Zone, a Nigerian blockchain firm that assists banks and fintechs with payment processing, has raised $8.5 million in venture capital funding, its first since becoming a standalone corporation in 2022. Until 2022, Zone was owned by Appzone.
Flourish Ventures and TLcom Capital, a pan-African venture capital firm, lead the seed round, according to a statement issued on Monday. International blockchain venture capital firms Digital Currency Group, Verod-Kepple Africa Ventures, and Alter Global are among the other investors.
“The startup was funded initially by the parent company. When you separate the traditional business, the natural thing to do is to raise money to continue growth,” Obi Emetarom, CEO and co-founder of Zone, told TechCabal over a call.
Zone, Africa’s first regulated blockchain payment network, will use the new capital to expand its network’s domestic coverage and connect more banks and financial services organizations. The company runs a blockchain network that allows financial service providers to conduct direct transactions without the need for a middleman. It automates settlement, reconciliation, and dispute resolution.
Zone says that more than 15 of Africa’s major banks and fintech companies utilize its network to process payments. Clients include Access Bank Plc, Guaranty Trust Bank Plc, and United Bank of Africa, three of Nigeria‘s largest banks with market capitalizations over ₦1 trillion.
“We are excited by the potential for Zone’s technology to be replicated across borders to advance payment innovation globally,” Ameya Upadhyay, Partner at Flourish Ventures said.
Zone will strengthen its technology, particularly in the area of quick settlements. In order to reach more people, the company plans to expand the use cases for its blockchain network beyond ATMs.
“We aren’t building the interface for the end users, we are building the API that banks, fintechs, and other financial service providers can integrate their payment applications to,” Emeratom said.
Zone’s new investment comes amid a challenging fundraising environment. In 2023, African companies raised $3.2 billion, the lowest in three years, according to TechCabal’s fundraising tracker. “The participation of high-quality investors despite the funding drought and the fact that we had more interested investors than we needed, is a sign of trust in the Zone brand,” he said. He stated that Zone’s selling point to investors is the originality of its product and the experience of its founders, who are banking sector veterans. “We’ve seen a lot of customer-facing payment startups in the previous five years. However, no startups are raising funds to construct payment infrastructure. That’s what makes us unique.”
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