Nigerian Startup, Kuda Raises $10 Million

Yemisi Izuora/Agency Report

Kuda, a Nigerian fintech startup Nigeria, has disclosed that it has raised $10 million, reportedly the biggest seed round ever to be raised in Africa.

The $10 million is led by Target Global, a renowned Venture Capital firm from Europe; with Entrée Capital and SBI Investment (once part of SoftBank) also participating; along with a number of other notable individual fintech founders and angels.

The list includes Raffael Johnen (founder of Auxmoney); Johan Lorenzen (founder of Holvi); Brandon Krieg/Ed Robinson (founders of Stash), and Oliver and Lish Jung (angel investors in Nubank, Revolut, and Chime).

The funding comes on the back of strong demand for its services and its ambitions, says CEO Babs Ogundeyi; as it aims to become the go-to bank not just for those living on the continent, but for the African diaspora, Techcrunch reports.

“We want to bank every African on the planet, wherever you are in the world,” Ogundeyi said in an interview.

Kuda aims to realize its ambition by starting off in Nigeria, its home market.

Since the start-up launched in September 2019, it has attracted around 300,000 customers. Also, it nowa processes an average of over $500 million of transactions each month.

Prior to this Kuda, co-founded by Ogundeyi and CTO Musty Mustapha, had raised $1.6 million in a pre-seed round to launch a beta of its service.

Ogundeyi told TechCrunch he’s already working on a much bigger Series A investment round. However, no valuation is currently being disclosed.

Kuda does not partner with other banks to manage and back deposits. Instead, Kuda has obtained a microfinance banking license from the Central B ank of Nigeria(CBN).

This means that it manages payments, transfers, issues debit cards (in partnership with Visa and Mastercard). It also has partnerships with the likes of Zenith Bank, Guaranty Trust Bank and Access Bank for people to come in for physical deposits and withdrawals when needed.

“We have built the core banking services in-house so we own the full stack,” Ogundeyi said. “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.”

He added that the plan will be to get full licenses “in what we consider key regions” but possibly partner in others where the existing infrastructure makes it more logical to do so.

“The reason for the full license is because of monetization,” he added. “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.”

Having an account is free with Kuda. Therefore, the start-up makes money through other services. Among them, users can top up their phones directly from the Kuda app (most accounts are prepaid), so Kuda acts as a kind of broker in that transaction and makes a percentage from it.

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