Ghanaian fintech SecondStax, which lets investors access capital markets outside their country, raises $1.6M • TechCrunch

African capital markets exist in silos, as the continent’s various exchanges are often inaccessible to investors outside their home countries. For example, a South African investor looking to diversify their portfolio outside of the Johannesburg Stock Exchange may find it difficult to invest in the Nigerian Stock Exchange.

This not only limits investors’ access to high-growth securities, but also limits access to capital, which has grown exponentially over the past two years. According to reports, major regional exchanges in Africa have raised over $80 billion in equity capital markets and $240 billion in debt capital markets.

While local retail apps such as Bamboo and Chaka offer US and foreign stocks to individual consumers, they are as limited as traditional brokers in helping consumers buy stocks and bonds in various capital markets in Africa. However, there is a startup that sees the challenge and aims to tackle it with a cross-border, multi-asset order routing and market data portal: Ghanaian fintech SecondStax (Secondary Securities Trading and Aggregate Exchange).

is announcing today the launch of a platform that enables broker-dealers, wealth managers, pension funds and institutional investors to access markets outside their home countries. To bolster its efforts, it has raised $1.6 million in pre-seed funding from private investors and venture capital firms, including LoftyInc Capital and STEMeIn.

SecondStax Founder and CEO, Eugene Tauyah, brings a wealth of experience to running such an ambitious project. In addition to more than a decade at Goldman Sachs, he has worked in a variety of consulting and technology roles for firms in the financial services and capital markets.

In the year In 2018, a remarkable event turned the journey towards building SecondSTAX. That was the year MTN Ghana, a local telecom operator, went public after raising about $237 million in the West African country. “I was talking to the heads of the trading desks and I felt that at the time of the MTN IPO, even if one had a lot of money to invest, if you were not Accra, there was no way to enter or buy into the IPO. ” Tawiyah told TechCrunch. “And the concept I had in mind was, if I stayed in Lagos, Nairobi or anywhere else outside of Accra, how could I get these supplies and trade them?”

Tavia co-founded the company with Duke Lartey. SecondSTAX offers debt and equity securities on multiple African bond and stock exchanges. At the same time, he said the B2B Capital Markets Infrastructure Platform would help investment companies looking to invest in developing and frontier economies outside of Africa. Investment firms on board the platform can hold assets in multiple currencies, reducing single currency risk and reducing the volatility of their returns, both in Africa and elsewhere, the fintech said.

Breaking down how SecondStacks works, Tavia says to think of the company’s platform as layers in a series of circles. The first and second circles are institutional investors from developed markets and those in Africa interested in investing in various stocks and bonds on African exchanges respectively. SecondSTAX is the third circle and serves as a gateway to the fourth circle, exchanges.

“In every country you have exchanges where securities are traded. Nigeria is a silo, similar to Ghana, Kenya and South Africa, etc. SecondSTAX is an effective integration of these exchanges across the continent. That is the platform that connects them all. And now as an institutional investor like Goldman Sachs in New York, the United Whether it’s a US bank in the UK or a boutique firm in Singapore, you can access this platform to tap into each of these exchanges.

Secondstax group

According to the CEO, once the fintech infrastructure is up and running, B2C will consider extending its capabilities to support investment management applications. Retail investors in Africa and outside Africa can invest in cross-border stocks and bonds through brick and mortar brokers and through SecondSTAX or third-party wealth management applications such as Bamboo, Hashapp, Robinhood and Hisa.

“We do not identify brokers; They can be brick and mortar or startups. Our potential customer base is much wider than one type of institution; As long as the broker has a digital platform, you can access African exchanges using our infrastructure.

In the year Launched in 2020, the fintech is looking at capital markets in Ghana, Kenya, Nigeria, South Africa, Morocco and Egypt. However, when it launches, it will start in the first two, which will allow for the routing of market orders for all stocks on the Ghana and Kenya exchanges and through a partnership of brokers that will sponsor cross-border transactions in both capital markets.

Tawiyah said the funding will see SecondStax expand to more countries by the end of the year and deal with the related tasks, especially regulatory and licensing issues. In addition, there are plans to increase the number of employees and strengthen the technology by developing additional features that customers want. “Over the next 18 to 24 months, we expect the revenue from these customers to start making more impact in terms of enabling meaningful revenue from start-up mode to a real-life concept,” the CEO added.

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