Smart-addressing startup, OkHi has announced a seed extension round of $1.5 million after a seed round of the same amount in 2020. Following the close of this seed round, the startup is set to focus on onboarding more institutions as it works towards having one million verified addresses in its database by 2022.
This round had new and existing investors such as Founders Factory Africa, Betatron, Interswitch, Chapel Hill Denham, and Flutterwave executives; other investors include EXFI (a syndicate of ex-Google employees) and Flutterwave Founder, Olugbenga Agboola.
Since the 1960s, when much of Africa gained independence, the urbanisation rate has grown rapidly. At the time of gaining independence, 80% of the population lived in rural areas. However, that figure currently stands at 50% and keeps growing annually.
This growth has been accompanied by the challenge of a proper addressing system for the continent. According to the United Nations, about 400 million of the 4 billion people who have no addresses live in Africa.
The lack of a proper addressing system presents governments, service providers, and residents with numerous problems. For example, how is an eCommerce business supposed to deliver an order to the correct location without a reliable method of verifying a customer’s address?
Unsurprisingly, this challenge results in businesses losing tons of money while lives are lost because essential services providers can't reach their locations.
In Nigeria, anyone opening a bank account has to submit documentation for address verification. For most people, this is a utility bill. A human agent deployed by the bank then steps out to verify the address on the utility bill supplied by the prospective customer. Apparently, this method is inefficient and unreliable as some people may not have a valid utility bill and would have to use utility bills that do not belong to them.
While travelling across Africa in 2014, Timbo Drayson, an ex-Googler, discovered that Google Maps did not work perfectly in Africa. With this realisation, he built OkHi in Kenya to provide address verification services for businesses, including eCommerce and ride-hailing startups.
While there have been solutions such as Google’s “Plus Codes,” OkHi’s solution is different because it focuses on addressing people and not locations.
Join over 3,000 founders and investors
Verifying one million addresses
In December 2020, the startup launched in Nigeria after reportedly verifying over 300,000 addresses in Kenya. This launch also saw it partner with fintech giant, Interswitch, which doubles as an investor. Drayson explained the reason for this move on a call with Techpoint Africa.
“We showed some amazing success in Kenya where we were focused on solving the addressing problem for delivery businesses, and we showed great traction. However, the goal and the vision of OkHi has always remained the same, which is to enable half the world who don’t have a physical address to be included.
"A great use case for that is address verification and being able to use your address to help onboard financial services. What we found when we tried to approach this in Kenya was that it wasn’t the best place to basically build and go to market with address verification.”
Unlike Nigeria, Kenya has a vast mobile money market dominated by Safaricom and M-Pesa. Consequently, fintech startups cannot generate as much traction as their Nigerian counterparts. A meeting with Interswitch was also a significant factor in the startup’s decision to move to Nigeria.
With broad coverage of the Nigerian market, Interswitch offers the startup the opportunity to tap into its vast network of financial institutions. In October 2021, OkHi announced a partnership with Quickteller that enables its customers to verify their addresses digitally.
“What’s great about Interswitch is essentially that they already serve our target user base, which is both consumers that need to have verified addresses and the banks and fintechs that need to use it,” Drayson stated.
In addition to Quickteller, OkHi is running a pilot program with Stanbic IBTC Bank — a Nigerian commercial bank — that enables the bank’s customers to verify their addresses digitally. Based on this partnership, Drayson noted that in addition to being more accurate, OkHi’s solution is four times faster than human agents and can be done at half the cost.
“Right now, we have a very rich pipeline of customers, both banks and fintechs that are currently integrating or going live in pilot. Our focus is just to execute on that and make sure that by 2022, we have about a million people using OkHi and verifying their addresses with us.”
In addition to providing users with a digitally verifiable address, the startup’s solution can notify businesses when a user changes their address. To do this, it makes use of data from their smartphone.
Such technology could create privacy concerns for users, and Drayson revealed that it allows users to opt out of using the solution whenever they like. In addition, they also adhere to the guidelines stipulated by the Nigeria Data Protection Regulation (NDPR).
Breaking down OkHi’s business model
Address verification can be broken down into three major categories: collecting an accurate address, verifying the address, and delivering to the address.
OkHi has three products — OkCollect, OkVerify, and OkGo — covering these functions. OkCollect uses a photo and GPS to verify addresses; OkVerify uses data from a customer’s phone, while OkGo serves as a Google Maps of sorts, enabling anyone to navigate OkHi addresses.
While customers can use their OkHi addresses for free, OkHi charges businesses ₦500 (~$1) every time they verify a customer’s address using OkHi. Although other startups provide verification services in Nigeria, most focus on document and identity verification.
“While there are a number of identity verification players who do document and biometric verification, for example, Smile Identity, most of them are more potential partners than competitors because while they offer full digital KYC solutions to businesses, they do not provide digital address verification. Therefore, there's an opportunity for us to power their address verification digitally,” Drayson told Techpoint Africa.
Building as pioneers
Building a business comes with unique challenges, and Drayson shares that most of their challenges come with playing in a new space with no blueprint to follow. Consequently, they have had to convince investors and customers alike of the merits of their solution.
“As a new business and technology that the world has never seen before, we have had to work hard to earn the trust of our early adopters, who are the pioneers taking our solution to market.
“While we have raised over $4m in total to date, and of course, there is still a lot of learning along the way; ultimately, we’re inventing a new category of business here. It’s an untrodden path with no proof points anywhere in the world, so it’s just been perseverance to close the investors we have today, who I’m thankful to for their money and advice.”
While the focus is currently on financial institutions, there are plans to start offering services to other sectors such as food delivery, ride-hailing, and eCommerce in 2022. Having tried and succeeded in Kenya, the startup would be in familiar territory if that were to happen.