Lagos-based fintech startup Kuda has raised USD 1.6 Mn in a pre-seed round.
Haresh Aswani, the Managing Director – Africa of the Tolaram Group, led the round. Ragnar Meitern and other angel investors also participated. The digital-only firm, which is also based in London, is fresh out from launching the beta version of its mobile application.
Aswani, who is also the Managing Director of Lekki Port, will be joining Kuda’s board of directors. Meitern, on the other hand, is a UK-based investment banking professional.
Kuda – Nigeria’s First Digital Bank
Kuda, formerly known as Kudimoney, was founded in 2018. Babs Ogundeyi – founder of classifieds site Motortrader.ng and a financial advisor – and Musty Mustapha – former Stanbic Bank software developer – co-founded the company.
The startup is a digital-only bank that runs predominantly on smartphones and via a USSD channel. Even without physical locations (branches), the company claims to be the most connected bank in Nigeria. The startup received license from the Central Bank of Nigeria in June this year, preparing for launch.
According to Kuda, being digital-only implies it saves all the money that would otherwise be spent maintaining branches. So doing, the company can afford to charge way less than the traditional banks do.
“We profit when our customers are happy to keep their money with us. We do not charge card maintenance fees or account maintenance fees or COT or any other code name that is used to extract fees from customers”.
Kuda’s systems are built with 21st century technology, instead of existing legacy software. With a full-stack approach, the fintech can process large amounts of data and in real-time. It used the same medium to send actionable info and analytics that helps customers preside over their finances.
Beta Version To Better Traction
Kuda released the beta version of its app in August this year. Since then, it has been testing the service and receiving feedback. The mpressive USD 1.6 Mn pre-seed is relatively enough cash to commence operations fully. Ogundeyi explained to Techcrunch that the funds would see Kuda go live in Nigeria by Q4 2019.
As previously said, the startup was first known as Kudimoney. The company had to rebrand because “Kudi” is being adopted by many fintech startups. This means Kuda is different from Kudi, a Series A stage Nigerian utility payments startup.
The startup will use some of the money to further develop the technology of its banking platform. While driving to make the platform more secure and reliable, Kuda will include support for its Lagos and Cape Town-based developer team. As one would expect, expansion is in the bigger picture, as the service plans to be a Pan-African digital-only bank.
To scale in Africa’s economic powerhouse and most populous nation, Kuda has struck strategic partnerships. The firm has put ink on paper with GTBank, Access Diamond and Zenith – three of the West African country’s largest financial institutions. However, these banks are not investors, but partners, clarifies Ogundeyi.
Nigeria’s THE Market
Nigeria’s fintech space is pretty populated. While there’s just about enough people in the country to service, many financial startups are eyeing a possible USD 1.3 Bn revenue.
WeeTracker’s 2018 VC report shows that fintech startups got the lion’s share of total investments in Africa. Proving this sea is filled with many fishes, SF-based no-fee payment firm Chipper Cash just expanded to Nigeria.
According to the International Monetary Fund (IMF) Nigeria’s Gross National Savings. Gross Domestic Product (GDP) is just 13.14 percent as of December 31, 2016.
Even after factoring in the mandatory contributions in pension funds, it is still almost half of the global average of 25 percent. A look back 10 years shows savings to GDP of 32.66 percent in Nigeria. This an alarming decline to the present day.