Stitch Raises $25M Series A Extension Led by Ribbit Capital, Bringing Round Total to $46M

by MMC
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Image credits: Point

Open banking, in which traditional banks publish their data via application programming interfaces (APIs) to enable the development of new financial services for their consumers, has been one of the most significant disruptions in global payments over the last decade. Less than five years ago, this innovation, in which companies use APIs to access customers’ financial accounts and provide a range of integrated and embedded financial services, took off in Africa.

In the latest development, South African fintech Pointwhich has built an “end-to-end payments solution designed to meet the complex and evolving payment needs of its enterprise customers,” announces funding to become a market leader in this payments segment.

Stitch strives to enable businesses to create, optimize and scale financial products and provide API gateways to improve online payment conversion and optimize its customers’ payment operations. Cape Town-based fintech has raised $25 million in an expansion funding round led by global fintech investor Ribbit Capital, bringing Stitch’s total series A at $46 million. Existing backers including CRE Ventures, PayPal Ventures and Raba Partnership participated in the round.

This is Ribbit Capital’s third investment in Africa after leading $30 million Series B from Chipper Cash And Wave’s $200 million Series A. Co-founder and CEO Kiaan Pillay said the team has been fortunate to have prominent local and international backers on its side since it emerged from stealth in 2021. Its early investors bought into the narrative that its team, targeting a vast market opportunity, could create and evolve products that create value. in a nascent fintech category. But as the company enters the growth phase, it is more important to have healthy growth numbers, especially in today’s slowdown in venture capital.

Pillay, recognizing this, said the fortuitous alignment of strong traction and pre-existing ties was key to attracting its lead investor and closing the round. “It’s a happy coincidence that we’ve finally started to find traction in a world where hard numbers matter to investors like Ribbit, whose team we’ve known for some time,” the CEO noted, adding that Ribbit Capital’s strong understanding of the global fintech landscape and emerging markets will be invaluable to Stitch, which is on track to process more than 50 million transactions, totaling $2 billion in total payments volume (TPV). ) This year.

These numbers cover seven product features that Stitch has launched since early 2022. Stitch was a quasi-data, quasi-bank-to-bank payments platform before going on a feature launch spree. Its customers, ranging from businesses to entrepreneurs, could use its platform to access customers’ financial accounts and innovate by providing services such as personal finance, lending, insurance, payments and wealth management.

Today, it has become a comprehensive payment service provider. Customers can accept payments by bank payment, debit and credit cards, recurring debits, cash and manual bank transfer; manage, orchestrate and reconcile payments across multiple methods, providers and geographies in a single dashboard with PayOS; and disburse funds via payments. Several use cases include online payments, financial transactions, financial services, loans and insurance, marketplaces, and recurring payments.

Stitch says its end-to-end payment solutions are primarily offered to businesses in South Africa. MTN, Multichoice, Foschini Group (TFG), Standard Bank’s SnapScan and Yoco are just a few names. However, it still has a handful of startups and small businesses as clients in Nigeria and other African countries where it has licenses to operate, Pillay said in the interview. The fintech, whose competitors include Mono, Okra, Revio and MoneyHash, also serves global PSP partners and is in talks to do the same with a few global consumer internet companies.

“We have evolved from a single-method platform to a next-generation PSP for local and global businesses,” said the CEO who founded Stitch with Natalie Cuthbert And Priyen Pillay. “Initially, we just had a payment functionality that allowed us to support bank and card payments. Although we’ve added more, we now have an orchestration layer, which many businesses use to manage payment methods and reconcile them between different banks. And we make payments, whether it’s a disbursement, a refund or a withdrawal. Our solution is attractive to global companies trying to enter the market for the first time because of the end-to-end process.

From the perspective of these consumer Internet companies in the United States or Europe, South Africa is often seen as the gateway to Africa. Unlike other African markets, the country has a functional credit card system, making card onboarding easier. However, it remains essential that these companies consider other payment options in an African market where cards are not widespread, and that’s where Stitch comes in. According to Pillay, demands from local business customers have pushed the ‘company to develop these product features, which it believes can be adapted to the needs of global customers, over the past year,

“I don’t think big companies are just using us for one method. I think one of the most interesting metrics for us is that within the first three months of going live at a large enterprise, we’ve seen almost everyone adopt a second or third product because we can incrementally add things in a very modular way. ” he said. “We’re kind of moving into a space that we didn’t expect, but as larger retailers have asked us to have more products, it’s become easier to get in and scale to. go from there.”

Stitch, who came out of stealth in 2021, claims its platform provides customers with better reliability, higher availability and faster problem resolution by using direct connections with banks and networks and cutting out middlemen. In addition to its open banking features, Stitch provides customer support including localized insights into the payments landscape and tailored, co-created solutions to eliminate the complexities of sending, receiving and managing payments. funds. Its subsidiary, WigWag, allows small businesses and micro-influencers who sell goods and services on social media platforms to accept payment via a link and card.

The fintech has now raised $52 million in venture capital (including one $6 Million Seed). The company, which has more than 80 employees, plans to use its Series A money to continue to grow its platform, expand its customer base and pursue opportunities to serve new markets, Pillay said on the call.

“Everything we do is customer-focused. We will continue to optimize what they have. And then scale geographically with them and deeper into the products they already have,” the CEO added. “We also want to continue adding as many first-party payment methods as possible. Our value proposition is based on precision engineering and deep infrastructure. So, for example, we are looking at connecting to cards and banking rails without an intermediary. Things like this are often slow and capital intensive; that’s why we increased.

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