Sparkle, a mobile-based digital bank that provides a combination of financial, lifestyle, and business support services to Nigerians, on Thursday, announced a $3.1 million seed fundraise from entirely Nigerian investors.
The round, which was oversubscribed according to a statement from the company, was led by Leadway Assurance with the participation of Trium Networks and a number of undisclosed high-net-worth individuals (HNWIs) in the country.
The latest funding brings Sparkle’s total investment secured to $5.1 million, having previously raised $2 million in pre-seed from friends and family.
Sparkle plans to use the new investment to scale its talent teams across engineering, financial risk, and marketing departments as well as invest in its automated back-end processes and digital infrastructure, it said.
“I’m delighted to be collaborating with a group of highly respected Nigerian businesses, investment firms, and captains of industry,” said Sparkle founder Uzoma Dozie, who is an ex-CEO of the defunct Diamond Bank. “They all understand the real need for a digital-first platform such as Sparkle.”
It’s not common in the Nigerian tech ecosystem that a funding round of such value comprises only local investors. The majority of the funding for startups in the country and across Africa comes from foreign investors and in some cases, both local and foreign VCs invest in the same venture.
According to Dozie, the Sparkle team was “very deliberate” about having an all-Nigerian round as it always felt that having a selection of strategic local investors would be beneficial to the startup’s growth.
“Nigerians know Nigerians—their banking and spending habits, quirks, challenges—both as consumers and businesses. We wanted to make sure our investors really understood the market before committing to this round,” he told TechCabal.
Asked if his background in the financial services industry played a role in the successful fundraising effort, Dozie admitted his familiarity with local financiers and high-net-worth Nigerians helped convince them to bet their money on Sparkle.
“I think that helped, yes. I am used to speaking to financiers and know the language and the key triggers to galvanise them into action. And they are used to me shouting loud and hard, over the years, about leveraging digital and technology to scale financial services for Nigeria,” he said.
Dozie adds that he will be “leaning on sector expertise and insight” of the new investors to build long-lasting partnerships as Sparkle scales and predicted an improvement in the participation of HNWIs in Nigeria’s tech and venture capital space in the near future.
“I think the trend will change as the market opportunities become more obvious to them, and better connections and networks are forged between tech entrepreneurs and HNWIs in Nigeria,” he said. “We want to see barriers to access broken down, which is important, but HNWIs also need to feel comfortable in investing in new sectors that they may not be so familiar with.”
In Nigeria, neobanks are known to provide cheaper and more personalised banking through various models. Sparkle stands out in the sense that it is one of the few that offers a mix of individual and business banking services via a single platform.
While individuals can use features such as savings, bill payments, money transfers, and other basic services, Sparkle Business, launched in April this year, offers MSMEs and SMEs functions that include inventory and invoice management, a payment gateway service, tax advisory, and employee management.
The startup has partnerships with Visa, Network International, PricewaterhouseCoopers (PwC) Nigeria that help power its offerings, and it has also secured a microfinance bank licence from the Central Bank of Nigeria (CBN).
Per TechCrunch, Sparkle has signed on over 40,000 individual banking customers and 2,000 businesses since its launch. It plans to continue focusing on connecting Nigerians and the global Nigerian diaspora, according to Dozie.
“Nigeria has a massive youth population who increasingly live, work and play beyond physical borders—we build with them in mind,” Dozie said. “Whether we are building services for individuals or businesses, we’re fully focused on creating a connected tribe of Sparklers.”