Last year, the African tech scene was flooded with Plaid-like services from the players of the fintech infrastructure.
The attention on these companies spiralled into this year, with each significant player raising large seed to Series A rounds.
OnePipe raised $3.5 million to double down on its embedded finance offering.
OnePipe received $950,000 in a pre-seed round last year and was co-led by VCAtlantica and Tribe Capital.
New investors include Saison Capital, Norrsken and Two Culture Cap. Chris Adelsbach, Techstars, Ingressive Capital, Acquity, P1, Raba, and DFS Lab followed on with new checks.
There are three main plays. Data and financial accounts aggregation is one of the things that Plaid, Okra, Mono, Stitch and Pngme do.
Treasury Prime, Marqeta ply their trade in embedded finance and banking as a service. Core open banking was pioneered by TrueLayer.
OnePipe had a game plan to create an API gateway that connected banks and fintechs under a uniform standard, a move that would allow the company to perform core open banking.
The company needed to pivot since it wasn't generating many demand cycles, according to founder and CEO Ope Adeoye.
After striking partnerships with a few banks, OnePipe decided to dive into the world of embedded finance.
Embedded finance is not necessarily the same as open banking or data aggregation in that a company doesn't need to collaborate with every bank in the country where they operate. OnePipe has six partner banks.
The CEO said that if you want to make a positioning play for banking as a service, all you need is one partner bank that will let you go deep.
If you go for data aggregation or open banking, you should go for breadth, not depth. On our side, we said we would rather go with tier two and tier three bands, where once you describe the concept to them, they get it. It powers their growth and is more valuable to them than other larger financial institutions.
OnePipe works with non-financial institutions to launch and cross-sell an array of financial services such as credit, accounts and payments within their offerings by running the infrastructure on behalf of the partner banks.
Adeoye said that they raised a round last year to focus on one use case of the partnership, which was to pull together the APIs of a fixed set of banks and offer embedded banking or banking as a service play. We make it possible for non-financial institutions to offer banking services to their customers.
An FMCG startup can plug into a bank's account origination system managed by OnePipe and begin to issue accounts to customers, allowing them to make payments off those accounts and access credit when they need it.
The fintech-SME love story is just beginning with open banking on the horizon.
In the 10 months since OnePipe switched to this model, it has processed more than 6 million transactions. There are over 1 million individual accounts and 138 businesses, ranging from retail to lending and agriculture.
OnePipe takes a percentage cut from transactions made on these accounts. OnePipe takes at least 1% of the loan interest from its lending partners and also shares it with the businesses and partner banks.
Aniko Szigetvari, the founding partner at Atlantica Venture, believes that OnePipe is more than just financial inclusion in Nigeria.
Embedded finance is a way for both traditional and financial service businesses to increase customer loyalty and revenue by offering a wide range of third-party financial products and revenue streams for their customers.
OnePipe is only present in Nigeria, but it is making its first move beyond the country to align with Szigetvari.
Adeoye mentioned that OnePipe made a deal with Sendy to expand into other African countries. The plan is to create a tag team that is similar to Stripe.
Before we looked into other African countries, the CEO made sure that they went with a customer on the ground. We will deploy the capital for expansion after we made a deal with Sendy. We will be with them as they go to Egypt, South Africa.
African startups join global funding boom.
