The news:
- Nigerian digital bank for small businesses, Brass, has been acquired by an investment group led by Paystack. PiggyVest, Ventures Platform, P1 Ventures, and angel investors, Olumide Soyombo and Oo Nwoye complete the group.
- This acquisition will see the company's co-founders, Sola Akindolu and Emmanuel Okeke, exit the business.
- This acquisition comes a few months after the company disabled withdrawals for customers, blaming a funding freeze.
The company's customers and employees, however, will not be affected by this acquisition, as the product will remain the same.
According to Brass CEO, Akindolu, "Brass will continue to build and support its customers and grow with a new leadership team, as the founding leadership team will leave to pursue other opportunities."
"Each member of the investment group brings several years' worth of experience financing and building reliable financial service products, and together with a new infusion of capital, we're excited for Brass' next stage of growth," a statement from Paystack read.
The Paystack-led acquisition comes three months after Brass was unable to give customers access to their deposits, blaming a funding freeze and the economic situation of the country. Before then, it had raised more than $2 million from investors.
The company was able to receive a fresh capital injection in March 2024, allowing it to process withdrawals for affected businesses.
The acquisition allows Paystack and PiggyVest to gain a foothold in a business that complements their operations. While PiggyVest has traditionally focused on consumer finance, its acquisition of Pocket (formerly Abeg) saw it delve into the social payments segment. Paystack, on the other hand, has built payment tools for businesses across Africa and potentially provides a customer pipeline for Brass.
Brass is expected to get new leadership as its founders exit, but no announcement has been made to that effect. In the meantime, its new leadership has the task of rebuilding customer trust after a trying few months for the four-year-old startup.
Per TechCabal, the company reportedly has ₦2 billion in debt on its balance sheet, which its leadership cannot account for. While the acquisition means new business for Paystack and Piggytech, there could be more liabilities to take on than assets.
