Piggybank.ng, The Nigerian Fintech Startup That Just Raised $1.1million – A two-year-old Nigerian fintech start-up this week announced that it has raised a $1.1M Seed Fundraise, to grow its online savings platform, Piggybank.ng. The company, started by Somto Ifezue, Odunayo Eweniyi, and Joshua Chibueze, who first met at Covenant University, Nigeria, is tackling a problem endemic to Nigeria, and across Africa; savings. According to the company, 80% of Nigerians – and most probably all Africans – need to save at least 40% of their monthly income to survive and pay for everyday expenses. However in a society such as Nigeria, with no credit system to speak of, the vast majority of payments are made in cash and savings, inevitably, slip away.
Enter Piggybank.ng. The concept and product are simple; savers can deposit as little as $1 a day into their online Piggybank.ng account, and cannot touch their savings, until an agreed withdrawal date [unless they are happy to pay a 5% early withdrawal fee], whilst all the time accruing around 6% interest per annum on automated savings.
Piggybank.ng seems particularly popular with Nigeria’s Millennials, for whom going online via their mobile phones for day-to-day transactions is second nature, and who currently make up 60% of the company’s registered users. Having recorded staggering savings growth of 3000% between 2016-17, with the Piggybank.ng community having saved over $5M, the company has commanded the attention of a group of Nigerian investors, led by Olumide Soyombo, Co-Founder of Leadpath, who have helped the company raise $1.1M.
I caught up with Piggybank.ng’s Co-Founder and COO, Odunayo Ewiniyi, to find out more about the company, how they plan to tackle the $2.2Bn savings market, and how they plan to invest their newly acquired funds.
Tell us a little bit about Piggybank.ng
Piggybank.ng is an online savings platform that enables savers to put away funds that they don’t want to withdraw easily. They can save as little as $1 a day and then restrict when they withdraw their savings to specific set dates they choose. Unlike a regular bank’s savings account, where you can access the money at any time, Piggybank.ng helps its users maintain their savings discipline while building their savings culture, as they save towards something big. Piggybankers can earn on average 6% per annum on automated savings or 10.95% per annum on the fixed deposit product, Safelock and can withdraw funds for free once per quarter.
How did the company come about?
We are a team of three co-founders, myself, Somto Ifezue and Joshua Chibueze who met originally at Covenant University, Nigeria. We have worked together for almost 8 years now on different startups and businesses and in 2016, we came together again to tackle the huge issue of savings in Nigeria. Maintaining discipline in Savings was a problem that we as individuals had, and we later realized that we were not alone. The majority of Nigerians, in fact, Africans, need to save a minimum of 40% of their monthly income, in order to survive and to pay for even the basics such as housing, access to healthcare and school fees. Piggybank was built to tackle this huge and under-served market.
What’s the difference between your product and using regular savings account from a bank?
Unlike conventional bank savings accounts, the platform restricts withdrawals until an agreed date or users can withdraw their savings on a quarterly basis, whereby savings are drawn outside of the agreed day attract a 5% early withdrawal fee. So while the platform is extremely simple and flexible to use, customers are also incentivized financially to keep their money in place, until the agreed date.
How have you grown your user base?
We haven’t invested too heavily in above-the-line marketing, to-date, rather our growth can be attributed almost entirely through peer-to-peer recommendations; verbal endorsement from trusted people within your wider network is a super-powerful mode of marketing. Our users are our influencers, our advocates. They like the simplicity of our products, they see medium-long term results in their savings accounts and then they are compelled to tell their friends and family about us. We also initiated a unique referral program, Piggybank Stories, whereby our savers are rewarded when they share their story; Once a Piggybanker’s story has been sent in and approved, they receive a unique link that they can share with friends, family, colleagues or on social media. Rewards can then be earned as the new user who uses the link engages with Piggybank. Africans are storytellers, so we have applied this tradition, this genetic structure that sits in all of us, to build our user base, which saw a 3000% savings growth between 2016-17 and 20-35% m-o-m growth in user traction over the past 12 months.
How do you generate revenue for your company?
Piggybank.ng generates its revenues through asset management, and our revenue margins currently stand at 4 – 7%. So, every month, users save, and we invest a portion of that float and plough back most of the interest we get back to our users. Our users earn an average of 6% per annum on automated savings or 10.95% per annum on the fixed deposit product, Safelock, which is higher than the average interests around.
How will you use this investment?
We recently applied for and secured a micro-financing license from the Central Bank of Nigeria[CBN], which was a long-term investment for us. We are also hiring talent in marketing, product and tech departments, as we continue to introduce new products and grow our user base.
Unlike other recent funding rounds, where start-ups have looked outside of Nigeria for VC investment, you’ve raised $1.1M from almost exclusively Nigerian investors – what does this say about the market?
We are extremely proud to have had such incredible support from the local Nigerian investment community, and I hope that our engagement with local investors now opens up opportunities for other start-ups, who often assume they have to go abroad for investment. Many of our peers have to fly across the continent, or head to the US or to Europe to raise a similar Seed Round. Whilst we’ve naturally held a lot of conversations with a number of different stakeholders through this fundraising process, essentially, as a team, we’ve been able to stay in Lagos and spend time working on and refining our product, and most importantly, talking to customers. There is wealth in Nigeria, and so much of it is channeled towards infrastructure, agriculture, real estate, petrochemicals and so forth, but we have seen very little [in real terms]local institutional investment into the tech ecosystem, and it shouldn’t be like that. So we’re grateful for Olumide Soyombo of Leadpath, for connecting us with a local investor network.
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