Emerging economies suffer from trade deficits that cause demand for the dollar, which dominates global trade, to exceed supply. This imbalance increases costs and delays trade. In Africa, the problem is exacerbated by the lack of technological solutions to meet the liquidity needs of large companies and multinationals, as many cross-border payment platforms focus on developing consumer-facing products.
Enter Waza, a Y Combinator-backed payments and liquidity platform emerging from obscurity with $8 million in seed funding. The startup claims to make it easier for African businesses and merchants to manage and pay their suppliers globally, targeting a $7 trillion market with the potential to generate $250 billion in revenue.
As TechCrunch reported earlier this year, cross-border fintech and payments is a hot segment right now, especially for Y Combinator-backed startups in the final batches. And the market, which is expected to surpass $250 billion by 2027, is seeing fintechs increasingly compete with traditional banks, especially in the B2B sector.
Waza began operations in January 2023 after participating in Y Combinator’s winter program that same month. The company aims to capitalize on this trend and make a name for itself in the global payments market, starting in Africa.
In the first month, Waza’s total payment volume was $280,000, co-founder and CEO Maxwell Obi told TechCrunch. In May, the fintech was processing monthly payment volume of up to $70 million, which translates to annual transaction volume of $700 million, he added. The CEO also said Waza’s transaction volume and revenue, which comes from FX spreads and a take rate of 0.75% to 1%, are growing at an average of 20% monthly.
The startup facilitates business payments and liquidity management for hundreds of customers on six continents, covering three categories with different requirements.
First, there are multinational organizations like US-headquartered airlines operating locally in Africa and facing liquidity issues; second, there are importers and traders dealing with suppliers from countries like India, China and the UK; third, there are other fintechs and developers who need API infrastructure to build their cross-border payment solutions. Fintechs offering similar solutions include AZA Finance, Verto and Conduit, which recently entered Africa from Latin America.
“With cross-border trade payments, companies can pay their suppliers quickly and expect the product to be delivered quickly because the exchange rate plays a role in how much they earn. So our value proposition has always been affordability and speed of settlement,” Obi said in a phone call, also citing Waza’s global banking relationships and partnerships as a protective barrier. “We also have much more control over our payment infrastructure compared to the competition. That’s why we are a cheaper option in the market and have been able to corner our customers so far.”
Prior to founding Waza, Obi held various roles as founder and operator. He co-founded and briefly worked at Amplify, a Nigerian fintech company acquired by Carbon, before moving to Zepz subsidiary Sendwave.
Obi, who managed partnerships and regulatory relationships for Sendwave before and after its $500 million acquisition by Zepz, tells me that the idea for Waza came to him during his time at the remittance startup. As business leader, he worked with various partners, banks and fintechs in Africa, Asia and Latin America – markets where Sendwave operated. He said one thing always came up: the need for a service to process global payments to suppliers and vendors. Sendwave couldn’t provide that as a peer-to-peer remittance company.
“I thought I should go deeper into the field to learn more. I went on the ground, talked to different players, importers, exporters, big corporations and companies, and the depth of the problems these players were facing started to dawn on me,” Obi said. “It was a bigger problem than I had imagined and I decided to do something about it.”
Obi founded Waza with CTO Emmanuel Igbodudu, a senior engineer at Revolut who led the Vaults team. Igbodudu also worked at Carbon and has held engineering positions at prominent Nigerian fintechs such as Moniepoint and Fairmoney.
Both founders have strong technical backgrounds that will come in handy as the fintech company expands into other areas of trade finance and cross-border payment solutions to diversify its revenue streams. “We want to do one thing and do it well before we venture into other areas,” he said. “And that is to move money from point A to point B as quickly and cheaply as possible. But we’re also at a point where we need to develop products that cover other areas that deal with B2B payments.”
Without giving details, Obi mentioned that Waza could potentially develop a banking product for businesses – similar to Brex or Mercury for Africa – that includes loans or financing, or a stablecoin banking product for the digital economy.
The seed investment will fund these initiatives and expand into new markets beyond current operations in Ghana and Nigeria. The round includes $3 million in equity from Y Combinator, Byld Ventures, Norrsken Africa, Heirloom VC, Plug and Play Tech Center, and Olive Tree Capital. Lagos and New York-based Timon Capital provided $5 million in venture capital. Waza will use this money to pilot trade finance for its large clients.
“The Waza team has extensive experience in cross-border flows and is targeting one of the larger opportunities in frontier markets,” said Chris Muscarella, Managing Director of Timon Capital, about the investment.
