Nigerian online-only bank startup Kuda raises $1.6M – gpgmail


Nigerian fintech startup Kuda — a digital-only retail bank — has raised $1.6 million in pre-seed funding.

The Lagos and London-based company recently launched the beta version of its online mobile finance platform. Kuda also received its banking license from the Nigerian Central Bank, giving it a distinction compared to other fintech startups.

“Kuda is the first digital-only bank in Nigeria with a standalone license. We’re not a mobile wallet or simply a mobile app piggybacking on an existing bank,” Kuda bank founder Babs Ogundeyi told gpgmail.

“We have built our own full-stack banking software from scratch. We can also take deposits and connect directly to the switch,” Ogundeyi added, referring to the Nigeria’s Central Switch — a SWIFT-like system that facilitates bank communication and settlements.

A representative for the Central Bank of Nigeria (speaking on background) confirmed Kuda’s banking license and status, telling gpgmail, “As far as I’m aware there is no other digital bank [in Nigeria] that has a micro-finance license.”

 

Kuda offers checking accounts with no monthly-fees, a free debit card, and plans to offer consumer savings and P2P payments options on its platform in coming months.

“You can open a bank account within five minutes, do all the KYC in the app, and you get issued a new bank account number,” according to Ogundeyi. Kuda bank Founder CEO Babs OgundeyiOgundeyi — a repeat founder who exited classifieds site Motortradertrader.ng and worked in a finance advisory role to the Nigerian government — co-founded Kuda in 2018 with former Stanbic Bank software developer Musty Mustapha.

The two convinced investor Haresh Aswani to lead the $1.6 million pre-seed funding, along with Ragnar Meitern and other angel investors. Aswani confirmed his investment to gpgmail and that he will take a position on Kuda’s board.

Kuda plans to use its seed funds to go from beta to live launch in Nigeria by fourth-quarter 2019. The startup will also build out the tech of its banking platform, including support for its developer team located in Lagos and Cape Town, according to Ogundeyi.

Kuda also intends to expand in the near future. “It’s Nigeria for right now, but the plan is build a Pan-African digital-only bank,” he said.

As of 2014, Nigeria has held the dual distinction as Africa’s largest economy and most populous country (with 190 million people).

To scale there, and add some physical infrastructure to its online model, Kuda has correspondent relationships with three of Nigeria’s largest financial institutions: GTBank, Access Bank and Zenith Bank.

He clarified the banks are partners and not investors. Kuda customers can use these banks’ branches and ATMs to put money into bank accounts or withdraw funds without a fee.

“Even though we don’t own a single branch, we actually have the largest branch network in the country,” Ogundeyi claimed.

Kuda’s plans to generate revenues focus largely around leveraging its bank balances. “We plan to match different liability classes to the different asset classes that we create. That’s how we make money, that’s how we get efficiency in terms of income,” Ogundeyi said.

In Nigeria, Kuda enters a potentially revenue-rich market, but its one that already hosts a crowded fintech field — as the country becomes ground zero for payments startups and tech investment in Africa.

Briter Bridges Lagos Nigeria Fintech MapIn both raw and per capita numbers, Nigeria has been slower to convert to digital payments than leading African countries, such as Kenya, according to joint McKinsey Company and Gates Foundation analysis done several years ago. The same study estimated there could be nearly $1.3 billion in revenue up for grabs if Nigeria could reach the same digital-payments penetration as Kenya.

A number of startups — established and new — are going after that prize in the West African country — several with a strategy to scale in Nigeria first before expanding outward on the continent and globally.

San Francisco-based, no-fee payment venture Chipper Cash entered Nigeria this month.

Series B-stage Nigerian payments company Paga raised $10 million in 2018 to further grow its customer base (that now tallies 13 million) and expand to Asia and Latin America.

Kuda CEO Babs Ogundeyi believes the startup can scale and compete in Nigeria on a number of factors, one being financial safety. He names the company’s official bank status and the Nigeria Deposit Insurance Corporation security that brings as something that can attract cash-comfortable bank clients to digital finance.

Ogundeyi also points to offerings and price.”We look to be the next generation bank where you can do everything— savings, payments and transfers — and also the one that’s least expensive,” he said.

 


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SF based African fintech startup Chipper Cash expands to Nigeria – gpgmail


The African no-fee, cross-border payment startup Chipper Cash has expanded to Nigeria.

The San Francisco based startup, with offices in Ghana and Kenya, will offer its P2P payment service and app in Africa’s most populous nation in partnership with PayStack—the payment gateway company. Paystack CEO Shola Akinlade confirmed the collaboration.

Chipper Cash will establishe a company presence in Lagos and has hired a country manager, Abiodun Animashaun, co-founder of Lagos-based ride-hail startup Gokada.

Animashaun is one of two senior figures departing African tech ventures to join Chipper Cash. Alicia Levine will leave Nairobi based internet hardware and service startup BRCK to become Chipper Cash’s Chief Operating Officer, according to Chipper Cash CEO Ham Serunjogi.

The startup went live in October 2018, joining a field of fintech startups aiming to scale digital finance applications across Africa’s billion-plus population.

Chipper Cash was co-founded by Serunjogi (from Uganda) and Ghanaian Maijid Moujaled, both of whom emigrated to the U.S. to study and work in Silicon Valley.

The fintech company now has more than 70,000 active users and has processed 250,000 active transitions on its no-fee, P2P, cross-border mobile-money payments product.

The startup also runs Chipper Checkout: a merchant-focused, fee-based C2B mobile payments product that supports its no-fee mobile money business.

Chipper Checkout will make its debut in Nigeria several months after Chipper Cash’s mobile payments launch, according to Serunjogi.

The imperative to move to Nigeria was pretty straight-forward. “Nigeria is the largest economy and most populous country in Africa. Its fintech industry is one of the most advanced in Africa, up there with Kenya and South Africa,” he said.

“I think for any company doing fintech across borders, that is looking to be successful in Africa, it’s imperative that you have a presence in Nigeria.”

For some fintech startups, such as Chipper Cash, locating in Nigeria is not just strategic for expanding in Africa, but also to serve international ambitions.

Chipper Cash was recently profiled in an ExtraCrunch feature as one of three African fintech startups — with goals to scale globally — that has co-located in San Francisco with operations in Africa. The play is to tap the best of both worlds in VC, developers, and the frontier of digital finance.

Toward that end, Chipper Cash raised a $2.4 million seed round led by Deciens Capital this May.

The payments company also persuaded 500 Startups and Liquid 2 Ventures — co-founded by American football legend Joe Montana — to join the round.

Per stats offered by Briter Bridges and a 2018 WeeTracker survey, fintech now receives the bulk of VC capital and deal-flow to African startups.

A number of estimates show the continent’s 1.2 billion people represent the largest share of the world’s unbanked and underbanked population.

In addition to creating greater financial inclusion on the continent, African fintech products and solutions have also found traction internationally. Safaricom (M-Pesa), Flutterwave, Paystack, Paga, Mines, and Chipper Cash are among companies that offer or plan to offer their products in regions such as Asia, Europe, and Latin America.

 

 

 

 

 

 


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