“Nigeria has the potential to be a great national economy if it’s well harnessed. Tech is contributing significantly to that. That is why there is a lot of interest and why we are excited to be there.” – @Babsogundeyi
Nigerian-based digital bank, Kuda just announced that it has raised $10 million in seed investment.
Across the world, mobile challenger banks like Nubank, Revolut, Chime, Eversend have sprung forth to compete with already established banks in their respective companies.
Kuda is one of such in Africa. Without a physical location, it allows users to make airtime purchases, access bill payment options, manages their payments and transfers. And in addition to issuing free debit cards, allows free account opening online.
Founded in 2016 by Babs Ogundeyi and Mustapha Musty as Kudimoney, the startup launched as a lending platform before transitioning into a digital-only bank.
This happened when the startup received a banking license from the Central Bank of Nigeria in June 2019.
Last year when raising its pre-seed round, Ogundeyi said the company had made strategic partnerships with three West African banks, Guaranty Trust Bank (GTB), Access Bank and Zenith Bank. This was because it wanted to give users access to Kuda debit cards and enable them to make physical deposits as well as withdrawals via these banks.
“We have built the core banking services in-house so we own the full stack. It means we don’t have to piggy back on another financial institution. We may choose to partner on certain products but we don’t have to. As a bank you need to be able to lend, and in Nigeria if you don’t have a full license it’s hard to lend and make money,” he said.
The startup now has more than 300,000 customers, both individual consumers and small businesses using its platform while processing $500m+ worth of transactions monthly.
The investors who participated in this round include Berlin-based VC, Target Global, who is the lead investor; Entrée Capital and SBI Investment.
Similarly, notable angel investors participated including Oliver and Lish Jung who invested in Nubank, Revolut, and Chime amongst are other mobile challenger banks in Brazil, the UK and US.
At the time Kuda closed its $1.6m pre-seed round in September 2019, it was said to have arguably raised the highest pre-seed round for a Nigerian startup. We are witnessing the same occurrence with its $10m seed investment, one of the biggest seed rounds out of Africa.
Joining the Nigerian fintech startup’s board, Dr Ricardo Schäfer, partner at Target Global is of the opinion that digital challenger banks like Kuda provide users with a better banking experience than traditional banks. It is for this reason the VC firm decided to be the lead investor in this round.
“Kuda is one of Africa’s leading digital challenger banks and one of the fastest growing fintechs on the continent. We are very excited to be working with Babs, Musty and the entire Kuda team to further build on the fantastic momentum they have had since inception and support them in taking the company to the next level,” he said.