Nigeria’s Kuda raises $10M to be the mobile-first challenger bank for Africa
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 startup out of Nigeria that operates a popular mobile-first challenger bank for consumers and (soon) small businesses, is announcing 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.
“We want to bank every African on the planet, wherever you are in the world,” he said in an interview. 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 (once part of SoftBank, now no longer) 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 in a pre-seed round to launch a beta of its service, and Ogundeyi said he’s already working on a much bigger Series A. No valuation is currently being disclosed.
In a year where many have been watching the world economy with some trepidation on the back of a raging health pandemic hitting multiple geographies, fintech in Africa has been in the spotlight of late.
Most recently, Paystack — a payments startup out of Nigeria — got acquired by Stripe 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.
But in truth, startups focused around the business of financial transactions — which also includes the adjacent industry of e-commerce (See: Jumia, the first venture-backed startup out of the region to go public) have been some of the most eagerly-watched, and their services mostly widely-adopted, of all tech plays in the region.
The reason is logical. As a continent, Africa is one of the most populous, yet one of the more underdeveloped economically, continents in the world. And in our modern 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.
That has meant a number of efforts, leveraging the growth in mobile phone usage to provide services to people to make transactions beyond those that they would otherwise only do in person, using cash. These have included innovative services like Mpesa, which uses a person’s phone (which can be a basic feature phone) as a proxy for a bank account, allowing people to pay in and pay out using their phone numbers and prepay accounts.
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