African fintech startup Cleva, founded by former employees of Stripe and AWS, has successfully secured $1.5 million in pre-seed funding. The Nigerian-based company focuses on creating a banking platform tailored for both individuals and businesses across Africa, aiming to simplify the process of receiving international payments by opening USD accounts.
The pre-seed funding round was spearheaded by 1984 Ventures, an early-stage venture capital firm based in San Francisco. Notable contributors include The Raba Partnership, Byld Ventures, FirstCheck Africa, and various angel investors.
Expressing confidence in Cleva’s founders, Tolu Alabi and Philip Abel, Aaron Michel, a partner at 1984 Ventures, emphasized the significance of their product in addressing hyperinflation challenges prevalent in Africa. He praised the team’s unique qualifications, stemming from their experience in building banking products at Stripe and robust platforms at AWS.
Cleva also gained support from Y Combinator, participating in the pre-seed round as the fintech embarks on its journey within the accelerator’s winter 2024 batch. Y Combinator has previously backed African startups with a focus on assisting freelancers and remote workers in opening U.S. bank accounts for payments, savings, and currency exchange.
In an interview with TechCrunch, CEO Tolu Alabi shed light on the reasoning behind launching the platform in August, despite facing competition from other platforms like Techstars-backed Geegpay and Payday. Alabi highlighted the persistent challenges Africans encounter in receiving international payments for their skills and products, estimating the market for facilitating payments for remote workers and freelancers in Africa to be an $18 billion opportunity.
One key factor contributing to Cleva’s success is the strong founder-market fit. Both Alabi and Abel have deep connections with the African market, having been born and raised in Nigeria before pursuing education in the U.S. They bring valuable technical and product experience from their roles at major tech companies, including Amazon, Stripe, AWS, and Twilio.
Cleva, which initially launched its services for Nigerians, allows users to open USD accounts with onboarding requiring a Bank Verification Number (BVN) and a government-issued ID. In the four months since its launch, the fintech has facilitated the opening of U.S.-based accounts for thousands of Nigerians, processing over $1 million in monthly payments and experiencing month-on-month revenue growth of 100%.
Setting itself apart from competitors, Cleva focuses on providing an exceptional customer experience and a unique business model. Alabi emphasized their commitment to going above and beyond for customers, ensuring timely and responsive customer support. The revenue model includes a 0.9% fee on deposits into customers’ USD accounts, capped at $20, distinguishing itself from competitors applying an uncapped 1% fee.
Looking ahead, Cleva has exciting plans to diversify revenue streams with upcoming products, including USD cards and savings in U.S. assets, as highlighted by CTO Philip Abel. The company also aims to target Africans in the diaspora, introducing features such as professional invoicing and global USD sending. Cleva envisions evolving from a product-only service to a platform offering APIs for a broader range of services across African countries and globally, according to Abel, outlining the company’s future roadmap.