Introduction

Scale, a South African startup specializing in brand and project management services for fintechs, has raised $700,000 in pre-seed funding to accelerate its expansion into new markets. The funding round was led by 54 Collective, a sector-agnostic venture capital firm, and First Circle Capital, a fintech-focused investor, with participation from Sunny Side Venture Partners and a group of angel investors.

Supporting Fintechs in New Markets

Founded just a year ago by Barbara Woollams and Miranda Perumal, a former director at Visa, Scale provides essential brand and project management services for fintech companies looking to enter new markets or build new product verticals. The startup also facilitates partnerships with payment infrastructure providers, helping fintechs navigate the complexities of launching in new regions.

With the fresh funding, Scale plans to extend its reach to Kenya, Zambia, and Cote d’Ivoire, focusing on expanding Scale Execute, its customizable card-issuing product developed in partnership with Visa and Mastercard. This strategic move aims to position Scale as a key player in the African fintech ecosystem.

A Strategic Bet Amid Challenges in Card Payments

The expansion comes at a time when many African fintechs are reevaluating their involvement in card services due to rising operational costs and challenges like chargeback fraud. Processing payments through multi-layered partnerships often results in high costs, squeezing profit margins for fintechs.

The issue of chargeback fraud has been a particular pain point for the industry. In 2022, fintechs such as Eversend and Busha had to scale back their card operations after Union54, a Zambian fintech offering virtual card-issuing services, discontinued its card services due to a 600% increase in fraud attempts.

However, expanding into Cote d’Ivoire presents a promising opportunity for Scale. The country leads West Africa in card issuance, with Ivorian banks issuing about 2.4 million cards to customers in 2022. This growing adoption of card payments underscores the potential for Scale to capture market share in this fast-evolving sector.

Scale's Vision for Growth in African Fintech

Backed by strong investors and key partnerships with industry giants like Visa and Mastercard, Scale is committed to addressing the pain points in enabling card payments across Africa. CEO Miranda Perumal emphasized the company’s focus on building trust with African businesses and delivering world-class service. “With the backing of our esteemed investors, we are well-positioned to expedite our ecosystem engagement and solve major challenges in enabling card rails,” Perumal said.

While cash remains a dominant payment method in many African countries, Scale is betting on the rise of digital payments and card issuance as the continent’s fintech market continues to grow. The African fintech sector is projected to reach $230 billion by 2025, and by 2029, card issuance platforms are expected to handle 35% of all card transactions on the continent.

Competing in a Growing Sector

As Scale expands, it will face competition from players like Onafriq in the B2B card issuance space. However, the company’s innovative approach, led by its strong female leadership and sector expertise, gives it a competitive edge.

Hetal Patel, Chief Investment Officer at 54 Collective, expressed confidence in Scale’s ability to drive meaningful impact. “The Scale team, led by a rockstar female founder with deep sector expertise and a proven bias toward action, truly excites us. We look forward to seeing Scale become a critical enabler for fintechs across Africa,” Patel said.