When Robinhood raised its $ 3 million funding round in 2013 a few months ago, it had huge ambitions to democratize access to titles for underserved and unserved people. Robinhood has since taken the world by storm and has grown to serve over 30 million users with its commission-free trading.
In the past, we’ve seen such growth spill over to other parts of the world, inspiring similar businesses. Robinhood is no exception. Many The platforms have sprung up to provide equity trading opportunities in their respective markets. In Nigeria, at least four platforms offer local and foreign stocks to individuals. Chaka is one of those platforms. Today, it announces the closure of its $ 1.5 million pre-seed round to fuel digital investments for individuals and businesses.
The pre-seeding tour was led by Breyer Capital, while 4DX Ventures, Golden Palm Investments, Future Africa, Seedstars and Musha Ventures participated. This is the second joint agreement for 4DX Ventures and Breyer Capital in the space of two weeks, the first in Egyptian social e-commerce platform Taager.
It is a well-known fact that even before Robinhood, the average American was actively involved in stock trading. According to a Gallup survey, about 60% of Americans owned some form of stock in 2000; that number had fallen to 55% by 2020. This is partly due to the global financial crisis that occurred in 2008.
The crash has also affected the Nigerian capital market and because Nigerians lost a lot of money during this period, stock transactions are most disapproved by most of the public. Yet for the average Nigerian interested, participant it is difficult to negotiate local stocks; and practically impossible for foreigners.
A dozen Osibodu, while in the United States, recognized this problem and returned to Nigeria to launch Chaka officially company launch in 2019. According to Osibodu, Chaka research create opportunities for Nigerians to invest in foreign assets and at the same time allow foreigners to invest in Nigerian assets.
“If there is more demand in the market, over time we would expect there to be more supply. If you move quickly over a long period of time, we expect our local capital markets to continue to grow, ”he told TechCrunch in an interview.. “We will provide borderless digital access to many solutions, and it is therefore not fair about Nigerians investing in the market, it’s about making the markets accessible to people locally and globally.
For the most part, Chaka performed on one front. Nigerian platform accesses over 10,000 stocks and ETFs traded on local and foreign capital markets. The CEO maintains that the platform has leveled the barriers to entry for borderless investments in Nigeria by providing clients with compliant access to the capital market.
“The problem with markets is that they have a demand and a supply with barriers to entry. We are committed to lowering these barriers in local markets and by lowering investment barriers for retail, more people will come to the market. In fact, more people entered the Nigerian stock market through us last year than any other broker. It’s like a demand-supply flywheel, ”added the CEO.
Chaka’s local assets are registered with the Nigerian Stock Exchange (NSE) Central Securities Clearing System (CSCS) and regulated by the Securities Exchange Commission of Nigeria (SEC). Assets in dollars, on the other hand, are regulated by the US FINRA and the US SEC.
In April of this year, digital investment platforms have been taken in line with the Nigerian SEC. The regulator declared their activities illegal and warned capital market operators working with them to desist from providing brokerage services for foreign securities. Unlike Robinhood which offers online brokerage services, Nigerian investment platforms do not. Chaka, for example, partners with Citi Investment Capital in Nigeria and DriveWealth LLC in the United States to issue stocks and securities..
The key, according to the Nigerian SEC, was to ensure that the activities of these platforms fell under its jurisdiction as part of its efforts to protect the investing public. Although Osibodu claims that Chaka had always engaged the SEC since the company was formed in 2019, it didn’t seem so last December when the regulator distinguished the company created two years ago for “the sale and advertisement of shares”.
The event created the priority for the regulator’s all-out attack on other digital investment platforms, giving Chaka enough time to initiate and conclude discussions in about six months. And last month, Chaka acquired the first fintech license issued by the SEC, making it the only investment platform operating as a digital sub-broker.
“When we launched, we kept SEC informed. But now, for the last six months, we’ve engaged with them, shown them our business models, the benefits, the markets. We are now proud to have SEC’s first fintech license. We believe that the most important thing is that the market is clear and understands the regulations obligatory at be registered. And we are delighted to have innovated and clarified what it takes to be able to offer services to the market ”, he declared.
With the new license, the company can quickly focus on what lies ahead. Osibodu says the license expands the scope of what Chaka can achieve. He affirms that Chaka can power many brokers and provide access to various digital investment offers in addition to being a digital sub-broker.
Besides Chaka’s traditional stock trading app for retail investors, it also offers SDK Chaka which enables asset managers and financial institutions to offer digital investments and Chaka for business for direct trade integration and trading tools for institutional investors.
Jim breyer de Breyer Capital, commenting on the investment, said, “We are proud to join our efforts with a company that is leveling the playing field for Nigerians when it comes to investing. [and Africans at large]. We are convinced of the value Chaka brings through its digital tools, and we look forward to playing our part in supporting the Chaka team in their mission to generate borderless investments in Africa.
Osibodu says the company will use its pre-seed investment to expand its presence in Ghana and other West African markets. Improving its technology and services and establishing partnerships with major financial institutions, including those of apex, is also a priority.
“As we go along, I think something that we are fair very focused on how can we continually reduce barriers to access and we are proud of the initiatives we have launched and will come. Watch this space for more partnerships, even with umbrella institutions in our markets as well.. “