Despite the impact of the global pandemic on businesses, and income, the African continent is currently one of the fastest-growing regions when it comes to mobile growth, and financial technology companies that are building services to meet that rapidly-expanding market are getting a lot of attention.
In the latest development, Kuda, a FinTech startup in Nigeria that operates a popular mobile-first challenger bank for consumers and small businesses, has announced that it has raised $10 million, the biggest seed round ever to be raised in Africa. The funding comes on the back of strong demand for its services and its ambitions, according CEO Babs Ogundeyi, to become the go-to bank not just for those living on the continent, but for the African diaspora.
According to Ogundeyi, “We want to bank every African on the planet, wherever you are in the world.” It’s starting first in its home market: since launching in September 2019, it has picked up around 300,000 customers, first consumers and now also small businesses, and on average processes over $500 million of transactions each month.
The $10 million is being led by Target Global, the giant VC out of Europe, with Entrée Capital and SBI Investment, also participating, along with a number of other notable individual fintech founders and angels.
Prior to this Kuda, which is co-founded by Ogundeyi and CTO Musty Mustapha, had raised $1.6 million last year September, in a pre-seed round to launch a beta of its service. Kuda also received its banking license from the Nigerian Central Bank, which gave it a distinction compared to other fintech startups. and Ogundeyi said he’s already working on a much bigger Series.
However, no valuation is currently being disclosed.
FinTech in Africa
Most recently, Paystack, a payment startup out of Nigeria, got acquired by Stripe last month for over $200 million, making it not only Stripe’s biggest acquisition, but the largest exit-by-acquisition to-date for any Nigerian startup. That news followed closely on the heels of Interswitch, another payments startup, hitting a $1 billion valuation on the back of an investment from Visa.
As a continent, Africa is one of the most populous, yet one of the more underdeveloped economically, continents in the world. And in contemporary times, digital inclusion has become synonymous with financial inclusion. So, as the population begins to adopt mobile technology in earnest, those users represent a big opportunity: there is pent-up demand, and competition is relatively sparse.
Nigeria, currently the biggest single economy in Africa, has also been at the center of a lot of fintech activity, and Kuda has been taking that opportunity by the horns.
In its case, that has started with building Kuda’s footprint from the ground up.
The rise of the challenger bank has been one of the more interesting developments in the world of consumer fintech, with companies like N26, Monzo, Starling, Chime, NuBank and Revolut finding a lot of traction with younger users.
However, Kuda does not partner with other banks to manage and back deposits with the challenger bank to in turn focus on customer service, and building user-friendly experiences and value-added services around money management. Instead, Kuda has obtained a microfinance banking license from the central bank of Nigeria.
This means that it manages payments, transfers, issues debit cards (in partnership with Visa and Mastercard). It has also partnered with the Zenith Bank, Guaranteed Trust, and Access Bank for people to come in for physical deposits and withdrawals when needed.