VertoFX is a global B2B payment platform that allows small- and medium-sized businesses (SMEs) to pay their suppliers. Today, it announced that it had closed $10 million in Series 1 funding.
Quona Capital was the lead of the round. Quona Capital is a fintech-focused venture capital company. The round was also attended by other firms, such as The Treasury, which was founded by Betterments Eli Broverman, and Acorns Jeff Cruttenden; Middle East Venture Partners; U.K.-based TMT Investments, Unicorn Growth Capital, Zrosk Investments, and P1 Ventures.
A lack of interoperability among African currencies is the main reason why a Kenyan businessman who wants to pay a South African business owner an invoice with either rands or shillings pays the bill using the dollar, the currency that powers nearly 80% of Africa's bilateral trade.
International payments are still a complex and costly proposition as trade and supply chains grow more global. This is especially true in emerging markets such as Africa where local currencies may not be as liquid and accessible to the same extent as those in developed countries.
Fintechs create solutions for peer-to-peer payments, remittances and other issues. However, many are consumer-focused. The B2B market is still largely untapped, which accounts for 30% of global imports and 45% total employment in emerging countries.
VertoFX was founded by Anthony Oduwole and Ola Oyetayo in 2018. Instead of focusing on Africa the two Nigerians based in the U.K. adopted an emerging markets approach.
The YC-backed company initially acted as a currency marketplace that helped businesses convert illiquid currencies to liquid pairs. After gaining transactions and raising $2 million in seed funding two years ago, users' feedback highlighted the importance to offer cross-border payments.
It's easy to see the value chain. A business that uses a platform to exchange or swap one currency for another will invariably pay another company in a different country.
Oyetayo explained to TechCrunch that we have evolved from being a currency exchange platform to offering a complete suite of cross-border payments products for businesses.
Businesses can now exchange money on the VertoFX platform in more than 200 countries, across 39 currencies. This is an increase from the 120 countries and 19 currencies that the company last spoke to us.
VertoFX, according to its website, is designed for freelancers and SMEs, and provides multi-currency accounts, payments, exchange, and payment services to all segments.
CEO Oyetayo stated that these business owners can send cross border B2B payments at rates up to nine times less than traditional banks. The best part is that there's no fee.
The no-fee model has been well received by over 2,000 businesses. Each transaction averages $30,000. According to the company, they have combined to facilitate billions of dollars worth of transactions each year.
According to the CEO, VertoFXs user base has increased 11x since the outbreak of the pandemic. VertoFXs revenue has grown 8x since then. However, he did not give any specific numbers.
Like most fintechs the company has been able to benefit from the global shift to digital payment methods and the fact that more African businesses are transacting through digital channels.
VertoFX can be used by businesses for personal payments. However, they can also use the company's infrastructure to create solutions for clients. Verto can be used by investment platforms that allow customers to purchase stocks from their platform. It also allows them to convert currencies and facilitate payouts.
Oduwole stated that this solution is targeted at developing markets, where businesses can take days or even weeks to pay customers. They can transact instantly or within a few hours with our in-house compliance system.
How can a company make money if cross-border payments are not charged? VertoFX charges a small commission to businesses who use its currency exchange service. It also charges a 1% fee for customers who use its price discovery platform solution.
VertoFX could make revenue from API calls in the future and revenue from payments made through the platform in the future, VertoFX's CEO stated.
Monica Brand Engel, co-founder and managing partnership at Quona Capital, a backer for Nigeria's Cowrywise, released a statement lauding the platform's ability to solve problems faced by businesses with low visibility, slow speeds, and high cross-border payment costs. VertoFX is doing valuable and important work, she stated.
CTO Oduwole stated that VertoFX plans to expand the number of currencies it offers to 51 by the end of this year. It stated that the company will use the funds to build its platform and make it easier for businesses to transfer money across borders.
VertoFX only has six African currencies on its platform. They cover 60% of Africa's GDP. VertoFX is planning to expand its geographic reach into Africa and the Middle East, as the B2B global payments market is expected to grow to nearly $200 trillion by 2028.
The founders stated that they want to see a future in which anyone can swap Ghanian cedi for rand without needing to transact with euros or dollars.
The CEO also noted that VertoFX is able to drive financial inclusion for companies that cannot move money from India to Turkey without going through a bank. VertoFX places businesses in underserved areas on the same playing field as those in developed markets, according to its CEO.
We want to help businesses in emerging markets send money to other businesses, just as easily as text messages.
