South African payments gateway Ozow recently completed a successful Series B round of funding, raising $48 million led by Chinese tech giant Tencent. Such success is a testament to the growing prominence of the South African tech scene, and the continued attractiveness of fintech investment opportunities.
In this article, we will take a closer look at the Series B funding, the terms of the investment, and the significance of Tencent’s involvement.
Overview of Ozow
Ozow is an African technology company that provides secure and seamless payment solutions for consumers and businesses. The firm was founded in 2020 by an experienced team of industry veterans, including entrepreneur Jon Foster-Pedley, technologist Michael Manyika, serial entrepreneurs Jacob Grobler and Morris Mthombeni.
The company offers various payment solutions to simplify payments for merchants, consumers, large corporates and government entities such as its e-Wallet offering and its anti-fraud technology called Eazyscore. This cutting edge technology allows Ozow to provide a secure payment experience for merchants. In addition, it is fully compliant with the Payment Association of South Africa (PASA) regulation.
Ozow has seen tremendous growth since its founding in 2020 through the launch of their eWallet offering and strategic partnerships with several large national retailers such as Pick n Pay including Wesbank. The success of Ozow has been further demonstrated by its recent Series B funding round which totalled $48 million led by Tencent Investment. This new capital will be used towards expanding their market reach within South Africa while also looking at potential expansion opportunities into other continents across the globe.
Overview of Tencent
Tencent is a leading global provider of internet services and digital content. Founded in 1998, it became one of China’s most influential companies. The firm offers innovative online and offline services, such as QQ, Weixin/WeChat, Tencent Video, and Tencent Games. As of 2020, Tencent operates three major business groups: FinTech, Social Networking Services (SNS), and Online Media & Entertainment.
The firm has been listed on the Hong Kong Stock Exchange (SEHK) since 2004, under the ticker 00700. Its primary listing is also on the Shenzhen Stock Exchange (SZSE). The company’s shares are widely held by various institutional investors in Asia and internationally. Major shareholders include CICC Capital LLC and Naspers Ltd.
Tencent has made substantial investments in numerous companies, ranging from startups to unicorns to major financial players such as PayPal and JD Finance. It also actively participates in incubation activities for new startups through its investment arm, Tencent Investment Management Co., Ltd.. In addition to acting as a full-service venture capital firm, Tencent has invested majorly in technology innovations such as artificial intelligence and blockchain technology solutions.
South African payments gateway Ozow raises $48M Series B led by Tencent
South African payments gateway Ozow has recently announced a successful raise of $48M in Series B funding, led by Tencent. This marks a major milestone for the company, as it looks to continue its expansion and development in the fintech industry.
This funding round brings the total amount Ozow has raised to $70M, making it one of the largest investments in a South African fintech startup.
Amount raised
Ozow, a South African fintech platform, announced today that it has raised $48 million in Series B funding. Led by Tencent, this round brings Ozow’s total capital raised to date to $60 million. This funding will be used to invest further in tech and product, and broaden its footprint locally and internationally. Additional investors include Tiger Global Management and AB InBev’s venture arm ZX Ventures, including existing investors Novastar Ventures and Capitec Bank.
This Series B extends Ozow’s leading position as a real-time EFT payment solutions provider in South Africa to enable even more people to pay over the internet with greater convenience. It follows Ozow announcing its Series A funding of $8 million in March 2020, followed by the acquisition of DOODrive.
Investors involved
OzoW recently announced a $48 million investment round led by Tencent and joined by Naspers, Futuregrowth, and previous investors of Ozow including Grindstone and Capitec Bank.
The funding from Tencent, China’s largest internet company, demonstrates the value of Ozow’s world-class technology platform. It also acknowledges its potential to revolutionise payments for businesses and consumers in South Africa.
Futuregrowth’s participation means the company has one of South Africa’s leading asset management firms as a major stakeholder. In addition, having institutional investment allows Ozow to secure long-term capital for further expansion opportunities.
The Series B round brings the total amount invested into Ozow to $84 million. Additional investments from Nuveen Solutions will be used to speed up product innovations and expansion plans in other African countries.
