SecondSTAX, a platform that lets broker-dealers, asset managers, pension funds, and institutional traders enter markets outside their own country, had recently raised $1.6 million in pre-seed funding from private investors and VC firms like LoftyInc Capital, Orbit54, and STEMeIn, to bolster its efforts.
SecondSTAX, the co-founder of SecondSTAX and its chief government officer, offers a wealth of experience in such a daunting endeavour. He worked at Goldman Sachs for over a decade and managed consulting and software projects for businesses in the financial services and capital markets. Investors seem to be interested in this round start 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.
Tawiah co-founded the corporation with Duke Lartey. SecondSTAX gives you access to debt and equity instruments through different African bond and stock exchanges. The B2B capital markets infrastructure platform also claims that it should assist in financing foreign businesses that must invest in developing and frontier markets on the continent. Funding organizations integrated into its platform may also keep assets in many currencies, reducing the risk of a single foreign exchange and the volatility of their profits, whether in Africa or abroad, according to Fintech.
How does SecondSTAX work?
To comprehend how SecondSTAX works, Tawiah suggests picturing the company’s platform as a layer in the order of a series of concentric rings. The first and second circles are institutional investors from developed markets and those from Africa interested in investing in a range of stocks and bonds available on African exchanges. The exchanges are found in the fourth circle and accessible by secondSTAX, the third circle.
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“You’ve got exchanges where securities are traded in every nation. Nigeria is a silo, identical to Ghana, Kenya, South Africa, and so forth. SecondSTAX successfully aggregates those exchanges throughout the continent. It’s that one platform that hyperlinks all of them collectively. After that, as an institutional investor like Goldman Sachs in New York, Financial institution of America within the U.Ok., or a boutique agency out in Singapore, they’ve entry to this platform to touch every one of those exchanges.”
The CEO claims that once the company infrastructure is steady operational, it will consider expanding its capabilities to serve B2C investment management applications. Then, using white-labelled applications created by brick-and-mortar brokers and powered by SecondSTAX or third-party wealth tech apps like Bamboo, HashApp, Robinhood, and Hisa, retail investors inside and outside of Africa would be able to access and trade cross-border stocks and bonds.
“We are not distinguishing between brokers; they can be brick and mortar or startups. Our potential client base is much broader than one type of institution; so long as the broker has a digital play, they can use our infrastructure to access African exchanges.”
The company plans expansion
The Fintech launched in 2020 is considering capital markets in Ghana, Kenya, Nigeria, South Africa, Morocco and Egypt. However, it will debut in the first two, providing market order routing for all stocks across the exchanges in Ghana and Kenya and permitting cross-border transactions within both capital markets through its sponsored broker agreements.
According to Tawiah, the investment will enable SecondSTAX to expand into other nations by the end of the year and carry out the associated tasks, particularly those related to licensing and regulatory matters. Additionally, there are also plans to expand the personnel and strengthen the technology by creating new features that its clients demand. The chief executive said, “We anticipate the income from these customers starting to become increasingly influential in the next 18 to 24 months in terms of being able to transfer us from startup mode to a real functioning concept producing substantial revenue.”
