Kotani Pay, a Nairobi-based crypto payments startup, has secured a $2 million pre-seed funding round. The investment round saw participation from DCG/Luno, Flori Ventures, and P1 Ventures, with P1 Ventures leading the 9 rounds. Founded in 2020 by Brian Kimotho, Daniel Kimotho, Felix Macharia, Samuel Kariuki, and Stephen Kiarie, Kotani Pay aims to streamline cross-border remittances for Africa’s underserved communities.
The startup utilizes the Unstructured Supplementary Service Data (USSD) communication protocol, allowing users to transfer funds using basic phones and local payment systems. Kotani has developed many of these systems as middleware connecting to blockchains. Kotani’s technology bridges the gap between smart contracts on crypto platforms and mobile money APIs, positioning itself as a B2B solution.
Kotani’s prominent crypto partners include Yellowcard, DCG, Fonbank, Celo’s Valora, Mercy Corps, UNICEF Crypto Innovation Fund, and Stellar. The platform also offers a feature for users to convert their local currencies to USD. Given the necessary licenses, this service is primarily designed for businesses but might be available to individual users in the future. The conversion is facilitated by a network of liquidity providers in collaboration with local forex services and money transmitter operators.
Most of the transactions on Kotani, amounting to $23 million, are inbound payments. The platform’s average transaction value is $150,000, reflecting its focus on enterprises. Per Macharia, Kotani earns revenue through an interchange fee, averaging around 1% of the total transaction volumes.
Following the acquisition of the Nigerian startup Fuhlstack, Kotani plans to introduce additional products like Reconset (a Reconciliation-as-a-Service offering) and Money Ledger (a Ledger-as-a-Service solution).