Kenyan Digital Banking Startup Umba Secures USD 5 M Debt Deal

Nairobi-based digital banking startup Umba has raised USD 5 M in debt financing from Star Strong Capital as it looks to deepen its footprint in Africa and edge closer to profitability in Kenya.

Founded in 2018 by Irish entrepreneurs Tiernan Kennedy and Barry O’Mahony, Umba offers mobile-based financial services including loans, current accounts, bill payments, and savings. The company has operations in Nigeria and Kenya, and gained a significant edge in 2022 by acquiring a majority stake in Daraja Microfinance Bank, one of just 14 licensed microfinance institutions in Kenya. This move gave Umba regulated status and access to formal banking infrastructure, which has been key to its Kenyan expansion.

Despite a drop in valuation—from USD 60 M in 2022 to USD 25 M during a bridge round in late 2023 that followed its USD 15 M Series A—Umba reports sixfold revenue growth over the past year, with 19% month-over-month revenue increases in 2024. The startup has now surpassed 1 million downloads on Google Play, with most loans integrated seamlessly into mobile money platforms like M-Pesa. Its algorithmic credit decisions leverage proprietary customer data to manage lending risk and enhance product offerings, particularly in SME and vehicle financing.

CEO Kennedy says the new funds will boost Umba’s lending capacity and fuel customer acquisition. “Our Kenyan launch has exceeded expectations. With this funding, we’re scaling a model that’s built for Africa’s future,” he said.

The announcement follows reports that Nigerian digital bank FairMoney explored acquiring Umba in a USD 20 M all-stock deal, largely motivated by its coveted Kenyan banking license. While the deal has not been confirmed, the interest underscores Umba’s strategic value in a consolidating fintech landscape.

With funding secured and profitability in sight, Umba now faces the challenge of scaling sustainably, either solo or as part of a broader fintech consolidation play.