GHANA – SecondSTAX, a platform that connects institutional investors like pension funds and broker-dealers with international markets, has raised US$1.6 million in pre-seed funding from private investors and VC firms like LoftyInc Capital, Orbit54, and STEMeIn.
According to co-founder and CEO Eugene Tawiah, this money will be used to expand SecondSTAX’s reach internationally by the end of the year. It also intends to grow its team and bolster its technology by creating more functions requested by customers.
“We expect that in the next 18 to 24 months, the revenue coming from these clients starts to become incrementally impactful in terms of being able to shift us from startup mode to an actual running concept generating meaningful revenue,” said the chief executive.
SecondSTAX, created by Eugene Tawiah and Duke Lartey in 2020, allows investors to trade debt and equities assets on several different African bond and stock markets.
The B2B capital markets infrastructure platform claims to do the same, helping investment firms outside Africa access the continent’s rising and frontier economies.
The fintech claims that investment businesses using its platform may hedge against the risk of losing money on foreign currency fluctuations by holding assets in many currencies.
Tawiah suggests that to understand how SecondSTAX operates, you must visualise the platform that his firm provides as a layer in a sequence of concentric rings.
Institutional investors from developed markets and those from Africa, respectively, who are interested in investing in a variety of stocks and bonds that are accessible on African exchanges make up the first and second circles, respectively.
SecondSTAX is the third circle, and it serves as a passageway to the exchanges, which are located in the fourth circle.
“You have exchanges where the securities are traded in each country. Nigeria is a silo, same as Ghana, Kenya, South Africa, etc. SecondSTAX is effectively the aggregation of these exchanges across the continent,” he said.
“It’s that one platform that links all of them together. And then now as an institutional investor like Goldman Sachs in New York, Bank of America in the U.K., or a boutique firm out in Singapore, they have access to this platform to touch each of these exchanges.”
The CEO has stated that once the fintech has its infrastructure in place, it would think about expanding its capabilities to enable B2C investment management applications.
Then, using white-labelled applications published by traditional brokers and powered by SecondSTAX or third-party wealth tech apps like Bamboo, HashApp, Robinhood, and Hisa, retail investors inside and outside of Africa will have access to and be able to trade cross-border stocks and bonds.
The company is looking at the financial markets of Egypt, Morocco, South Africa, Morocco, and Kenya in Africa. When it does start, however, it will do so in the first two, allowing for cross-border transactions inside both capital markets via its sponsored broker agreements and facilitating the routing of market orders for all equities across the Ghanaian and Kenyan exchanges.