In early 2022, the fintech startup Bloom — not to be confused with the Gen Z-focused investing app, or the heavily capitalized revenue financing platform — was accepted into Y Combinator as the first-ever startup from Sudan to participate in the famed accelerator. Alongside its four founders’ track records at Amazon, Meta, IBM, and Goldman Sachs, the startup’s premise was also notable and vital: helping Sudanese people protect their wealth.
Now, after an initial limited launch, a major political upheaval in its home country, a pivot, a small fundraise and a rebrand to Elevate, the startup is now open for general availability, at least in certain emerging markets.
Primarily targeting people in East and North Africa, particularly Sudan, Elevate had first built a product to hedge against rising devaluation of those users’ home currencies by way of “high-yield” savings accounts, free FX, and adjacent digital banking services — all based on the US dollar.
The issue Elevate was targeting is rife. Inflation and currency devaluation have been long-time concerns for Africans using bank accounts (one of the reasons unbanked numbers are higher here than in more developed countries). In 2022-2023, the sub-Saharan region saw typical devaluations of 8% (with depreciation of over 40% in some countries) according to the IMF, and ratings analysts expect the picture to be the same this year.
Elevate initially aimed to build a pan-African neobank that would integrate into local banks and wallets across the region, a USD banking add-on that could support receiving and saving USD remittances from friends, family and employers. Alongside Sudan, it also targeted Ethiopia, Uganda and Tanzania for early roll outs.
“We are from the region, understand the nuances in our markets, and can navigate what may appear to be an ambiguous landscape. I’d also add that we’re also comfortable — perhaps even thrive — working in volatile markets. We’re underwriting the next decade of growth in Africa,” Abdigani Diriye, one of Elevate’s founders, said at the time.
Building in a volatile market
Between late 2021 and mid-2022, Elevate (then called Bloom) launched its first set of products to 100,000 people and secured $6.5 million in seed funding from YC, Visa, Global Founders Capital and prominent angels like Dropbox co-founder Arash Ferdowsi and N26 ex-CEO Nicolas Kopp.
But that early stage was played out amid a much bigger drama: Sudan itself was undergoing a major coup as a civil war lurked in the wings. Under the strong arm of a military junta, prime minister Abdalla Hamdok was deposed and kidnapped and then reinstated, before himself resigning — all within the space of less than three months.
In the wake of that chaos, Diriye and CEO Ahmed Ismail left for personal reasons. Elevate remained committed to the region and worked out a pivot.
Youcef Oudjidane, another co-founder who now runs the company with a fourth co-founder Khalid Keenan, said in a recent interview with TechCrunch that during the founders’ time on the ground in Sudan and Ethiopia, they discovered a particular user demographic for their USD vision: the booming freelancer and remote work sector.
Across Africa and other emerging markets, there has been a rise of younger workers with the technical and language skills to pick up jobs via freelancer platforms Upwork and Fiverr. For them, the difficulty hasn’t been opening local USD accounts; it’s been cost-effectively facilitating payments from international employers and online platforms.
“Using local products meant many remote workers had large chunks of their earnings eaten away with excessive fees. The solution was obvious. The USD products couldn’t be local,” said Oudjidane, who is also the founding partner of emerging markets fintech fund Byld Ventures. “The product would need to move to offering U.S.-based USD accounts,” accounts that, critically, would facilitate ACH payments to enable those freelance payments and came with the security that you get with U.S. banking, such as FDIC assurance.
Market pivot
Further political instability in Ethiopia, and the eventual outbreak of the conflict in Sudan in 2023, accelerated Elevate’s pivot. By then, the fintech had reevaluated which markets it would serve; they needed a large population of freelancers and remote workers in emerging markets who are likely to work for clients further afield and struggled with the payment pain points the team had seen in East Africa. Based on those factors, Elevate chose Egypt, Pakistan, the Philippines, and Bangladesh.
“Remote workers who need to save in dollars have a few options: Choose an FDIC-insured account or a wallet, with the latter posing a risk if the provider collapses, resulting in lost deposits. The core of our business model revolves around providing this protection. There’s also a need for a remittance service to move beyond traditional US dollar accounts with expensive SWIFT transfers to offering very low-cost FX transfers,” Keenan said.
“Incumbents like Payoneer don’t provide FDIC insurance and often charge high FX rates, up to 3% in some markets. So, a significant part of our model focuses on driving down these FX rates, similar to what Wise has done, and continuing to push for more favorable terms for remote workers.”
Since launching earlier this year, Elevate, which simplifies receiving payments for non-U.S. residents from U.S. employers and platforms like Upwork, Toptal, Fiverr and Deel (one of its partners for customer acquisition), has signed up over 150,000 people across its new markets. The San Francisco-based fintech provides these financial services by partnering with sponsor bank Bangor Savings Bank. Its products are similar to those of other African fintechs, including Grey and Cleva.
What’s next for Elevate
Elevate’s strategy shift and change of partner bank from an Egyptian entity overlapped with its switch from Visa to Mastercard. Consequently, the fintech didn’t fully capitalize on Visa’s milestone-based investment. However, the founders don’t rule out the possibility that the Visa network could support some of the fintech’s future products, such as prepaid and local cards.
The YC-backed company currently generates revenue from net interest income, FX and card interchange. It also plans to launch savings and investment products in the coming months. According to Oudjidane, the company is nearing profitability with enough funds in the bank, having run a lean operation and spent around $2 million since its inception.
However, this hasn’t stopped the fintech from raising a new $5 million pre-Series A round, with 80% in debt, from Dubai-based investment fund Negma Group, to fuel its expansion into markets like Indonesia, South Africa and Turkey.
Before the war started in Sudan, even if its single-digit millions backing appears incredibly modest in comparison to some of its developed-world counterparts, Elevate was one of its most-funded startups. Local tech observers subsequently expected its success, alongside that of Fawry-backed Alsoug, to draw more attention to Sudan’s fledging tech startup ecosystem, which had just begun attracting global investors after 30 years of international sanctions.
But things haven’t turned out that way. While other startups, with little recourse, have remained despite the conflict, Elevate, which has the luxury of serving consumers in different markets, will only re-establish a physical HQ in the country when political stability returns.
“Freelancers and remote workers in these markets will undoubtedly be a critical source of foreign income to help rebuild,” Oudjidane said.