Futuregrowth invests in Ozow, alongside Tencent, others
The growth in e-commerce has boomed in recent years, with the pandemic spurring even more demand for online shopping. One company that has been successfully riding this wave is Ozow, an online – soon-to-be omni-channel – payment gateway that enables consumers to make instant electronic fund transfers (EFTs) at check-out online.
Futuregrowth Asset Management, via the Futuregrowth Development Equity Fund, took the opportunity to get in on the action when it participated in Ozow’s series B funding round alongside Tencent, Endeavour Catalyst – whose investment committee is chaired by the co-founder of LinkedIn – and Endeavour Harvest. The $48 million raised from the series B funding round provides Ozow with the capital to continue building its consumer-facing brand, launch new products and expand into new regions.
“We were attracted by the prospect of investing in an up-and-coming fintech business that is set on transforming the banking industry. Ozow aligns with Futuregrowth’s purpose of making a positive difference in South Africa through developmental investing,” says Amrish Narrandes, head of unlisted equity at Futuregrowth. The business is run by an ambitious, driven and extremely innovative management team who have previous entrepreneurial experience prior to founding Ozow, he adds.
Clayton Wiggill, M&A and investments manager at Ozow says, “We are delighted to have Futuregrowth join our table as one of the leading investment firms in South Africa. They share our vision that payments are ripe for disruption and that Ozow is well placed to lead this evolution whilst providing digital and financial inclusion to the previously underbanked. We are looking forward to a fruitful relationship with the Futuregrowth team.”
Ozow’s digital payment solution enables consumers to make EFT payments instantly online using a basic bank account. At present, credit cards are the dominant in-person and online form of payment in South Africa, with EFTs a close second, but a large portion of the under-banked population don’t have access to a credit card.
By automating the EFT process, Ozow’s proposition offers huge potential in an e-commerce payment market where manual EFT processes are inefficient, time consuming and prone to human error.
Ozow is also working with government and industry players to roll out a rapid payment programme to create an instant payment ecosystem for the unbanked, using simple identifiers such as phone numbers and email addresses.
For merchants, the payment gateway is compelling because fees charged are affordable and, because the platform is easy to use, merchants can increase their conversion rates and sales. Ozow also offers preferential payment terms for NGOs and small- to medium-sized enterprises (SMEs).
Ozow aspires to become an omni-channel payment gateway and has already automated the manual EFT payment process across e-commerce, point-of-sale, e-billing and peer-to-peer transactions.
Previously known as i-Pay, the company was founded in 2014 by Thomas Pays, Lyle Eckstein and Mitchan Adams, and has gained strong traction since then, achieving double-digit growth in revenue and transaction values since going live in 2016.
The payment company has serviced both SMEs and large enterprises, such as Takealot, FlySAFair, NetFlorist, Uber, Shoprite, and telecommunications companies. The manual EFT market is twice the size of other payment methods, but instant EFTs are still in their relative infancy, making up a mere 0.2% of the total EFT market. This gives Ozow access to a market that has huge upside potential.
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