It’s not every day you hear that what started as an AI chatbot in 2017 has grown to a VC-backed company with a $150 million valuation. But that is the story of Nomba, a Nigerian fintech that started as Kudi.AI, a chatbot that helped people process online payments. This week, Nomba announced that it raised a $30 million pre-Series B round.

From a chatbot to a company

Adeyinka Adewale, the co-founder and CEO of Nomba, told TechCabal that Nomba started as an AI chatbot because a large part of the market wasn’t tech-savvy. “Not everyone was tech savvy enough to download and onboard apps to make payments online,” Adewale stated. So he teamed up with his co-founder Pelumi Aboluwarin, to deploy a simple solution to help the layman navigate the world of digital payments. “We launched in the first week of 2017, and at the time, because a lot of big tech companies were launching natural language processing engines, it was a good time to build an assistant to walk the everyday person through online payments,” he said.

According to Adewale, by July 2017, the company had decided to build a platform where merchants could use human interaction to process transactions, instead of artificial intelligence. He explained that after graduating from the Y-Combinator Winter 2017 batch in March, the next hurdle was to scale and solve their two main problems. 

“Our first problem was that our customers needed a form of human assistance to help them perform transactions in case anything went wrong. Another problem we had at the time was that card payment was not the cheapest way to perform transactions online,” he shared. In solving these problems, Nomba launched an agency banking solution in 2018. 

Cash flow is the lifeblood of any business

Nomba currently has three offerings for small, medium, and large businesses. Adewale told TechCabal that Nomba decided to segment its customers based on their cash flow because, “if you don’t segment your products across those verticals, you will end up building something that will work for someone but might not necessarily work well for the other person.” 

He added that Nomba is using its customer data to build tailored solutions that will help businesses grow. He said, “because we are in that phase of helping businesses accept revenue (transactions from customer’s payments), we can then help businesses make sense of that data so they can build a better business.”

In a statement shared with TechCabal, Nomba stated that it will use its latest funding to build custom solutions for different businesses. “Restaurants will be able to access menus, manage inventory, receive payments, and perform other business functions all from the same hardware,” an excerpt from the statement reads.

When asked how Nomba differentiates itself from other companies in the same line of business like Orda and Vendease, Adewale told TechCabal that “it’s all about partnerships”. “It’s about what products we can partner on because you can’t do everything. There are already partnerships in the pipeline,” he added. 

Raising in a global downturn

The global tech industry is currently going through a funding downturn as global interest rates continue to rise. African startups are finding it difficult to raise money and funding in the region declined by 57% in the first quarter of 2023. Adewale acknowledged the current funding downturn but shared that Nomba was able to navigate the current downturn by maintaining relationships with its investors before the fundraising process.

“The way it worked for us was that we built relationships with investors, told them what we were building, and checked in constantly with them. I have been speaking to some of the investors in the round for a long time, not necessarily fundraising, just catching up and telling them where the business is at, even when we don’t need money,” he said.

According to Adewale, maintaining these relationships helped shorten the whole fundraising process, which took less than six months. “Immediately we found our lead investor, it was a fast process because our existing investors were excited to follow on their investments.” 

He also told TechCabal that Nomba selected its new investors based on their experiences: “Base10 has invested in a couple of platforms like Nubank in Brazil. They also have a business banking product that we have so much respect for. We also have Shopify, which has essentially built merchant solutions for the life of the business, so there’s a lot of expertise and learning for us there. Helios has invested in telecoms and banking in Nigeria, so they are seasoned investors that understand the space.”

What does business banking mean for Nomba?

According to Adewale, “there’s nothing called business banking as a vanilla product.” (A vanilla product is the most basic and simple version of a product). He explained that business banking for Nomba means creating solutions for businesses depending on the demand from these businesses. 

“What we do is pick the segments that we care about and see what the core payment and banking functions are that these businesses care about, and then we build out those features. It doesn’t mean that our products would be a fit for everybody, just for the verticals that we came out with,” Adewale told TechCabal.

According to Adewale, Nomba’s business model is based on the fees it charges for each transaction. “Our revenue model is tied to fees on transactions. We are not a lender, so our revenue model is based on transactions processed on our platform,” he said. 

A valuation of $150 million 

According to YCombinator data, Nomba is currently valued at $150 million. While YCombinator does not include how they arrived at this figure, this valuation makes Nomba one of the most valuable tech startups in Nigeria. Adewale refused to focus on the valuation, saying that the figure was not a public figure and not important to Nomba. 

However, he did attribute Nomba’s valuation to capital efficiency. “We don’t necessarily believe that the more money you raise, the more success you have. For us, it’s how you do the most work with the least amount of money you need.” 

Luci Fonseca, Partner at Base10, echoed Adewale’s sentiments in his statement: “Nomba’s track record of innovation and capital efficiency makes it one of the most exciting startups in Africa.”

Booming valuations, YC’s spotlighting, and a big raise in a venture downturn all give credence to the ecosystem applause that Nomba is getting now. But for the startup founders, the focus is on the customers, and how they can help these businesses thrive with end-to-end software solutions—from payments and agency banking to inventory and reconciliation services, one African business at a time. 

Get the best African tech newsletters in your inbox