You would have to fork out over 3000 dollars to buy a share in Amazon. It's a luxury that few can afford and despite the prospects of the trillion-dollar company or returns from its share price, it will take some to pay that full price.
People can own smaller shares in big companies with fractional investing.
A growing need to invest in U.S. stocks in different parts of the world has led to the creation of many similar platforms. In Nigeria, Bamboo was launched in January 2020. The investment firm has grown significantly in the last two years and has raised over $12 million in a new financing round.
The Series A round was co-led by Greycroft and Tiger Global. According to a statement seen by TechCrunch, the other investors in Bamboo are: Saison Capital, Y-Combinator CEO Michael Seibel, and Chrysalis Capital.
The average Nigerian doesn't have a lot of ways to save and invest. The nation's currency, the naira, runs on an inflation rate of more than 15%. They can hedge against inflation and currency devaluation by building a portfolio of U.S. stocks.
The S&P 500 has an average annual return of 10.5% from 1957 to 2021. Until a few years ago, HNIs with resources were able to open brokerage accounts and consult asset managers in Nigeria.
It takes weeks for the average Nigerian to complete it. All that is simplified by Bamboo. It is a retail investment app that allows Nigerian people to set up an account in minutes and buy and trade U.S. stocks in real-time.
The company is trying to make investing in the global stock market easy for Africans.
In accessing investment options, especially in capital markets, both locally and globally, we want to make that easy for Africans because we want to help them create and preserve wealth by owning shares in the world's most successful companies.
Stock investing is relatively new in Nigeria, but Bamboo has shown expertise in user acquisition and retention. About 20% are active daily traders, while 75% never traded stocks before using the platform, according to the company. 85% of deposits on the Bamboo platform were made by repeat depositors.
The users are charged a commission of 1.5% per transaction and about 45 to $65 per withdrawal for users with dollar bank accounts.
The Nigerian retail investment space has competitors such as Bamboo. They differ in the type and class of securities they offer, for instance, Bamboo gives access to U.S. stocks, ETFs and ADRs, while Chaka deals with stocks and ETFs trading on local and foreign capital markets, but all have been subjected to regulatory issues at home.
The activities of these investment firms were declared illegal by the SEC in April of last year.
The Central Bank of Nigeria accused them of operating without licenses as asset management companies and of using the Nigerian F.X. market for purchasing foreign bonds. The four fintechs had a total of 15 billion dollars in turnover from January to April.
Nigeria’s SEC warns investment platforms to stop trading ‘unregistered’ foreign securities
Bassey confirmed to TechCrunch that the company received a court order to unfreeze its accounts. Despite operating in a tight regulatory space, Bamboo can't offer the features that other investment platforms can.
Stock and selling stocks is a regulated business and we only live in Nigeria. We have to work within the ambit of what the regulators in Nigeria allow and what they don't.
That is the amount of services we are offering. The CEO said that they would work within the ambit of what the regulators were comfortable with if we launched in other markets. He stated that Bamboo is waiting for approvals from regulators to start offering Nigerian stocks before Q2 this year so Africans and those in the diaspora can invest in the continent.
The next market for Bamboo is Africa. The company said that over 50,000 users have joined its waitlist since it announced its intentions to launch in the West African country. Bamboo will look to move into those countries with this new funding, because there has been some demand from them.
Part of the funding will be used to scale the company's tech infrastructure. New offerings will allow asset managers and other companies to integrate Bamboo into their offerings for their customers and trademark stock-trading product.
In terms of size, Bamboo is similar to Series A eight years ago. It will be unfair to assume that Bamboo can replicate the U.S. giant's growth trajectory over the years. The Nigerian company is poised to reach mass scale across Africa in the next couple of years, thanks to the backing of Tiger Global and Greycroft, who have supported successful retail platforms over the years.
These are early days. If you think about it with the kind of technology that we have put together, the kind of brand that we have created, the access that we do both locally and globally, then we are a unique team. The future is bright for us because we are one of the few teams that can do that.
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