Africa's blockchain and cryptocurrency space is receiving much-needed venture support at a tough time for startups, some of which are facing challenges such as a tough regulatory environment, macro policies, or outright mismanagement. Some companies have withdrawn from certain markets or closed down completely.
The boost involves Yellow Card, a US-founded crypto platform that launched in Nigeria in 2019 and has since become Nigeria's most-funded cryptocurrency exchange. The company confirmed to TechCrunch that it has raised $33 million in Series C investment led by 10-year-old venture firm Blockchain Capital. The company's investments include Coinbase, Kraken, OpenSea, and most recently Worldcoin. This brings Yellow Card's total funding to at least $88 million.
Blockchain Capital's endorsement of Yellow Card means that the crypto platform, which initially offered access to cryptocurrencies, USDT, USDC, and PYUSD, to retail customers in 20 African countries using local currencies, now offers corporate customers This comes amid a doubling of the use of We raised $40 million in Series B funding two years ago. (Yellow Card was valued at $200 million in that round. Morris didn't provide details, but said the crypto platform's current valuation was “a significant increase from its Series B.”)
“The big change for us is that we are now primarily focused on collaborating with enterprises,” co-founder and CEO Chris Morris told TechCrunch. “When we started, we targeted the B2C market to serve retail customers. However, we realized that the real users who would benefit most from this technology were businesses. I did.”
Yellow Card served retail customers for the first few years after its launch. But Morris said the turning point came when the company, which hit 1 million customers in 2021, began to realize how expensive it was to serve retail users on its platform. Cryptocurrency customers, regardless of size, must undergo sanctions screening, KYC, and chain analysis screening, but when it comes to volume, profit margins are too thin to sustain business with small retail users. . Meanwhile, small to large businesses were traveling more and paying higher gas prices.
As a result, Yellow Card has increased its minimum transaction amount, a deliberate move to reduce its broad retail base and increase its appeal to businesses that use the platform for financial management and access to stablecoins. It is.
Yellow Card described itself from a crypto exchange platform to a licensed stablecoin on/off ramp due to changes in the way customers use the platform. “We are now much more aligned with what customers, especially enterprises, use us for: financial management and access to stablecoins. That led to a change in messaging.”
Beyond B2C, businesses become new targets
Currently, Yellow Card works with around 30,000 businesses across Africa and abroad, helping them with payments and financial management, primarily through stablecoins.
At first glance, Yellow Card's business focus may seem like a departure from its original plan to make cryptocurrencies accessible to the masses. But Morris insists the eight-year-old company is still steering in that direction, but in a different direction.
First, he points out that individuals and small businesses are not mutually exclusive in Africa. An example is an individual who owns a small kiosk. That's why despite the slight change in direction, Yellow Card's customer base ranges from trading houses selling imported shoes to some of the continent's biggest companies and everything in between. “How business and personal use converge on the continent creates very different dynamics, and our approach will be relevant to both groups,” the CEO said. Ta.
Second, the company believes that serving businesses means it can benefit more from technology than individuals can by directly interacting with it.
For example, by using Yellow Card for financial management, companies that import food, medicine, and consumer goods can make essential goods more affordable and accessible to individuals, even if they are not directly involved in cryptocurrencies. It can benefit many people. In other words, the average person benefits more from the cheaper goods and services made possible by yellow card companies than from the technology itself.
Although sub-Saharan Africa lags behind the rest of the world in terms of cryptocurrency trading volume (accounting for less than 3% of total trading volume executed between July 2023 and 2024), this There are more practical and compelling use cases for cryptocurrencies in the region than in the West. For example, Nigeria is the second-fastest cryptocurrency adopter in the world. Ethiopia, Kenya and South Africa are in the top 30, according to a recent report from Chainalies.
Stablecoins in particular have become central to Africa's crypto economy. What is the play? Most countries in Africa have highly unstable local currencies and limited access to the US dollar. As such, stablecoins pegged to the dollar, such as USDT and USDC, offer a way to store value for businesses and retail customers by hedging against inflation and currency devaluation, and facilitating international payments and cross-border trade. We provide.
Promoting the introduction of stablecoin utilities
Maurice said the utility of stablecoins and demand for the company's technology from high-transaction companies are factors that have helped Yellow Card's trading volume jump from $1.7 billion at the beginning of last year to more than $3 billion. said. As a result, the company's revenue has increased sevenfold since January 2023 and is now “reaching eight digits.”
“The main driver of our adoption is practicality. Stablecoins are useful. People need them,” the CEO said. “They solve problems for people and businesses. People are adopting this technology because they need it. This is not a speculative use case. This is a utility use case.”
Yellow Card has two main products. Core on/off ramp and API suite. On the call, Mr. Morris playfully refers to it as “Africa as a Service.” The API suite integrates Africa's banking and mobile money infrastructure, making it accessible to global companies like Coinbase and Block, and enabling customers to move in and out of the continent using the Yellow Card's rails.
Without a doubt, Yellow Card’s recent funding is a testament to the progress of stablecoins in Africa and their utility globally. Going forward, the company will work to further leverage the opportunities provided by technology by improving its flagship product and API (on top of which widgets are built).
“The future of payments lies in fast and affordable rails powered by open networks and available to everyone,” said Aleks Larsen, general partner at Blockchain Capital. “We couldn’t be more excited to support Yellow Card as they bring Africa on-chain with their stablecoin.”
Yellowcard, which bills itself as Africa's largest and first licensed stablecoin on/off ramp platform, is backed by Polychain Capital, Block, Winklevoss Capital, Third Prime Ventures, Castle Island Ventures, Galaxy Ventures, Blockchain Coinvesters, and Hutt Capital also invested in the Series C round.
It added that the funding will enable it to continue to lead the development of new products, strengthen its team and systems, and engage with regulatory authorities across the continent.
Regulation is a bane for the global presence of cryptocurrency platforms. Companies like Binance and Coinbase are facing lawsuits in the United States for allegedly offering unregistered securities, while cryptocurrencies remain heavily restricted in some countries, including China, and mining and exchange The crackdown continues.
Separately, the recent debacle between Binance and Nigeria (Nigeria has detained one of the crypto platform's executives, Tigran Gambariyan, for eight months on suspicion that Binance is undermining the local currency) ) is one reason why crypto platforms need to continue dialogue with regulators.
With strict and ambiguous rules governing how people use cryptocurrencies in different markets, African regulators are far more innovative and understand the technology better than in other regions. Morris argues that He cites recent licensing guidelines in Nigeria, frameworks in countries such as South Africa, Botswana, Tanzania and Zambia, and the introduction of a sandbox environment in Ghana to support his claim.
“Obviously, the goal is to continue to consider and develop clear regulatory frameworks around the world. I think Africa has an unfair reputation when it comes to regulation. It's actually much more It’s often a crypto-friendly environment,” Morris said.
