Zazuu, a financial technology company based in London that developed a platform for African remittance providers and raised more than $2 million in capital, has ceased operations, citing an inability to secure sufficient finance.
Zazuu, a financial technology marketplace for cross-border payment networks in Africa, has ceased operations because it was unable to secure funding from investors such as Launch Africa and Founders Factory. Zazuu had previously raised approximately $2 million from these types of investors. “We explored every option before making this decision,” the company claimed in a message published on LinkedIn to announce the closing of the business.
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Why was Zazuu established?
Zazuu was established in 2018 by Kay Akinwunmi (CEO), Korede Fanilola (COO), Tosin Ekolie (CTO), and Tola Alade (CDO). In August 2021, the company raised a seed round of $200,000 from Launch Africa and ODBA. One year later, the company successfully raised $2 million from a variety of angel investors, including Tinie Tempah, Jason Njoku, Babs Ogundeyi, ODBA, and HoaQ. Other investors included Launch Africa and Founders Factory Africa.
The cost of transferring money to Africa from Europe is typically approximately nine per cent but can be as high as twenty-two per cent in some circumstances. Africa has the highest cost of remittance services of any continent. After beginning as a straightforward chatbot that informed users of daily FX rates and was available on Facebook and Telegram, Zazuu eventually developed into a full-fledged aggregator that featured more than 17 remittance providers with an emphasis on Africa on its platform before it was shut down.
The concept that a marketplace where clients could choose the most cost-effective choice for remittance may help cut prices by bringing transparency and creating competition was the driving force behind the company’s business model. Akinwunmi mentioned that in March 2022 Zazuu offered the most competitive exchange rate for anyone who wanted to send money to Africa on the platform, which was 1.5%. Additionally, the firm stated that almost one hundred thousand clients had utilised its Search and Compare tool. This service allowed customers to compare costs in order to locate the most advantageous exchange rates for transferring money to Africa.
The reason for the shutdown
According to what Adewunmi said in the month of May 2022, one of the difficulties that Zazuu encountered in its earliest phases was the difficulty of conveying to clients and potential partners what they were attempting to construct. He went on to say that another obstacle Zazuu had to overcome was complying with the licensing regulations, which came with associated expenditures.
As a result of a lack of funding for Africa’s technology sector, Zazuu is the latest in a string of software businesses that have closed their doors this year. By the end of October, African companies have raised a total of less than $2.8 billion so far this year, which is less than half of the $6 billion that was raised in 2017. Another cryptocurrency business, Lazerpay, which ceased operations in April, cited a lack of finance as the reason for its demise. Another South African mobility company, WhereIsMyTransport, said in October that it would be closing its doors because it was unable to secure additional investment.