Capeitec Bank, who previously invested in 2016 with a $15 million debt facility granted further implies that they are satisfied with the impact Ozow has had on their ecosystem over the last few years and plan to continue investing in their success going forward.
Use of funds
As part of the Series B funding, Ozow plans to use part of the proceeds to continue its drive towards acquisition. It will also focus on expanding its product offering and using these funds to double-down on its multi-channel, cross-border payment capability and expand geographically.
The funds will also help facilitate investments in technology and research and development, enabling Ozow’s next phase of scaling. Further, the money received will attract and retain top international talent to join its ranks. The combination of skill sets on board is a critical factor for success in any business, especially for the eCommerce & payments sector.
Ozow CEO Thomas Pays said, “This latest raised capital marks a significant milestone for Ozow, allowing it to invest more heavily into our strategic partnerships in Africa that are creating great experiences for consumers at both online and physical retail stores across South Africa –which is essential in fuelling technology access to help create better financial inclusion” He added: “It also further equips us with the financial boost required to expand our offering within SA where we plan on entering exciting synergistic verticals beyond just payments, such as leveraging our online identity verification capabilities.”
Benefits of Tencent’s Investment
South African payments gateway Ozow has announced a $48M Series B funding round led by Tencent, a leading technology and entertainment group in China. This investment is a major milestone for Ozow. The company will be able to leverage Tencent’s expertise to accelerate Ozow’s growth and help expand its payments gateway services to a broader customer base.
Let’s explore some of the benefits that Tencent’s investment brings.
Expansion of Ozow’s services
The South African technology company Ozow announced a major capital raise of $48 million as part of their Series B funding. Leading the round was international technology giant, Tencent, which is also a majority shareholder in Ozow. The proceeds from this capital raise will allow Ozow to expand their services to new regions and deepen existing partnerships with banks and merchants.
With the help of this injection of funding, Ozow will be able to expand its services into new territories beyond South Africa by developing a sprawling network across Africa and various parts of Asia. This move will ensure that consumers have multiple avenues for payment solutions from trusted sources all around the globe. In addition, the additional financial resources will allow Ozow to build out its bank integrations with important financial institutions to spread innovative solutions like instant EFT and value-added features like SMS & status notifications.
Tencent’s support for Ozow indicates that digital payments are becoming more commonplace across diverse markets such as Africa and other emerging economies worldwide. Through Tencent’s investment, Ozow is now poised to become a major player in global payments and bring cutting-edge products and services to existing markets while continuing expansion elsewhere. As Tencent continues to demonstrate its commitment to innovation through investment into companies like Ozow, they will remain at the forefront of digital payments solutions well into the future.
Access to Tencent’s resources
Capital injection will enable Ozow to drive organic expansion into new markets and launch additional payment services. In addition, with Tencent as a strategic partner, Ozow will benefit from access to Tencent’s expertise in AI technology, mobile payments, fintech and gaming, among other areas.
In addition, being part of the Tencent family allows Ozow to tap into networks critical to its growth. This includes connecting with Tencent’s wide range of global partners and drawing upon its business-to-business capabilities for added insights in the fintech sector. It also opens a potential cross-border collaboration by exploring opportunities offered in other regions.
Furthermore, Tencent will provide valuable guidance and proof-of-concept services for Ozow’s development plans—by sharing generous research and technological resources with Ozow’s team. Through this allyship between Tencent and Ozow, both companies strive to best serve their shared customer base and accelerate growth across Africa.
Strengthening of Ozow’s presence in the African market
This investment from Tencent into Ozow illustrates the Chinese giant’s confidence in the South African payments business. Through this strategic partnership, Tencent can extend its presence in the African market and explore other opportunities.
Ozow’s existing partner banks, located primarily in South Africa, will now benefit from being part of a larger, more established technology group. This would open up additional growth paths for Ozow and further expedite their scale-up process.
