Roughly 400 million people live in Anglophone East Africa, with half under 25. Nearly half of this population do not have a bank account or mobile money despite being one of the fastest-growing regions globally. Those who do, risk being affected by inflation. For example, the average East African currency is believed to devalue about 20% every year.
Sudan’s YC-backed fintech startup, Bloom, is helping its customers to have a hedge against this rising devaluation. The company offers a “high-yield” savings account, free FX, and adjacent digital banking services so customers can save in a stable currency, the dollar, preserving their wealth, and spend as they go in local currencies.
Ahmed Ismail, Youcef Oudjidane, Khalid Keenan, and Abdigani Diriye co-founded the company in late 2021. Oudjidane was a managing partner at Class 5 Global, a San Francisco venture company that has financed startups like Careem and Meliuz.
Ismail, a Sudanese by birth, teamed up with Oudjidane, an Algerian by birth, to hunt for more investments in Africa. After studying several models pioneered by digital-first banks such as TymeBank, Kuda, and FairMoney, they saw a significant need for developing a savings product that addresses what they believe is the most pressing issue facing African consumers: inflation and currency devaluation.
Bloom is Helping people preserve their money in a stable currency
The company’s CEO Ahmed Ismail disclosed that — “The problem that we think is most pervasive is consumers’ inability to protect the value of their wealth. So we decided to build a business that does exactly that, that helps people save money in the stable currency and spend as they go in local currencies.”
So, to develop the project, the company had to bring CTO Keenan and CPO Diriye onboard, who also have roots in eastern Africa. The four graduated from Russell Group universities and have worked at Amazon, Meta, IBM, Uber, Goldman Sachs, and Barclays.
According to Ismail, research and analysis proved that East Africa (preferably Sudan) was the ideal marketplace for the team to begin their journey. However, the northeastern country doesn’t appear to have a thriving, let alone an active tech ecosystem. After 30 years of international sanctions, it only received its first foreign investment in 2021, when Alsoug, one of the country’s leading fintech and e-commerce companies, raised $5M funding.
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“We think the right way to build a business is to go after the largest opportunity first. So Sudan is interesting for three reasons. It’s a huge economy, and I believed in 2015, it was Africa’s fifth-largest economy,” he said.
Buttressing on why Bloom started from Sudan, Ismail explained — “We know it has had some economic challenges since then after the secession of South Sudan. Yet, purchasing power and consumer spending is still amongst the highest on the continent per capita. And most importantly, it’s probably Africa’s most under-invested country from a VC funding perspective, and the most important dynamic I think about Sudan is it’s a friendly place to do business.”
About Bloom
Bloom — not to be mistaken for the US investing app for teenagers — is a fintech company that offers fee-free accounts for users to save in dollars and buy and spend in Sudanese pounds. It also provides local and dollar cards and a feature to receive remittance free of charge from several countries globally, mainly from where most of the Sudanese diaspora resides.
Bloom works with the Export Development Bank, a partner bank that handles deposits. And you can think of Bloom as the technology, customer acquisition, user experience and marketing partner to the bank.
“People don’t hold Sudanese pounds; they typically either buy dollarised assets like real estate, or they buy land or physical U.S. dollars,” Ismail said. “What we’re offering people is the ability to tokenise that. And in small amounts of money, you’ll be able to hold value, as opposed to needing to save up huge amounts to buy an apartment or a plot of land.”
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Ismail disclosed that more than 15,000 people have signed up on Bloom’s waitlist. Bloom will begin to onboard them this month while touting its <$1 CPS marketing efforts. For now, users can only receive money; however, the company is working on letting them run outflows later when it builds up sufficient inflows and volumes to create liquidity.
Bloom is Expanding Across Anglo East Africa
Last Tuesday, Bloom announced that it is now part of Y Combinator’s Winter 2022 startup batch after receiving early admittance in July 2021. The company, which just launched this March from stealth, raised a pre-seed in September from Global Founders Capital, Goodwater Capital and some football players, including Blaise Matuidi.
The Sudanese startup, based in Dubai, plans to expand across the Anglo East African region, including Ethiopia, Kenya, Rwanda, Tanzania, and Zambia, and funding from an upcoming seed round will help see to that. Fintechs offering comparable services, such as Fingo, another YC-backed business, and Koa and Finclusion, may create competition in some sectors. Competition might spur with fintech providing similar services in some of these markets, such as Fingo, another YC-backed company in Kenya, as well as Koa and Finclusion.
“We are from the region. We understand the nuances in our markets and can navigate what may appear to be an ambiguous landscape. We are also comfortable — perhaps even thrive — working in markets that are volatile. We are underwiring the next decade of growth in Africa,” Bloom’s Cofounder Abdigani Diriye said of the investment.