Loyalty, deals and rewards services are a rarity in most African markets. The unit economy and other factors such as currency instability make it difficult to get such companies off the ground in the region.
Still, ThankUCash, a platform launched in 2018 by Connected Analytics, has managed to thrive, proving that not everything is bleak in the deals, coupons, and rewards. And to that end, the startup, which announced an undisclosed seven-figure seed last year, has finally closed the round at $5.3 million..
VC firms 500 Global and Unicorn Growth Capital jointly led the Lagos-based company’s round-up. It saw participation from US-based accelerator Expert Dojo, Predictive VC, SaaS Growth Ventures, Betatron Venture Group, Accelerex Holdings. Individual investors such as Andrew Dell, former CEO of HSBC and Craig Fenton of Google UK also participated.
The company plans to use the investment to expand within its home market of Nigeria – where it operates in Lagos, Port Harcourt and Abuja – and beyond into Ghana and Kenya. It also wants to improve its product offering and add more staff.
For years, store-like businesses in Nigeria such as supermarkets and restaurants have operated offline and rely on accounting and mastermind knowledge to record the activities of their customers in their stores. This made it difficult to refund customers and loyalty points.
Online platforms like ThankUCash offer these merchants the opportunity to delve into rewards and help them maintain loyalty and increase sales.
CEO Simeon Ononobi started ThankUCash with Suraj Supekar, Madonna Ononobi and Harshal Gandole acting as Chief Technical Officer, Chief Operating Officer and Senior Vice President of Engineering, respectively.
The multi-merchant rewards platform (meaning customers can jump from one merchant to another to earn loyalty points in another) allows customers to earn rewards when they shop from thousands of merchants listed on the app .
The company raised a $320,000 pre-seed after attracting the attention of accelerators such as 500 Startups, Google Launchpad and other local investors such as Microtraction and Ventures Platform.
So far, ThankUCash said it has registered more than 600,000 users and installed more than 1,000 stores on its platform. It also claims to have processed over $80 million in transaction volume.
As a company matured, Ononobi and his team want to take on a more complicated task: building infrastructure for companies looking to offer related services.
“We create solutions that help SMEs succeed while increasing consumer purchasing power and opportunity. We want to build infrastructure for rewards, loyalty, deals, buy now, pay later, cashback,” he said during a phone call with BestFitnessBands.
“Cashback was our low-hanging fruit and an entry point. We’re still going into deals, coupons, gift cards, buy now, pay later, anything that helps the business grow, but at the same time gives consumers more buying options.”
Ononobi, a serial entrepreneur who previously built a payments company as well as apps for Nigerian banks and the government, thinks ThankUCash will do the same as Flutterwave and Paystack did with payments in Africa.
Some companies, such as banks, have launched cashback programs through user debit cards in the past. But most of them were generally inefficient, from setting up to collecting and redeeming points, and Ononobi states that their inefficiencies amount to no technical support. ThankUCash sees a goldmine to provide plugins that banks and fintechs can leverage to offer cashback and rewards.
The bit about buy now, pay later is vague now, as there are only a handful of prominent BNPL services in Africa. However, the company appears to be positioning itself for the imminent proliferation of such services, spurred by similar events worldwide, where buy now, pay later services have seen a surge due to pandemic-driven consumer behavior.
“The technology is such that we have our machines in the shops. So when customers apply for loans, we generate a code for it, customers enter it into the POS machine and the merchant is credited straight away. The code can only: are used in the chosen store and only for the requested loan amount, so that the customer buys directly from the merchants at the end of the day, “explained the founder, who also said that his startup would venture to buy now, pay later services to to offer itself in the future.
ThankUCash’s consumer-facing platform remains operational. But to kick-start the infrastructure game, it has signed a partnership with payment company Interswitch to get its merchants on board.
The company, which in the process of making integrations with payment gateways, said there are a number of banking partnerships in the pipeline.
In terms of how ThankUCash makes money, merchants pay the company a fee for each purchase made in their stores. For example, ThankUCash gets a 1.5% commission for every customer who takes it to the store to redeem a 5% cash back item. The Lagos-based company is also taking commissions on deals and plans to charge “heavy onboarding fees” to companies that want to use its APIs for its services, including buy now and pay later.
ThankUCash has perfected one offering: the cashback product that helps merchants gain more walk-in customers. It improves the deals category, allowing sellers to sell products quickly (by hiring ex-managers of DealDey, a Nigerian defunct deals company). And while the buy, pay and pay later infrastructure is currently being built (which will give businesses the chance to sell products whether customers have money or not), ThankUCash plans to add a fourth offering soon: a wire transfer product where merchants can sell straight away to the diaspora.
The chief executive does not provide any details about this product. In the meantime, are investors, who have doubled down knowing about this type of information, are excited on “the ongoing evolution of the company,” a comment from Amit Bhatti, the director of co-lead investor 500 Global.
“Since going through 500 Global’s accelerator in 2019, we have impressed by Simeon and the ThankUCash team’s progress in implementing a rewards system that works for Nigerian consumers regardless of cash or credit or online or offline payment,” said the director. “It’s also a win-win for businesses and banks as TUC gives them the tools and data they need to grow.”
The team of 45 has hired Aaron Tindiseega to lead the expansion into Kenya and the East Africa region. The Ugandan professional has experience working for banks and technology companies such as Uber, Standard Chartered Bank and Stanbic IBTC. For the expansion to Ghana, Kiki Anku, who has worked at Apple and a number of startups, will lead the way.