SA Fintech Startup Ozow Raises $48M Series B funding led by Tencent

South African fintech company Ozow founded in 2014 to drive financial inclusion through open banking on Wednesday announced that it has managed to raise $48 million in a Series B funding round led by Chinese internet giant Tencent Holdings. This new funding will help the seven-year-old startup expand in Africa and expand its team from 100 to 250, including hiring employees in its new European office.

The investment round also includes Endeavor Catalyst and Endeavor Harvest Fund. The Endeavor Catalyst committee approval was chaired by co-founder and former executive chairman of LinkedIn Reid Hoffman, which is another vote of confidence in the company’s focus on developing innovative payment solutions that help create more financial inclusion.

Thomas Pays, Ozow co-founder and Chief Executive Officer said in an interview: “We started engaging with Tencent in March and they understand the scale and opportunity there would be for a company like ours. Ozow plans to use the funds to hunt for acquisitions as well as start services in Namibia, Ghana, Kenya, and Nigeria.”

Since the company’s Series A raise of  $2.5 million in 2019, Ozow has seen a 100% year-on-year growth of its business. From 2016 to 2017, Ozow raised a combined $1.2 million in angel and seed rounds, and up until now, its total raise stood at $3.7 million from backers such as Kalon Ventures. However, this Series B round has increased that number to $51.7 million

The Cape Town-based company’s digital-payment gateway that connects shoppers directly to their bank accounts has mirrored the growth in e-commerce in a nation where just 20% of bank-account holders have credit cards. Tencent’s investment gives it a stake in a startup that says it controls 70% of all instant, third-party electronic payments done in the nation. 

Ozow offers a range of fintech and payment solutions for point of sale, e-commerce, e-billing, peer-to-peer payments, and QR codes. It works with major retailers, including Shoprite Group and Takealot, as well as MTN, Vodacom, and Uber. The company said is adding 140 000 users and it processes more than $100 million (R1.5-billion) in transaction volumes monthly across its network of thousands of merchants. The company has six million users.