In early 2022, a fintech startup called Bloom made history by becoming the first Sudanese company accepted into Y Combinator. The startup, now known as Elevate, was founded by individuals with impressive track records at major companies like Amazon, Meta, IBM, and Goldman Sachs. Elevate’s mission is crucial: helping people in Sudan and other emerging markets protect and grow their wealth. This article explores Elevate’s journey, challenges, and impact on the fintech landscape in emerging markets.
Elevate started as Bloom, a name inspired by the founders’ vision to help wealth flourish even in the most challenging economic climates. Their acceptance into Y Combinator was a significant milestone, marking the first time a Sudanese startup joined the prestigious accelerator. The founding team’s diverse experience provided a strong foundation for tackling the financial issues faced by their target audience.
Elevate’s initial goal was to build a product that could help users hedge against the devaluation of their home currencies. They aimed to offer high-yield savings accounts, free foreign exchange (FX) services, and digital banking solutions all anchored in the stability of the US dollar. The primary focus was on East and North Africa, including countries like Sudan, Ethiopia, Uganda, and Tanzania. The economic environment in these regions, characterized by high inflation and frequent currency devaluations, made traditional banking solutions inadequate.
The path to success for Elevate was fraught with challenges. Shortly after their initial product launch, Sudan experienced a major political upheaval. A coupled with the deposition and reinstatement of Prime Minister Abdalla Hamdok, creates a volatile environment for any business. Additionally, personal reasons led two of the founders, Abdigani Diriye and Ahmed Ismail, to step down, leaving the remaining founders to navigate the turbulence.
Despite these obstacles, Elevate remained committed to its mission. The company underwent a significant pivot, rebranding from Bloom to Elevate. This pivot included a shift in focus towards a specific user demographic: freelancers and remote workers. These individuals often faced significant challenges in receiving and managing payments from international clients due to high fees and limited access to USD accounts.
Inflation and currency devaluation are persistent issues in many African countries, contributing to high numbers of unbanked individuals. In 2022-2023, sub-Saharan Africa experienced typical currency devaluations of around 8%, with some countries seeing depreciations exceeding 40%. These economic conditions make traditional banking less viable and emphasize the need for innovative solutions like those offered by Elevate.
Elevate’s solution involved offering U.S.-based USD accounts, which provided security and lower fees compared to local alternatives. By partnering with ACH payment networks and ensuring FDIC insurance, Elevate could offer a product that not only facilitated easy access to earnings for remote workers but also ensured the safety and reliability of their funds.
As political instability persisted in Ethiopia and Sudan, Elevate broadened its focus to include other emerging markets with high numbers of freelancers. The new target markets included Egypt, Pakistan, the Philippines, and Bangladesh. These countries were chosen based on their large populations of remote workers who frequently face payment challenges similar to those in East Africa.
Elevate’s current offerings include USD savings accounts, low-cost remittance services, and competitive FX transfers. These services are designed to help remote workers save more of their earnings by minimizing fees and providing favorable exchange rates, similar to services provided by companies like Wise but with additional benefits tailored to their specific user base.
While companies like Payoneer and Wise also serve the needs of remote workers, Elevate differentiates itself with FDIC insurance and significantly lower FX rates. Payoneer, for instance, does not offer FDIC insurance and charges higher FX rates in certain markets. Elevate’s approach ensures more secure and cost-effective solutions for its users.
Since its rebranding and pivot, Elevate has seen impressive growth. The platform has signed up over 150,000 users across its new markets, thanks in part to strategic partnerships with freelancer platforms like Upwork and Deel. These collaborations have been crucial for customer acquisition, allowing Elevate to reach its target audience more effectively.
Elevate generates revenue through a combination of net interest income, FX fees, and card interchange fees. The company’s lean operational model and strategic financial management have brought it close to profitability. Having spent around $2 million since its inception, Elevate has managed to achieve significant milestones without excessive expenditure.
Elevate recently raised a new $5 million pre-Series A round, with 80% of the funding coming from debt provided by Dubai-based investment fund Negma Group. This round will support the company’s expansion into new markets, including Indonesia, South Africa, and Turkey. Earlier, Elevate secured $6.5 million in seed funding from notable investors like YC, Visa, Global Founders Capital, and prominent angels.
Looking ahead, Elevate plans to introduce savings and investment products to further enhance its value proposition. The fintech is also considering leveraging the Visa network for future products, such as prepaid and local cards, despite currently working with Mastercard. These initiatives aim to solidify Elevate’s position as a leading fintech solution in emerging markets.
Elevate’s journey from Bloom to its current state as a pioneering fintech in emerging markets is a testament to resilience and innovation. By addressing the unique financial challenges faced by freelancers and remote workers, Elevate is not only empowering individuals but also contributing to the economic stability of the regions it serves. The company’s future looks promising as it continues to expand and evolve its product offerings.
