Nairobi-based bitcoin startup Bitpesa has secured follow up funding to its Series A round earlier this year. This new round of funding is led by venture capital firm Greycroft Partners, which has experience investing in tech startups such as Braintree and Venmo, provides BitPesa with a further cash injection.
Investors Attracted By Positive Growth
The new round of financing comes at a time the firm is experiencing steady growth in African markets. Bitpesa is currently handling monthly trade volumes of $10 million, up from $1 million in 2016, with a 25% increase every month for the last two years. The company’s model which uses the bitcoin blockchain to provide low-cost B2B payment processing for local and international markets led to its being named the best fintech solution in Africa at the AppsAfrica Awards 2016.
Bitpesa CEO, Elizabeth Rossiello commented in AppsAfrica: “We keep raising because we have grown above and beyond projections […] We have expanded across Africa and Europe, added a stellar roster of Fortune 100 companies as clients and are receiving growing support from regulators.”
BitPesa received an additional new investor Plug and Play, with existing shareholders also fronting extra capital. Investors from previous funding rounds include Draper Associates, Pantera Capital, Blockchain Capital and Digital Currency Group.
According to Greycroft founder Alan Patricof in a Disrupt Africa interview, the investment firm believes bitcoin has potential when it comes to remittances and payments in emerging markets, an area where BitPesa is well positioned.
Plug and Play vice president, Scott Robinson also added: “BitPesa promises to revolutionise the exchange and payment markets in Africa, disrupting monopoly incumbents and opening the fastest growing economies in the world to foreign companies. We’re very excited for the team’s vision and current execution which bolsters payment avenues throughout the region.”
BitPesa has now doubled its team to around 40 employees since last year and is exploring cross-border payments as a significant growth area for the future, particularly for its African clients.
BitPesa aims to transform the financial landscape in Africa through its peer-to-peer payment network and bitcoin exchange. One way is through identifying cutting edge partners who can assist the company in rolling out other B2B products such as trade financing and lending. Already, BitPesa is actively seeking banks and MNOs (Mobile Network Operators) in each region to partner with.
While many have been reluctant to work with bitcoin startups in the past, with the company becoming FCA approved in the UK and Japan allowing the use of bitcoin as a transactional currency, hopefully, local banks and MNOs will be more open to integrating bitcoin technology in their operations. The company is also proactively engaging with regulators in African markets that have banned
The company is also proactively engaging with regulators in African markets that have banned bitcoin like Kenya and Nigeria, to find a way to service SME’s and individual clients.
Effect of the Price Rally
The price of bitcoin has surged to all-time highs since the start of the year, coming amidst the August 1 Segwit infrastructure upgrade that resulted in a currency split, and formation of bitcoin cash. With another potential technical upgrade coming for bitcoin in November, Rossiello insists bitcoin will still be used on the platform due to it being more liquid than other digital currencies.
“The speed of bitcoin payments has increased and this move ensures that technology can continue to have an “industrial use,” underscoring how strongly people believe in it. We’re experiencing an exciting moment for the firm and for the industry.”
The company is also expanding its presence in Francophone Africa with an office in Senegal, and in Europe, due to the increased money transfer volumes between this markets. The additional capital together with the wealth of experience the investors bring to the company will be instrumental in making it a market leader in Africa’s payments space.
Retracing in Kenya Due to a Difficult Regulatory Environment
Despite the good news of high growth figures and increasing funding for what is widely considered Africa’s leading bitcoin startup, the company announced on September 1 that it is making changes to the services it offers to its Kenyan customers.
Citing the difficult regulatory environment in Kenya that prohibits bitcoin-related startups from opening or maintaining business bank accounts with local banks, which is hindering the firm from process payments in Kenyan Shillings, BitPesa has decided that the verification of new customers in Kenya will be paused and that the new minimum limit for transactions in Kenya will be $25,000.
This means that buying bitcoin in Kenya using BitPesa will unfortunately only be available for businesses and high net worth individuals who are already existing BitPesa customers.
Regardless of the difficulties in the startup’s “home country”, BitPesa is a great example of a resilient African bitcoin startup that is able to navigate the complexities of dealing in digital currency in different jurisdictions around the globe.