April 13, 2022 | Firm News

Investing in Umba: the Next Great Neobank for Africa

Mark Selcow

Written by

Mark Selcow

Umba leadership team

I’ve marveled at the rise of the Neobanks across the globe. Each region, starting in Europe, has one or two mega, mobile-first banks that are serving customers well and capturing deposits. The speed with which these banks have swept into their markets is staggering. Nubank has grown to over 40MM customer accounts, up from just 1MM in less than 5 years, and has a $34BN market cap as of this post. Revolut has over 20MM customers, Chime has over 13MM and N26 has over 10MM, just to pick a few.

Clearly, these numbers tell us that there are meaningful sectors of the consumer and small business market that are just not happy enough with their legacy bank. They want a better experience, lower fees (or no fees), faster access to their pay, ease of use on a smartphone, and access to credit with less bureaucracy. They also want a brand they can feel good about, which is more than just a cool logo: it’s the whole experience of moving money, paying bills, building credit, and borrowing with low friction. 

People just want banking that gets who they are. That could be their ethnicity, stage of life, or other characteristic. For example, I have 3 teenagers and use a Neobank for their teen debit card, spend monitoring and allowance features. My legacy bank doesn’t offer anything like that. What’s my point? It’s that neobanks are valuable and growing for good reason: They are doing the things customers want.

Which is why we are proud to announce our investment in Umba, where we led the company’s recent Series A financing. Umba is a Neobank for Africa and is executing extraordinarily well. Umba started in Nigeria, the largest economy in Africa, and now have their second country ready to launch. They offer core banking–including deposits, bill pay, debit card, bank to bank transfers, peer to peer payments, and innovative lending products to meet the significant unmet need for credit in their customer base. 

We invested because the 1.2BN people who live on the African continent deserve better. As it is only ⅓ have bank accounts, and those that do are demanding more and more for their families and their businesses. We see an enormous opportunity for African consumers and small businesses to get incredible banking services and superior financial products that will unlock a lot of economic potential and expand financial access. In too many countries in Africa, legacy banks serve only the affluent. And they don’t even do that very well, with high fees, restrictive credit, low tech (which translates to low access) and a slow pace of innovation. The kind of quality and breadth of product at Umba convinced us they would win the battles for customer choice. 

And we saw an incredible team of founders and technologists who understand their markets and who are passionate about the customers they serve. Importantly, the Umba team is serious about working closely with local regulators and authorities and has earned their support and trust.

The company has ambitious plans for further product expansion, and their talent for elegant product design and financial infrastructure positions them well for the future. We could not be more excited to be a part of the Umba story, and in helping the company in its mission to provide better financial inclusion to tens of millions of people in Africa.