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Hey 👋🏽 Sheriff here.

So, Moniepoint just became a unicorn, and I had to dig into their story.

How does a scrappy fintech go from tinkering with software to processing payment volumes twice the size of Ghana’s GDP?

Today, I’m unpacking their playbook - how they went from zero to a billion-dollar valuation.

But first…

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Now… Let’s get into this week’s edition.

In 2015, Tosin Eniolorunda and a small crew of engineers left their nice, safe jobs with an idea.

They’d spent years building card and payments software for banks at Interswitch - Nigeria’s first unicorn.

But Tosin had noticed something - the banks were running on clunky, outdated tech.

They took a leap and started TeamApt - a scrappy consultancy that automated bank processes using software.

Soon, they were serving 90% of Nigerian banks.

But their big success didn’t come from sitting in bank boardrooms.

It came from countertops in shops and kiosks all across Nigeria.

Meet the POS: The ATM’s cooler sibling

Back in 2016, the POS (Point of Sale) machine was becoming popular in Nigeria.

The central bank was pushing for the country to go cashless, and companies like Interswitch built tech that made cards easy to use.

And the POS was how people paid with cards.

They were everywhere - in shops, bars, and supermarkets.

But they had one problem → businesses couldn’t tell who paid them.

They could only see total balances, and this made them clunky to use because

• Tracking inflows was difficult

• And making refunds was impossible

For a small business, this was stressful. And it gave Tosin a different insight.

These devices could do a lot more than just charge cards.

So, Tosin and his band of engineers got to work.

This time, they were going to build simple tools for businesses to collect payments and manage their money - all on a POS.

They called their POS Moniepoint and launched it in 2019.

It was an instant hit.

Later that year, they raised VC after four years of bootstrapping.

The next year, they hit $7 billion a month in payment volumes.

And last year, they processed a massive $182 billion - that’s 50% of Nigeria’s GDP, according to the World Bank.

Two weeks ago, Moniepoint raised $110 million and became Africa’s eighth unicorn.

But its homerun product is only half the story.

The other half is in the businesses it powers.

Small shops, big market

Nigeria’s informal market is huge.

It’s built on small, unregistered businesses that form the backbone of the country’s economy.

It’s the small shop around the corner. The local bar. The fruit and vegetable market. And the barbershop.

The informal market is responsible for 92.7% of all jobs in Nigeria.

But this market is very fragmented and needs a lot of things - payments, credit and even logistics.

Moniepoint is not the first startup to build for Nigeria’s informal market.

It’s not even the first to make a POS product.

But with a different playbook, they came out on top.

The first insight from that playbook is that…

1) Cash is still king 💸

93% of the money circulating through Nigeria’s economy is outside banks.

That’s a whole economy built on cash. It’s fast, simple, and people trust it.

So, instead of pushing for a pure cashless economy like many other startups, Moniepoint leaned in.

It made a POS product that was much more than a payment terminal

In one small terminal, the POS became

• A bank for keeping their money - each POS was tied to a bank account from Moniepoint

• A tool for managing their business, tracking expenses and even getting loans

• A portable ATM, letting these businesses sell their cash to people who wanted to withdraw money

  

While digital payments blew up in Nigeria, it didn’t dethrone cash.

And Moniepoint was eating good on both sides.

It let the businesses get paid digitally and helped them make money off the cash they held.

Then it took a tiny commission off the top.

2) Online wars are won offline

To bring businesses online with digital payments, Moniepoint went deeply offline.

It built a network of ground agents called “Business Relationship Managers”.

These were trusted community members who went into shops and markets to convince them to use Moniepoint.

They also served as local support agents helping them resolve issues.

These “managers” didn’t get a salary though.

Instead, they got a sign-on bonus of ₦8,500 ($5) and a commission off the transactions made.

The more people they signed up, the more money they made.

The result? A massive network of customers spanning the country.

Nigeria has 36 states and 774 local government areas (or counties).

And Moniepoint is active in every one of them.

That kind of ground game is unmatched.

3) Small business is big business

As Moniepoint scaled, they went deeper into serving informal businesses.

They built expense cards.

They helped businesses settle transaction disputes easily.

And even offered working capital loans to keep businesses afloat.

Last year, their loan book hit $70 million.

70% of the businesses they lent to had never gotten bank credit before.

And since they mostly got paid through Moniepoint, paying back was easy.

In 2023, Moneipoint teamed up with the Corporate Affairs Commission (Nigeria’s business registry) to help these informal businesses go formal.

Small businesses can reserve a business name and get it legally approved with the country’s registry right on Moniepoint’s business app.

And when they go formal, there’s a suite of products waiting to help them grow.

On the surface, it looks like Moniepoint is powering stalls - but they’re really powering the Nigerian economy.

What comes after a billion dollars?

From here, there are two ways Moniepoint’s story can go:

1) Deeper into Nigeria

Moniepoint already won the Nigerian market.

At last count, it processed $17 billion every month - on track for $204 billion this year.

That’s more than half of Nigeria’s economy.

But there’s still room for it to go deeper into the Nigerian market.

Nigeria has 39 million small businesses.

With all its success, Moniepoint only has 2 million businesses actively transacting daily.

2) Getting out of Nigeria

Moniepoint is also zooming out and looking at other markets.

Last year, it got approval to acquire Kopo Kopo - a Kenyan business banking startup.

Kopo Kopo is a Moniepoint lookalike, and currently powers 12,500 East African merchants with loans and payments.

If the deal sails through, Moniepoint could try its playbook in East Africa.

And it’s also making global moves.

Last year, it moved its HQ to London and went on a hiring spree.

What it has in store? We’d have to wait and see.

Moniepoint isn’t just another unicorn - it’s a rare breed.

It cracked the code in a market often called “too messy”.

It bridged the gap between cash and digital payments.

And did it all while being profitable, all thanks to a unique playbook that it’s now looking to use in other markets.

Did you learn anything from this playbook about informal markets?

Let me know here.

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