fintech, as TechCrunch noted earlier this year, are currently ahot market, especially for businesses financed by Y Combinator in the most recent batches. Fintechs are also posing a growing threat to traditional banks in the market, which is expected to reach a valuation of over $250 billion by 2027, particularly in the B2B space.
Waza, which started operating in January 2023 after taking part in Y Combinator’s winter batch that same month, plans to take advantage of this trend and establish itself in the payments industry globally, beginning in Africa.
Waza’s entire payment volume in its first month was $280,000, as co-founder and CEO Maxwell Obi reported to TechCrunch. According to him, in May the fintech handled up to $70 million in monthly payments, or $700 million in total annualized transaction volume. Additionally, the CEO stated that Waza’s FX spread-derived transaction volumes and revenuesand a take-rate of between 0.75% and 1%, are increasing by 20% on average each month.
The startup serves hundreds of clients in three distinct categories with varying demands by facilitating business payments and managing liquidity across six continents.
First, there are international corporations, such as American-based airlines, that have local operations in Africa but face liquidity problems; second, there are importers and traders who deal with suppliers in nations like China, India, and the United Kingdom; and third, there are additional fintechs and developers who require API infrastructure to create their own cross-border payment solutions. Fintechs offering comparable solutions include Verto, AZA Finance, and Conduit—which just made its way into Africa from Latin America.In the context of trade, cross-border payments allow companies to pay their suppliers rapidly and anticipate receiving their goods swiftly, as currency rates affect their profitability. Therefore, we have always focused on price and quick settlement,” Obi stated over the phone, citing Waza’s alliances and global banking links as a moat. Compared to the competition, we also have far more control over our payment infrastructure. This explains our ability to offer a more affordable alternative in the market, which has allowed us to seize market share thus far.
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Obi had a variety of positions as a founder and operator prior to starting Waza. He was a founding member ofHe did a brief internship at Amplify, a Nigerian fintech that Carbon purchased. He then joined Sendwave, a Zepz subsidiary.
Obi, who handled alliances and regulatory interactions for Sendwave both before and after Zepz acquired the company for $500 million, tells me that he came up with the idea for Waza while working at the remittance firm. In his capacity as head of business, he interacted with numerous partners, banks, and fintechs in the regions where Sendwave was active—Africa, Asia, and Latin America. A recurring theme, according to him, was the requirement for a service to manage vendor and supplier payments internationally. Sendwave, a peer-to-peer remittance provider, was unable to provide that.
“I considered exploring the area further to find out more. I visited the area and spoke with several participants, importers, exporters, and bigcorporates and enterprises, and the extent of the suffering these participants experienced started to emerge,” stated Obi. “I chose to take action because I realized the issue was more serious than I had thought.”
Alongside CTO Emmanuel Igbodudu, a senior developer at Revolut who oversaw the Vaults team, Obi established Waza. In addition, Igbodudu had engineering positions at well-known Nigerian fintechs, including Moniepoint and Fairmoney, and worked at Carbon.
Strong technological backgrounds held by both founders will be advantageous as the fintech diversifies its revenue sources by branching out into additional trade finance and cross-border payment solutions. Before branching out into other verticals, “we want to do one thing and do it well,” he stated. “And that involves transferring funds from one location in theeasiest and least expensive method. However, we also need to develop products that address B2B payments and span additional verticals at this point.
Obi hinted that Waza may create a stablecoin banking product for the digital economy or a business banking product with credit or financing, akin to Brex or Mercury for Africa, without going into specifics.
These projects will be financed by the seed investment, which will also allow the company to grow outside of its present markets of Ghana and Nigeria. Y Combinator, Byld Ventures, Norrsken Africa, Heirloom VC, Plug and Play Tech Center, and Olive Tree Capital have contributed $3 million in equity to the round. Timon Capital, with offices in New York and Lagos, contributed $5 million in venture loan financing, which Waza would utilize to test out trade finance.Chris Muscarella, managing director of Timon Capital, commented on the investment, saying, “The Waza team has deep experience around cross-border flows and they are going after one of the bigger opportunities in frontier markets.”
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