Zambia’s Union54 Bags Another Major Investor As Tiger Global Leads $3 Million Funding

Union54 has secured the sum of $3 million in a just-completed seed round led by venture capital giant, Tiger Global, and it comes two months after the Zambian startup graduated from Y Combinator‘s summer batch. Other investors in the round were venture capital firm Runa Capital, Ace and Company, Todd & Rahul Angel Fund, and Vibe VC. The fintech company also received funds from angel investors such as Babs Ogundeyi, the Chief Executive Officer of Nigerian neobank Kuda, Risana Zitha, Managing Director of Renaissance capital, and Gbenga Ajayi, former director of SMB Growth at Wise.

Union54 provides an application programming interface (API) to issue debit cards without needing a bank or a third party processor. From anywhere in Africa, customers, employees, stakeholders or just about anyone, can issue and manage their debit cards.  The company was started by Perseus Mlambo and Alessandra Martini this year, as a spinoff from their previous company, Zazu, a challenger bank they launched in 2015. Faced with the challenge of issuing cards to its customers at Zazu, Union54 was launched, the founders said. Since its launch, Union54 has also extended its services to help other fintechs.

According to Chief Executive Perseus Mlambo, over 50 companies are currently in Union54’s API sandbox environment, ranging from digital banks to post-Series A fintechs and “companies founded on the basis of Union54’s availability.”  The fintech company wants to help companies monetize their existing customer bases through what it describes as the “interchange”. With the interchange, Union54 will take on fintech companies that will use its API to issue cards to customers. When these customers use the cards to carry out online transactions, they earn 1 percent. In the case of a $50 transaction, $0.50 is earned. While that might look small, imagine a fintech company that uses Union54’s API to issue cards to more than 50,000 regular customers. That’s where the bigger picture lies. With the interchange, Union54 hopes to help fintechs earn significant revenue without doing a lot of the heavy lifting linked with card management.

“Not only are we allowing fintechs to go to market faster than any bank or card issuer could ever dream of doing, but we’re also really showing that our incentives are very much aligned. We only make money when they do and that’s why we’re happy to give a guarantee with that interchange,” Perseus Mlambo said.

Commenting on the investment for Runa Capital, General Partner Andre Bliznyuk said the Runa Capital was thrilled to back Union54’s efforts to “supercharge the African fintech ecosystem by enabling their customers to easily launch new card-based products and deliver tangible value to the consumers.”

Notably, Tiger Global’s investment in Union54 is its fourth investment in African startups this year, following its investments in Flutterwave in March, FairMoney in July, and Mono this month. In the past years, the venture capital giant has also Invested in Nigerian startups Jobberman, Cheki, Wakanow, and South African e-commerce company Takealot. Its investment in Zambia’s Union54 is a milestone achievement for the Southern African nation.

Union54 plans to use the newly acquired funds to ramp up recruitment across engineering, product, marketing, and sales teams. It will also use the funds to broaden its regional customer base. More importantly, the company hopes to use the funds to position itself to raise an attractive Series A within the next few months.

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