Podcast Summary
Podcast: This Week in Startups
Host: Jason Calacanis (Note: Mistakenly called Alex throughout the transcript)
Guest: Tosin Anya-Larunda, CEO & Co-founder of Moniepoint
Episode: Fast growth, big capital, and how Moniepoint is building a fintech unicorn in Africa | E2036
Date: October 31, 2024
Main Theme & Overview
This episode dives into the incredible growth story of Moniepoint, a newly minted fintech unicorn based in Africa, with a focus on Nigeria. Host Jason Calacanis interviews CEO Tosin Anya-Larunda about Moniepoint’s origins, their daring pivot from B2B banking software to challenging banks directly, their approach to profitability and venture funding, and the vibrant African startup ecosystem.
Key Discussion Points & Insights
1. Founding Story & Pivot (01:17 – 04:49)
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TeamApt Origins:
Moniepoint started as Team Apt in 2015, a bootstrapped company providing white-label banking software for 26 out of the top 30 Nigerian banks.- Tosin: "We focused on having a business that's going to be worth a lot before now figuring out how to raise funding for it." (02:34)
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The Pivot:
In 2019, they realized the software business, while profitable (seven-figure revenues), was limited by TAM and lacked recurring revenue. They pivoted to financial services for SMEs.- Tosin: “We made it a mandate that we're going to be one of the biggest financial service providers in the country.” (04:49)
2. Breaking Down the Agent Model (06:07 – 09:26)
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Agent Role:
Agents act as local “one-man banks,” offering cash in/out, bill pay, account opening, and card issuance to underbanked communities, addressing trust and accessibility gaps.- Tosin: “These are like trust centers where people are like, oh, okay, I know this guy ... I put my money in this account.” (08:02)
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Agent Structure:
Agents are independent entrepreneurs, not Moniepoint employees. The company’s roots in providing POS technology (a la Square) enabled rapid agent network expansion.- Tosin: "These agents were some of the small businesses that we got initially..." (09:26)
3. Scaling in Nigeria’s Competitive Landscape (11:38 – 12:58)
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Challenges:
Fierce competition from well-funded startups and banks, but Moniepoint’s strategy was to focus on product quality, innovation, and superior distribution.- Tosin: “Superior products, superior distribution always wins and we focus heavily on having a great product at an accessible price point.” (12:58)
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Bootstrapping to VC:
Initial years were profit-driven and bootstrapped to avoid VC dependency; later, VC was brought in to scale without sacrificing fiscal discipline.- Tosin: "We never wanted to be at the mercy of venture capital... As long as you’re profitable as a business, you are not under any pressure to raise extra funding." (13:18)
4. Philosophy on Profitability vs. Growth (14:47 – 18:15)
- Moniepoint insists on sustained profitability, tolerating only brief periods of being “in the red” (max six months post-raise).
- It’s a strategic response to the less robust African VC environment versus Silicon Valley, and to avoid inflated, unsustainable valuations.
- Tosin: “The philosophy is to always be profitable... we simply could not bear that risk.” (15:11)
5. Insane Growth, Macro Tailwinds, and Impact (18:15 – 24:03)
- Moniepoint’s 2018-2021 CAGR was 321%, rising to 332% (2019–2022).
- Major tailwinds: Nigeria’s rapid digitalization, COVID-19, and a government-driven “demonetization” policy boosted digital adoption, which their cloud infrastructure could easily absorb.
- Tosin: "The insane luck that we had was we rode a massive wave of digitalization... Nigeria pulled an India..." (20:21)
- 2022 revenue was $149M—IPO scale.
6. Expansion, Product Line, and Future Plans (22:38 – 30:49)
- Recent launches include digital banking for consumers and businesses, cash advances, business tools, debit cards, savings, and cross-border payments.
- Focus remains SME-centric, but expanding to the consumer side (20X growth in users over the past year) to fortify the ecosystem and value for business customers.
- IPO is on the horizon, but focus stays on "profitable growth."
