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TechInAfrica — Fintech startup Chaka aims to open up online stock investing to Africa’s most populous nation, Nigeria. Recently, the seed-stage company went live with its mobile-based platform offering Nigerians stock trading in over 40 countries.
Chaka positions itself as a passport to local and global investing. The startup has created an API and interface that allows Nigerians with a bank account (and who meet KYC requirements) to create trading accounts to purchase global blue chip and local Nigerian stocks.
According to Chaka founder and CEO Tosin Osibodu, the platform allows investors to start with a minimum of 1000 Naira or $10 to create a local and global wallet to trade.
It has partnerships with two brokers to facilitate stock purchases, Citi Investment Capital and US-based DriveWealth.
“Embedded in our offer is the ability to buy on the local stock market…we make it more seamless than usual, and assets…from this whole universe outside the continent,” said Osibodu.
The Nigerian Stock Exchange has been upgrading its platform to digitize and accommodate more listings. It has a five-year partnership with NASDAQ and Airtel Africa listed on the NSE in July.
“Our outlook is that within Nigeria…between one and two million people are strongly in the market for this product,” Osibodu said.
Chaka aims to offer more than stocks. “Our product road-map includes not just equities, but other investment products people are interested in — mutual funds, fixed income products, and eventually even cryptocurrencies — so that really expands our bounds,” said Osibodu.
Chaka’s fee structure is 100 Naira (or 3%) for local trades and $4.00 for global trades.
Commenting on how to mitigate the FX risk of the often volatile Nigerian Naira, Osibodu said that the startup converts locally to dollars and funds client trades in USD. Chaka agrees to intra-day forward rates at 9 am each day and locks them in until 2 pm for transactional activity on its platform.
The investment has now remained undisclosed, but Chaka confirms it has received pre-seed funding from Nigerian founder and investor Iyinoluwa Aboyeji, aka E.
According to WeeTracker, the startup is in a unique position in African fintech. The sector receives the bulk of the continent’s VC, but most of it is directed toward P2P payments startups compared to personal investment platforms.
Chaka’s founder came up with the idea to form the venture, in part, due to challenges attempting to access well-known trading platforms, such as E-Trade.
“I tried to open these accounts and whenever I…disclosed I was Nigerian very shortly after those accounts were closed or denied,” said Osibodu.
Nigeria has been known as an originating country for online fraud, commonly referred to as 419 scams for decades. Osibodu noted this as something for which the country’s legitimate business operators pay an undue reputational cost.
As seen in recent years, Nigeria has also become a magnet for legitimate business in Africa. The country has the continent’s leading movie and entertainment industry and has emerged as a hotspot for startup formation and VC activity.
Chaka backer Iyinoluwa Aboyeji believes progressive trends in Nigeria will open up a new investor class.
The startup has also received seed-funds from Microtraction, a Lagos located early-stage investment shop founded by Yele Bademosi and supported by Y-Combinator CEO Michael Seibel.
Chaka allows for API integrations and has a developer team. The company has created an automated customer verification process. “It sounds trivial compared to the American market, but it’s a bit of a first in Nigeria,” said CEO Tosin Osibodu.
“The grand mission of the company is to reduce capital market access barriers,” said Osibodu.
“With a two to five million customer base — and a $40 to $200 ARPU — on the really conservative end that’s a $100 million revenue opportunity,” he added.
Source: techcrunch.com
