Why We Invested: Zone is leveraging blockchain to redesign Africa’s payment rails
When and how did TLcom connect with Obi, Wale and the team at Zone? What made this encounter memorable?
We first met Obi and Wale, co-founders of Zone, about five years ago when they were fundraising for AppZone, their previous company. While we were impressed by their deep understanding of the fintech industry in Nigeria, we ultimately decided not to invest. AppZone delivered tremendous value to its bank and financial services clients by building core banking software and payment solutions to meet their needs; however, we preferred to invest in a product-centric business model that could create a venture-scale company. We kept in close touch with the team. When they decided to build Zone as a standalone proposition from AppZone, we were thrilled to co-lead the Seed round with Flourish Ventures.
What inspired Obi and Wale to build Zone? What specific problem is the company tackling?
Years spent collaborating with banks and payment companies across Africa while building AppZone led the co-founders to think more and more about solving the critical challenge: the quality of the underlying payments processing rails. Outdated legacy switching infrastructure built with a centralised architecture currently delivers a payment experience that’s inherently vulnerable to failure and produces unsatisfactory transaction success rates. The market is critically in need of innovation. Zone is building a groundbreaking solution: a first-of-its-kind private blockchain-based switch to leverage the strengths of web3 for regulated and formal payment flows. The company’s switching and processing technology will deliver two core propositions for its financial institution user base: near-perfect transaction success rates and automatic reconciliations.
Tell us more about the scope of the market opportunity Zone is addressing.
In 2023, NIBSS reported that digital payments transactions in Nigeria surpassed the N600 trillion mark (around $375 billion at today’s exchange rates), and volumes grew by over 55%. With growth expected to compound at 30-40% per annum in the medium term, driven by population growth, wider financial services access and broader payment types, the long-term trend is exponential. Zone can potentially capture maximum value from this substantial addressable market opportunity because its technology transcends payment types and use cases. The numbers are significant in Nigeria alone, but it’s exciting that Zone’s ambition extends to the entire continent, multiplying the size of the opportunity. In the long term, the company will provide pan-continental payment rails that enable banks and fintechs to connect seamlessly and confidently to deliver a friction-free payments experience to their end-users, both in-market and cross-border, incorporating today’s fiat currencies and the future’s digital currencies.
What distinguishes Zone from its competitors?
We’re excited about three things. First, Zone’s groundbreaking, private and regulated blockchain-based network architecture where each player (a bank or fintech) acts as its own node, facilitating direct connections to every other node and eliminating the possibility of a single point of network failure to improve transaction success rates massively. Second, by implementing a centralised and indisputable ledger, Zone can deliver a single source of truth for all transactions on its network, streamlining and automating the dispute resolution processes that currently cost banks millions of dollars and customers days of lost time. Third, Zone has a world-class team with deep experience building scalable financial services software in Nigeria and Africa. This expertise positions Zone to deliver a cutting-edge solution to a multinational and pan-African ecosystem.
What drove TLcom to invest?
Aside from the clear technical advantage Zone’s software delivers compared to incumbents, Wale and Obi have been building in Africa’s fintech space for nearly two decades, working together for a significant portion of that time. As venture capital investors, we rarely meet founders with their depth of experience and track record of successfully working together over a long time. We’re excited to work with Zone to build Africa’s next fintech unicorn. This investment reiterates TLcom’s commitment to our strategy of supporting Africa's top founders in tackling the continent’s most complex problems by investing at the Seed and Series A stages.
Olayiwola Osoba (VP, Marketing), Omonuwa Olulano (Chief Human Resource Officer), Wale Onawunmi (Co-founder & CTO), Obi Emetarom (Co-founder & CEO), Tim Souter (Chief Financial Officer), Francis Ogbuka (VP, Sales)