Nigerian FinTech Kuda Bank Closes $55-Million Series B Funding Round

Image sourced from Tech Crunch.

Kuda Bank, a Nigerian fintech startup has raised $55-million in a Series B funding round at a valuation of $500-million. Previously, the company announced it had raised $25-million during a round of Series A funding a little over four months ago.

Co-leading this latest round of funding were existing investors Target Global and Valar Ventures – a firm co-founded and backed by PayPal co-founder, Peter Thiel. Joining them were SBI Investment and other previous participants.

According to Kuda’s co-founder and CEO, Babs Ogundeyi, the startup aims to build a new take on banking services for “every African on the planet” – in service of these lofty goals, the startup is looking to use the funds raised during this latest round to build on its platform for Nigeria, and also begin to prepare for a continental expansion.

“We’ve been doing a lot of resource deployment in our operational entity, in Nigeria. But now we are doubling down on expansion and the idea is to build a strong team for the expansion plans for Kuda,” Ogundey told TechCrunch.

Kuda has yet to release any information about which country it’s eyeing for expansion – though it is safe to say that sub-Saharan Africa’s economic powerhouses will be in its sights, including Kenya and South Africa.

Ogundey co-founded the fintech startup with Musty Mustapha, now-CTO of Kuda, in the second half of 2019. In Nigeria, Kuda launched its no-fees, digital-only banking services with a pre-seed of $1.6-million. Since then, the firm has seen sustained growth.

“For Babs and Musty, it was always about building a pan-African bank, not just a Nigerian leader,” said Ricardo Schäfer, the partner at Target Global, quoted by Tech Cabal.

“The prospect of banking over 1 billion people from day one really stood out for me at the beginning.”

“Kuda is our first investment in Africa and our initial confidence in the team has been upheld by its rapid growth in the past four months,” said Andrew McCormack, a general partner at Valar Ventures.

“With a youthful population eager to adopt digital financial services in the region, we believe that Kuda’s transformative effect on banking will scale across Africa and we’re proud to continue supporting them.”

As of November 2020, 300,00 people were banking with Kuda, with the company processing an average of $500-million worth of transactions per month. By March 2021, Kuda saw its customer base double to 650,000 – as of right now, Kuda services a customer base of 1.4 million people.

Kuda also offers credit to its customers by way of an overdraft allowance, which the company pre-qualifies the most active users for. In the second quarter of 2021, Kuda disbursed $20-million worth of credit to over 200,000 qualified customers, with a 30-day repayment period.

According to Ogundeyi, Kuda aims for repayment to not be a burden, and the company has seen minimal payment default because of its approach.

“We use all the data we have for a customer and allocate the overdraft proportion based on the customer’s activities,” he says about Kuda’s flexibility-driven credit model.

By Luis Monzon
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