On top of that, Tencent’s iconic WeChat Pay brand can now be used by Ozow’s customers to access payment services across South Africa. From a user engagement perspective, this could help to drive user acquisition for both parties significantly as more people become aware of their offerings.
Furthermore, with Tencent’s expertise in machine learning and artificial intelligence (AI), Ozow can enhance its technological capabilities. In particular, this would allow Ozow to serve previously unbanked population segments by utilising innovative AI-driven algorithms for onboarding customers onto their platform seamlessly and quickly.
Impact of the Investment
The investment of $48M in South African payment gateway Ozow, led by telecommunications giant Tencent, is a huge investment to the technology and payments landscape in South Africa. With such a substantial investment now made, the impact on Ozow and the country’s payments industry is expected to be wide-reaching.
In this article we will explore some of the potential impacts of this investment.
Increased competition in the payments industry
The new funding round of $48M signifies that the South African payments startup, Ozow, is seeing increased growth potential in the payments industry. This influx of capital will enable Ozow to strengthen its existing offering and increase competition against major players in the payments space.
The influx of capital will allow Ozow to increase their investment in technology development and expand their international reach. As they continue to invest in growth, they will likely focus on attracting more customers and merchants across Africa. Other investments may include rolling out additional payment methods, such as direct debit or loyalty programs. In addition, Ozow aims to gain wider market share for their payment services solutions in various African countries by focusing on customer acquisition and merchant retention.
The Series B funding also indicates that more venture capitalists view the African fintech market as a viable investment opportunity given the high potential for growth in this region. As a result, other investors will likely follow Tencent’s lead and join the race for gaining a foothold in the African payments landscape.
With more investments in the payments industry, we can expect increased competition among startups and incumbents looking to capitalise on innovations and business models. This increased competition is good news for customers who can look forward to improved services with lower transaction costs as these companies vie for their attention.
Increased adoption of digital payments
The funding round, led by Chinese tech giant Tencent, showcases the potential of digital payments. As a result, Ozow is well positioned to increase the adoption of digital payments through this latest investment. The investment rounds off an impressive year for All Payments Africas’s Paytech business, raising over R890 million in the last 18 months from equity investors and debt financing from lenders.
The fresh funds will help Ozow expand into new markets and invest in product development and growth to further accelerate the penetration of its services across the continent. It has already seen strong demand for its services throughout Africa with more than 8 million registered customers, processing more than 50-million transactions annually worth more than R15 billion.
Ozow’s investments seek to benefit Africa’s economy by driving financial inclusion on an unprecedented level – allowing millions of new users access to convenient, secure payment methods they can trust. This will increase consumer confidence in digital payments in Africa where traditional methods are still widely used – leading to greater economic emancipation across the continent.
Potential for more investment in the African market
The announcement that Ozow, a South African mobile payments company, raised $48M in Series B funding led by Tencent begs the question of what potential this type of investment has for the African market. Mobile and digital payments are quickly becoming one of the most popular online transaction methods, allowing customers to pay for goods and services without relying on banks or other physical forms of payment.
The investment into Ozow could have major implications for businesses and services across Africa, suggesting that more opportunities may be available to invest in innovative payment solutions. Even with the influx of venture capital, African startups still face numerous financial barriers such as limited access to debt financing and restricted venture capital investments. Therefore, an injection of venture capital could provide these companies with extra resources to continue innovating and pushing forward even more advanced technologies within their payment ecosystems.
Moreover, with investment from Tencent comes experience within some of China’s top banking technologies and expertise in audience acquisition and expansion into new markets. This provides further evidence that increased investments made into African-based technologies can help grow local economies and create jobs in different industries around the continent – potentially stimulating economic growth through resilience to global market trends.
With all this additional investment in digital payment solutions like those offered by Ozow, Africa stands to benefit greatly from this influx into digital payment technology. From creating more digital payment solutions and opportunities for merchants to engage customers with customer-focused platforms designed for success – this potential new wave of investments has exciting possibilities for allowing prosperity within Africa’s digital landscape where consumers can feel confident engaging socially responsible platforms when making online purchases safely.
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