When Robinhood raised its $3 million seed round in 2013, it was just a few months old, reaching the underserved and the underserved with big ambitions to democratize securities. Robinhood has since taken the world by storm and has grown to serve over 30 million users with its zero-commission trading.
In the past, we have seen this type of growth in other regions around the world, inspiring similar businesses. Robinhood is no exception. many Platforms have come up to bring stock trading opportunities in their respective markets. In Nigeria, at least four platforms offer both local and foreign stock to individuals.. Chaka is one such platform. Today, it is announcing the closure of its $1.5 million pre-seed round to promote digital investments for individuals and businesses.
pre-seed round was led by Breyer Capital, while 4DX Ventures, Golden Palm Investments, Future Africa, Seedstars and Musha Ventures participated. This is the second joint deal for 4DX Ventures and Breyer Capital in a span of two weeks, the first in Egyptian social e-commerce platform Tagger.
It is a well-known fact that even before Robinhood, the average American actively participated in stock trading. According to a Gallup poll, about 60% of Americans owned some sort of stock in 2000; In 2020 this number dropped to 55%. This was partly due to the global financial crisis that occurred in 2008.
The crash also affected the Nigerian capital market and because Nigerians lost a lot of money during that period, stock trading is Mostly despised by most of the public. Yet for the average Nigerian Desiroushandjob participants Trading local stocks is difficult; and practically impossible for foreigners.
Tosin Osibodu, while living in the US, recognized the problem and came back to Nigeria to start Chalk officially Launching the company in 2019. According to Osibodu, chalk Wanted Creating opportunities for Nigerians to invest in dollar assets as well as allowing foreigners to invest in Nigerian property.
“If there is more demand in the market, then over time, we expect there will be more supply. If you go bullish over the long term, we expect our local capital markets to continue to grow,” he told ClearTips in an interview. “We will provide borderless digital access Different solution, and so it’s not In college About Nigerians investing in the market, it’s about making the markets accessible to the masses at the local level and globally. “
For the most part, Chaka has executed on one front. Platform Nigerians gain access to over 10,000 stocks and ETFs trading in local and foreign capital markets. The CEO says that the platform has leveled the entry barriers for borderless investments in Nigeria by giving clients access to the capital markets.
“The thing about markets is that they have demand and supply with barriers to entry. We are committed to reducing those barriers in local markets and by reducing barriers to investment in retail, more people will come to the market. In fact, last year more people came to the Nigerian stock market through us than any other broker. it’s like a demand supply Flywheel,” said the CEO.
Chaka’s local estate are registered Nigerian Stock Exchange (NSE) with the Central Securities Clearing System (CSCS) and regulated by the Securities Exchange Commission (SEC) of Nigeria. dollar assets, On the other handhandjob is controlled by US FINRA and US SEC.
In April this year, digital investment platform were caught SEC of Nigeria . in the crosshairs with. The regulator declared their activities illegal and warned capital market operators working with them to withdraw from providing brokerage services for foreign securities. Unlike Robinhood which offers online brokerage, Nigerian investment platforms do not. For example, Chaka partners with Citi Investment Capital in Nigeria and DriveWealth LLC in the US to issue stocks and securities..
According to Nigeria’s SEC, the activities of these platforms were to be covered as part of efforts to protect the investing public. Although Osibodu claims that Chaka always incorporated the SEC since the company was formed In 2019, it didn’t look like last December when The regulator selected the two-year-old company to “sell and advertise stock”.
The incident exemplified the regulator’s all-out attack on other digital investment platforms, giving Chaka enough time to negotiate and finish in about half a year. And last month, Chaka acquired the first fintech license issued by the SEC, making it the only investment platform to operate as a digital sub-broker.
“When we launched, we kept the SEC in the loop. But now, in the last six months, we have engaged with them, shown them our business models, benefits, markets. We are now proud to have the SEC’s first fintech license. We believe that the most important thing is to have clarity in the market and understand the rules expected To to be registered. and we are thrilled To break new ground and clear whatever is needed to be able to offer the services in the market,” he added..
With the new license, the company can faster Pay attention to what’s next. Osibodu says the license expands the scope of what Chaka can achieve. they claim that Chaka can power Different Apart from being a broker and digital sub-broker, they provide access to various digital investment offerings.
In addition to Chaka’s traditional stock trading app for retail investors, it also offers Chaka SDK which allows asset managers and financial institutions to offer digital investments and Chaka for business For direct trading onboarding and trading tools for institutional investors.
Commenting on the investment, Jim Breyer of Breyer Capital said, “We are proud to combine efforts with a company that is leveling the investment field for Nigerians. [and Africans at large]. We believe in the value Chaka provides through our digital tools, and we look forward to playing our part in supporting Chaka’s team on their mission to drive borderless investment in Africa. ”
Osibodu says the company will use its pre-seed investment to expand footprint in Ghana and other West African markets. Improving its technology and services and securing partnerships with leading financial institutions, including top financial institutions, is also a priority.
“As we progress, I think something we’re doing In college a lot of attention is paid to how we do continuously Reduce access barriers, and we are proud of the initiatives we have brought and are to come. Check out this space for more partnerships, even with the top institutions in our markets“