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When Robinhood raised its $3 million seed round in 2013, it was a couple of months old with huge ambitions of democratizing securities access to the underserved and unserved. Robinhood has since taken the world by storm and grown to serve more than 30 million users with its zero-commission trading.
In the past, we’ve seen such growth trickle down to other regions across the world, inspiring similar businesses. Robinhood is no exception. Several platforms have sprung forth to bring stock trading opportunities in their respective markets. In Nigeria, at least four platforms offer both local and foreign stocks to individuals. Chaka is one such platform. Chaka has announced the close of its $1.5 million pre-seed round to power digital investments for individuals and businesses.
The pre-seed round was led by Breyer Capital, while 4DX Ventures, Golden Palm Investments, Future Africa, Seedstars, and Musha Ventures participated. It’s the second joint deal for 4DX Ventures and Breyer Capital in the space of two weeks, the first in Egyptian social e-commerce platform Taager.
It is a well-known fact that even before Robinhood, the average American actively participated in stock trading. According to a survey by Gallup, about 60% of Americans owned some form of stock in 2000; that number was down to 55% in 2020. This was partly due to the global financial crisis that occurred in 2008.
The crash also affected the Nigerian capital market and because Nigerians lost a lot of money during that period, stock trading is mostly frowned upon by most of the public. Yet for the average Nigerian interested, participating in trading local stocks is hard; and practically impossible for foreign ones.
Tosin Osibodu, while in the U.S., recognised this problem and came back to Nigeria to start Chaka officially launching the company in 2019. According to Osibodu, Chaka wanted to create opportunities for Nigerians to invest in dollar assets and at the same time allow foreigners to invest in Nigerian assets.
“If there’s more demand in the market, over time, we expect there’ll be more supply. If you fast forward over a long period of time, we expect that our local capital markets will continue to grow,” he said to TechCrunch in an interview. “We will provide borderless digital access to multiple solutions, and so it’s not just about Nigerians investing in the market, it’s about making the markets accessible for people locally and globally.”
For the most part, Chaka has executed on one front. The platform Nigerians access to more than 10,000 stocks and ETFs trading on local and foreign capital markets. The CEO maintains that the platform has levelled entry barriers for borderless investments in Nigeria by providing customers with compliant access to the capital market.
“The thing about markets is that they have demand and supply with barriers to entry. We’re committed to lowering those barriers in local markets and by lowering barriers to investing for retail, more people will come to the market. In fact, more people came into the Nigerian stock market through us last year than any other broker. It’s like a demand-supply flywheel,” the CEO added.
Chaka’s local assets are registered with the Nigerian Stock Exchange (NSE) Central Securities Clearing System (CSCS) and regulated by the Securities Exchange Commission of Nigeria (SEC). Dollar assets, on the other hand, are regulated by the US FINRA and the US SEC.
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