Africa's blockchain and crypto space is receiving a much-needed venture boost during a tough time for startups, some of which have retreated from specific markets or completely shut down due to issues like harsh regulatory environment, macros or downright mismanagement.

The boost involves Yellow Card, the U.S.-founded crypto platform launched in Nigeria in 2019, which has since become the continent’s most-funded cryptocurrency exchange. The company confirmed to TechCrunch that it has raised $33 million in Series C investment led by decade-old venture firm Blockchain Capital, whose bets include Coinbase, Kraken, OpenSea, and, more recently, Worldcoin. This brings Yellow Card’s total funding to at least $88 million.

Blockchain Capital’s buy-in to Yellow Card comes as the crypto platform, which initially offered retail customers access to crypto, USDT, USDC, and PYUSD in 20 African countries using local currencies, is doubling down on its business customers, a shift it started during its $40 million Series B fundraise two years ago. (Yellow Card was valued at $200 million in that round; Maurice, without disclosing specifics, says the crypto platform's current valuation is "a significant bump from the Series B.")

“The big shift for us has been our focus on working predominantly with businesses now,” co-founder and CEO Chris Maurice told TechCrunch. “When we started, we targeted the B2C market to serve retail customers. However, we realized that the real users who benefit the most from this technology are businesses.”

Yellow Card served retail customers for the first couple of years after its launch. However, the pivot came when the company, which reached 1 million customers in 2021, according to Maurice, began to notice how incredibly costly it was to handle retail users on the platform. While any crypto customer, regardless of size, must go through sanction screening, KYC, and chain analysis screening, when it came down to volumes, the margins were too thin to make the business sustainable with small retail users. On the other hand, small to large businesses were moving more significant volumes and paying higher gas fees.

As a result, Yellow Card has raised its minimum transaction amounts, a deliberate measure to reduce its broad retail base and grow its appeal to businesses using the platform to manage treasury and access stablecoins.

“Usage of our platform didn’t change — it was more about our shift in targeting and positioning,” answered Maurice when asked if Yellow Card’s description of itself from a cryptocurrency exchange platform to a licensed stablecoin on/off ramp was a result of a change in how customers used the platform. “We’re now more aligned with what our customers, particularly businesses, use us for, which is to manage treasury and access stablecoins. That’s what led to the change in messaging.”

Move over B2C, businesses are the new target

Today, Yellow Card works with about 30,000 businesses across Africa and internationally, helping them with payments and treasury management, primarily through stablecoins.

At first glance, Yellow Card’s focus on businesses might seem to deviate from its original plan to make crypto accessible to the masses. However, Maurice argues that the eight-year-old company is still steered in that direction but is going about it differently.

First, he points out that an individual and a small business are not mutually exclusive in Africa; an example is an individual owning a small kiosk. Hence why Yellow Card’s customer base, despite the slight pivot, still ranges from a trader selling imported shoes to some of the continent’s largest corporations, and everyone in between. “The way business and personal use blend together on the continent creates a very different dynamic, making our approach relevant for both groups,” said the CEO.

Second, the company believes that serving businesses means individuals could benefit more from the technology than they necessarily do from directly interacting with it.

For instance, by using Yellow Card for treasury management, companies that import food, pharmaceuticals, and consumer goods can make essential items more affordable and accessible, benefiting the broader population, even if individuals aren’t directly engaging with crypto. In other words, the average person gains more from cheaper goods and services — made possible by businesses using Yellow Card — than from using the technology themselves.

While Sub-Saharan Africa lags behind the rest of the world in crypto volume (accounting for under 3% of the total transactions performed between July 2023 and 2024), the region has more practical and compelling use cases for crypto than the West. Nigeria, for instance, has the second highest crypto adoption globally; Ethiopia, Kenya and South Africa are in the top 30, according to a recent report by Chainalysis'.

Stablecoins, particularly, have become the center of utility in Africa’s crypto economy. What’s the play? Most African countries have highly volatile local currencies and limited access to the U.S. dollar. So stablecoins, pegged to the dollar, such as USDT and USDC, offer business and retail customers a way to store value by hedging against inflation and currency devaluation and facilitating international payments and cross-border trade.

Stablecoins utility driving adoption

Maurice says the utility of stablecoins and demand for its technology from businesses moving larger sums has contributed to Yellow Card’s transaction volumes surging from $1.7 billion early last year to over $3 billion. As a result, the company's revenue has increased sevenfold since January 2023, now "well into eight figures."

“What's majorly driving adoption for us is utility. Stablecoins are useful. People need them,” said the CEO. “They solve problems for people and businesses. People are adopting this technology because they need it. This is not a speculation use case. It's a utility use case."

Yellow Card has two main products: the core on-and-off-ramp and the API suite, which Maurice, on the call, playfully terms "Africa-as-a-service." The API suite integrates Africa’s banking and mobile money infrastructure, makes it accessible to global companies like Coinbase and Block, and allows them to on-and-off-ramp their customers on the continent using Yellow Card’s rails.

No doubt, Yellow Card’s recent financing validates the progress of stablecoins in Africa and its practicality globally. The company will now look to tap more into the opportunities the technology provides by improving its flagship product and API (which has a widget built on top of it.)

“The future of payments lies in fast, affordable rails for everyone, powered by open networks,” said Aleks Larsen, General Partner at Blockchain Capital. “We couldn’t be more excited to back Yellow Card as they bring Africa on-chain with stablecoins.”

Yellow Card, which self-describes itself as the largest and first licensed stablecoin on/off ramp platform in Africa, said Polychain Capital, Block, Inc., Winklevoss Capital, Third Prime Ventures, Castle Island Ventures, Galaxy Ventures, Blockchain Coinvestors, and Hutt Capital also invested in the Series C round.

It added that the funding will also allow it to develop new products, strengthen its team and systems, and continue to lead engagement with regulators across the continent.

Regulation is the bane of crypto platforms’ existence globally. Companies like Binance and Coinbase are facing lawsuits for allegedly offering unregistered securities in the U.S. Meanwhile, crypto remains heavily restricted in certain countries, including China, with continued crackdowns on mining and exchanges.

Separately, the recent debacle between Binance and Nigeria — the country has held one of the crypto platform’s executives, Tigran Gambaryan, for eight months over allegations that Binance was undermining its local currency — is one reason crypto platforms need to keep talking with regulators.

With strict and fuzzy rules governing how people use crypto in different markets, Maurice argues that African regulators have been much more innovative and have a better understanding of the technology than other regions. He cites the recent licensing guidelines in Nigeria, frameworks in countries like South Africa, Botswana, Tanzania, and Zambia, and the introduction of a sandbox environment in Ghana to support his point.

“Obviously, the goal is that we continue to see and develop clear regulatory frameworks globally. I think Africa has an unfair reputation when it comes to regulation. In reality, it’s often a much more crypto-friendly environment than the U.S. right now,” Maurice said.

This article originally appeared on TechCrunch at https://techcrunch.com/2024/10/16/african-crypto-startup-yellow-card-raises-33m-led-by-blockchain-capital-to-scale-its-b2b-pivot/