Union54, a Zambian fintech startup, backed by Y Combinator, has closed a $3 million seed round led by Tiger Global. The funding round was joined by Runa Capital, Ace & Company, Todd & Rahul Angel Fund and Vibe VC. The investment is coming only two months after graduating from Y Combinator’s summer batch.
The Zambian fintech also received funds from angel investors such as Babs Ogundeyi, the CEO of Nigerian neobank Kuda; Risana Zitha, managing director of Renaissance Capital; and Gbenga Ajayi, former director of SMB Growth at Wise.
Founded in 2020 by Perseus Mlambo and Alessandra Martini, Union54 is a debit card issuing API for fintech and corporates. The startup allows any software company to issue debit cards to their customers without needing any bank or credit card processor. It is a spinoff from their previous company, Zazu, a challenger bank they launched six years ago.
At Zazu, the founders found it difficult and time-consuming to issue cards to its customers. While working on the problem, they identified the skewed incentives when interacting with card issuers. And they launched Union54 not only to solve that problem for themselves but other fintechs.
Its partners include African unicorn Flutterwave and newer companies such as Payday and Plumter (cross-border fintechs) and crypto exchange platform Bitmama.
Union54 plans to use this investment to ramp up recruitment across engineering, product, marketing, and sales teams. The Zambian company will also use the funds to expand its regional customer base.
Commenting Mlambo said: “Not only are we allowing fintechs to go to market faster than any bank or card issuer could ever dream of doing, but we’re also really showing that our incentives are very much aligned. We only make money when they do and that’s why we’re happy to give a guarantee with that interchange.”
For the purpose of the funding, Mlambo said: “The funding will help us find the best of African talent, people who want to work on big problems. The investment helps us to be able to go to them and say, ‘hey, we’re a well-funded company, we’ve got customers using us, we’re earning revenue and this is going to be one of the most important companies to come out of Africa.”
Speaking about the investment for Runa Capital, general partner Andre Bliznyuk said the company is excited to support Union54’s efforts to “supercharge the African fintech ecosystem by enabling their customers to easily launch new card-based products and deliver tangible value to the consumers.”