- Tosin: “Focus is still on businesses, especially small businesses... consumer business is just an ecosystem play.” (28:38)
7. The Fundraising Process & African Fintech Realities (32:02 – 38:28)
- Series C, $110M Round:
Larger fintech raises are rare in 2024, especially in Africa due to falling VC activity. - Currency/inflation risk makes global investors hesitate. Moniepoint “naturally hedges” with inflation-linked revenue, mitigating risk.
- Valuation is lower than comparable US fintechs would get (science + art + location mindset).
- Tosin: “If we're based in Silicon Valley, I'm pretty sure this is many multiples of the valuation given the revenue and growth rate... but ultimately it's a willing buyer, willing seller market.” (38:28)
8. African Startup Ecosystem & Early-Stage Support (38:28 – 46:12)
- Ecosystem Vibrancy:
Nigeria, Kenya, Egypt, South Africa lead the pack, with emerging hubs like Ghana and Benin. Themes mirror global fintech: merchant acquiring, credit, business banking, cross-border payments. - Early-stage:
Growth supported by Y Combinator, Techstars, local angels, and family offices. Founders are beginning to reinvest as angels.- Tosin: “YC has quite a cohort of them... and now that they're also seeing, you know, much more successful startups... is also leading to a bit of angel investing." (42:37)
- Tosin: "Angel investing is closer to gambling than... the more mature you are, the more it is closer to mathematics." (44:45)
9. Global Perception & the Africa Opportunity (46:12 – 49:06)
- Many investors overlook Africa due to lack of proximity and perceived risk/opacity.
- Awareness and storytelling—especially highlighting outsized growth and market potential—are key to attracting more capital.
- Tosin: “We need to do a lot more work as Africans... to also be able to understand the continent. Where is the next frontier?” (47:00)
Notable Quotes & Memorable Moments
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On Competing with Banks:
"We decided to, in a way, challenge the banks. Is that a fair encapsulation?"
Tosin: "Fair enough. That’s what it is." (04:49) -
On Bootstrapping vs. VC:
"As long as you’re profitable as a business, you are not under any pressure to raise extra funding. You essentially only raise funding when you need it."
(Tosin, 13:18) -
On Growth:
"We rode a massive wave of digitalization... Nigeria pulled an India, where in a short period of time the central bank... demonetization... led to a massive influx of people adopting digital payments..."
(Tosin, 20:21) -
On Valuation Realities:
“If we’re based in Silicon Valley, I’m pretty sure this is many multiples... but ultimately, it’s a willing buyer, willing seller market.”
(Tosin, 38:28) -
On Angel Investing:
“Angel investing is closer to gambling than... the more mature you are, the more it is closer to mathematics than gambling.”
(Tosin, 44:45)
Timestamps for Key Segments
- Origin & Pivot: 01:17–04:49
- Agent Model Explained & Early Growth: 06:07–09:26
- Scaling & Competition in Nigeria: 11:38–12:58
- Bootstrapping to VC & Profitability Philosophy: 12:58–18:15
- Growth Stats & Macro Tailwinds: 18:15–24:03
- Expansion, Future Plans, Consumer Banking: 22:38–30:49
- Fundraising, Currency Risk, Valuation: 32:02–38:28
- State of African Startup Ecosystem: 38:28–46:12
- Global Perception & Why Africa is Underrated: 46:12–49:06
Conclusion & Outlook
Moniepoint’s story is a testament to the potential within Africa’s fintech sector: huge, underestimated markets; world-class growth; relentless focus on profitability; and increasing diversity and vibrancy in the founder/investor ecosystem. Tosin’s pragmatic takeaways on valuations, risk, and opportunity—plus candid advice for founders and investors about the realities of operating in Africa—make this episode a masterclass in navigating emerging markets.
Final Recommendation by Tosin:
"Africa needs to tell its story more—awareness will reduce perceived risk, and the growth opportunity is real for those who understand the market." (47:00)
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