Why we invested in Verto
By Jad El Boustani and Germine Bouchnack
Founded in September 2017 and launched in October 2018, Verto is a B2B cross-border payment provider and currency exchange marketplace that enables Micro, Small and Medium Enterprises (MSMEs) in emerging markets to receive and transfer funds globally.
Verto is catering to the inefficient payments, processing and currency exchange needs of 120M+ MSMEs in Africa while gradually evolving into a digital business banking infrastructure serving the full financial spectrum needs of businesses in Emerging Markets.
Verto is a Y-Combinator graduate (Winter 2019 batch). It is licensed (E-money license from the UK FCA) and headquartered in the UK with a local office in Nigeria. Its customers are mainly based in UK, Nigeria, Kenya, and South Africa.
Since its launch, Verto witnessed massive growth in terms of business adoption and transaction volume growth while maintaining very healthy LTV/CAC ratios. The main drivers being the lack of interoperability between African currencies while trades and supply chains are becoming increasingly global.
• Verto facilitates the inflow and outflow of currencies (including exotic currencies) to enable seamless and instant cross-border payments for MSMEs in emerging markets.
• It enables hundreds of businesses globally to access a wide pool of liquid and exotic currencies, deliver their funds to 200 plus countries, with cheaper transaction fees.
• Verto offers three products:
VertoFX: Directly matching businesses with liquidity providers (banks and currency exchange bureaus) and enabling them to monitor live market-beating FX rates.
Verto Marketplace: Matching businesses with other businesses to conduct peer-to-peer FX trade, with Verto being the central counterparty.
Verto Wallet and business bank account: Enables businesses to pay-in, hold and pay-out across 39 currencies (including G10 and 4 African currencies), while allowing seamless conversions across liquid and illiquid currency pairs.
Africa is a massive market that is ripe for SME fintech disruption
• Africa is home to the largest pool of SMEs ~25% of the total number of SMEs globally
• The GDP in Africa is growing at 3.7% YoY and reached $2.6T in 2019
• Highest population spurt that will contribute to 50% of the global population growth in the coming decades
• Large trade-based economies ($1.2T) and Strong growth of intra-African trade value (rising by 17% to $159.1B in 2018)
• $136T in transaction flows globally, resulting in $231B in revenues (2/3 of cross borders revenue is from emerging markets)
• The cross-border transactions are growing the fastest in emerging markets and specifically in Africa and the Middle East
• Africa witnessed the biggest success stories globally in the fintech space due to the large underbanked population and poor banking infrastructure
We believe Verto has great potential for the following reasons:
• Digitizing a large untapped and inefficient market poised for rapid growth.
• B2B payments market is attractive with better margins and a stickier client base than the B2C payments market.
• Creating a regulated MSME cross-border payments ecosystem and digital banking infrastructure. The ecosystem will position Verto to dominate the digital business banking vertical in Africa and the MENA Region
• Strong organic growth, healthy LTV/CAC of >5.1x
• A differentiated product offering optimized for MSMEs in emerging markets.
• Developed a strong technology infrastructure enabling a seamless experience that is driving the businesses’ engagement and increasing their dependency on Verto
• Strong management team with African origins (well-aware of the local market dynamics and pain points) and investment banking backgrounds in developed economies.
• Several exit scenarios with massive upside
• Great pool of co-investors. Round was led by Quona Capital with the participation of Treasury, U.K.-based TMT Investments; Unicorn Growth Capital; Zrosk Investment Management; and P1 Ventures
We are very excited to be on board and looking forward for the next steps!