South African fintech startup uKheshe has raised USD 500 K in seed funding (more than ZAR 7.6 Mn) from FiTech Ventures and Ocean on 76. The second investment for the Johannesburg-based firm, the funding brings its valuation to USD 6.5 Mn (ZAR 100 Mn).
The funding comes 10 months since the financial inclusion platform was launched. The startup was initially under the umbrella of CIS as an incubatee within software development house Jin.Guru, an Indian software company. Jini.Guru helped uKheshe with business set up and pumped in USD Mn in the fintech startup while incubating is as a corporate social investment initiative.
The co-founder of uKheshe, Clayton Hayward, said that being able to access a transact account is the first step towards having a broader financial inclusion for the company. According to him, the startup has noticed since its launch that such needed services significantly impact the general financial inclusion of unbanked and underbanked South Africans.
With this fresh money in the bank, the fintech is gearing to receive its next round of funding. While it is awaiting a Series A investment, the time which it will come has not yet been determined by the runners of the company.
uKheshe’s mobile application allows users to pay and receive payment by scanning an uKheshe QR code. Cardholders can withdraw cash and check balances after the scanning, and users can also withdraw funds at Pick n Pay stores countrywide. They can also pay for goods or services directly using USSD or the phone app. Cardholders do not need a bank account or smartphone once they activate their QR codes with their phone numbers.
The QR cards are given free of charge. They can be ordered online for distribution, and users can hand out prepaid uKheshe cards. The company was founded close to a year ago by Jason Penton and Clayton Hayward. uKheshe has an application programming interface (API) that allows seamless third-party integration with the service. The firm claims to have more than 30,00 users on its platform.
Seed investor, Chris Lister-James from Fitech Ventures says that while it is difficult to value early-stage fintechs accurately, uKheshe’s current trajectory has justified the initial valuation of R100m.
“The market opportunity is enormous, and we are excited about our investment and the role we will play in providing sustainable financial services. Having invested in several early-stage fintech startups, we have some great complementary companies and look forward to playing both a financial and strategic role in the growth of uKheshe.”
Digital migration is a reality and Prins Mhlanga, CEO, Ocean on 76 Group, another uKheshe seed investor, says that services like this will significantly improve financial inclusion as it offers an easy-to-use, affordable alternative: “Usage and the subsequent sustainability of the platform will ensure that as the world continues to embrace digital transformation, the majority won’t be left behind.”
Lister-James says that while most countries in Africa remain largely cash-based, with majority low-income earners, who are wary of banking fees and distrust financial service providers, there is immense opportunity: “The significant cell phone penetration enables fintechs, such as uKheshe, to develop convenient, cost-effective, digital financial services solutions that can circumvent the existing financial services providers. We view this disruption as not only positive but necessary.”