Two months after securing bridge financing to address working capital challenges, Nigerian business banking startup Brass has been acquired by a consortium of investors led by payment giant Paystack.
Other investors in the deal include PiggyVest, Ventures Platform, and P1 Ventures.
The acquisition culminates discussions that likely began in early 2024. Ventures Platform, a venture capital firm, facilitated these conversations, recognizing the need for experienced operators to be part of the strategic alliance.
“We’re excited to act as new stewards for Brass’ mission: to enable entrepreneurship for Africans, making it more frictionless and successful,” the investors stated in an email to TechCabal.
Brass cofounders and executives, Sola Akindolu (CEO) and Emmanuel Okeke (CTO), along with Head of Product Tolulope Saba, will be departing the company.
A new leadership team, yet to be disclosed, will take over their roles. All other Brass employees will retain their positions, and there will be no changes for customers, with the product remaining largely the same. The investors have committed to further investment in product and service improvements.
This acquisition ends months of uncertainty for Brass following delays in processing customer withdrawals that began in October 2023. These delays continued, raising liquidity concerns and rumors of a potential shutdown.
The fintech community rallied around Brass, fearing that the closure of a deposit-taking fintech could trigger a bank run on other fintechs. Discussions about an acquisition gained momentum, with Moniepoint, Paystack, and Flutterwave initially linked to these talks.
During the acquisition discussions, Brass sought debt financing to remain operational. An early investor, who declined to participate in the bridge round, mentioned that Brass aimed to raise $300,000 to $500,000 in convertible debt but withheld financial information during the fundraising effort. The exact amount raised remains unclear.
The new owners will assume Brass’s assets and liabilities, some of which still have significant uncertainties. Sources familiar with Brass’s finances claim there was a ₦2 billion gap in the balance sheet, with company leadership unable to account for the expenditure.
“Like many businesses, Brass faced headwinds within the last few months given the difficult business environment,” the investors commented on these liabilities. “With a healthy investment of new capital, Brass is in an incredible position to deliver a world-class financial operations stack for businesses in Africa.”
The acquisition by well-trusted and larger fintech firms is expected to stabilize the situation, calming fears within the fintech ecosystem and ensuring the continued provision of banking services to Brass’s customers.
