Carbon is preaching transparency in a country where such is uncommon as the fintech startup has posted on its website financials audited by KPMG. This is coming four months after the company obtained a credit rating as a pre-IPO venture.
“Typically, in the local market, we have not seen a lot of voluntary transparency or the availability of data,” said Lexi Novitske — a Lagos-based VC investor at Acuity Venture Partners.
“Most startups are concerned such disclosure could expose losses, give market intel to competitors or attract unwanted attention from regulators. It could also lead to negative negotiation leverage if partners saw that they were making good returns.”
Carbon, which recently rebranded its OneFi holding company and PayLater product titles into one name, plans to continue releasing its financial results on an annual basis, co-founder and CEO Chijioke Dozie told TechCrunch,
This may not be totally unheard of in other global tech markets, but for startups in Africa’s big tech hubs — such as Nigeria — it’s a rarity.
One of the first glimpses into startup financials in Nigeria came when Jumia shareholder Rocket Internet went public in 2014, which required it to include limited Jumia data in its annual report.
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The accompanying prospectus to Jumia’s listing this year on the New York Stock Exchange offered the most expansive financial data to date on a tech venture operating in Africa.
So why’d Carbon go to the trouble of putting its pre-public accounting out in the open for anyone to see?
Clients and recruiting were two reasons. “From a customer perspective, we are trying to get people to trust us with their financial services…so they can see this is the institution I’m dealing with and this is their financial position,” explained Carbon’s Dozie.
Carbon has evolved from its original focus as an online lender to offer a broader array of mobile-based financial services — including payments, investment products, credit reports and business banking services. In March, the company acquired Nigerian payment solutions company Amplify for an undisclosed amount.
By stats offered by Briter Bridges and a 2018 WeeTracker survey, fintech now receives the bulk of VC capital and deal-flow to African startups, many of which are attempting to reach the continent’s large unbanked and underbanked populations.
Carbon fits into that category and its CEO believes being upfront about the startup’s financial position will attract top talent. “From a recruitment perspective, we want recruits to know we have good prospects — that this is a company that’s doing well and wants to keep doing well,” said Dozie.
That impression is buoyed by Carbon’s initial results, which were fairly positive for a Series A-stage startup. The company had revenues in 2018 of $10 million, according to its online annual report, and turned a profit of around $500,000.
It’s helped with recruiting interest, according to Dozie, who said he’d marked an increase in candidates inquiring about open positions since the results were posted.