Nigerian fintech startup Kuda — a digital-only retail financial institution — has raised $1.6 million in pre-seed funding.
The Lagos and London-based firm lately launched the beta model of its on-line cellular finance platform. Kuda additionally acquired its banking license from the Nigerian Central Financial institution, giving it a distinction in comparison with different fintech startups.
“Kuda is the first digital-only bank in Nigeria with a standalone license. We’re not a mobile wallet or simply a mobile app piggybacking on an existing bank,” Kuda financial institution founder Babs Ogundeyi instructed TechCrunch.
“We have built our own full-stack banking software from scratch. We can also take deposits and connect directly to the switch,” Ogundeyi added, referring to the Nigeria’s Central Swap — a SWIFT-like system that facilitates financial institution communication and settlements.
A consultant for the Central Financial institution of Nigeria (talking on background) confirmed Kuda’s banking license and standing, telling TechCrunch, “As far as I’m aware there is no other digital bank [in Nigeria] that has a micro-finance license.”
Kuda provides checking accounts with no monthly-fees, a free debit card, and plans to supply shopper financial savings and P2P funds choices on its platform in coming months.
“You can open a bank account within five minutes, do all the KYC in the app, and you get issued a new bank account number,” in line with Ogundeyi. Ogundeyi — a repeat founder who exited classifieds web site Motortradertrader.ng and labored in a finance advisory position to the Nigerian authorities — co-founded Kuda in 2018 with former Stanbic Financial institution software program developer Musty Mustapha.
The 2 satisfied investor Haresh Aswani to steer the $1.6 million pre-seed funding, together with Ragnar Meitern and different angel traders. Aswani confirmed his funding to Techand that he’ll take a place on Kuda’s board.
Kuda plans to make use of its seed funds to go from beta to dwell launch in Nigeria by fourth-quarter 2019. The startup will even construct out the tech of its banking platform, together with help for its developer crew positioned in Lagos and Cape City, in line with Ogundeyi.
Kuda additionally intends to broaden within the close to future. “It’s Nigeria for right now, but the plan is build a Pan-African digital-only bank,” he mentioned.
As of 2014, Nigeria has held the twin distinction as Africa’s largest financial system and most populous nation (with 190 million individuals).
To scale there, and add some bodily infrastructure to its on-line mannequin, Kuda has correspondent relationships with three of Nigeria’s largest monetary establishments: GTBank, Entry Financial institution and Zenith Financial institution.
He clarified the banks are companions and never traders. Kuda prospects can use these banks’ branches and ATMs to place cash into financial institution accounts or withdraw funds and not using a payment.
“Even though we don’t own a single branch, we actually have the largest branch network in the country,” Ogundeyi claimed.
Kuda’s plans to generate revenues focus largely round leveraging its financial institution balances. “We plan to match different liability classes to the different asset classes that we create. That’s how we make money, that’s how we get efficiency in terms of income,” Ogundeyi mentioned.
In Nigeria, Kuda enters a probably revenue-rich market, however its one which already hosts a crowded fintech subject — because the nation turns into floor zero for funds startups and tech funding in Africa.
In each uncooked and per capita numbers, Nigeria has been slower to transform to digital funds than main African nations, corresponding to Kenya, in line with joint McKinsey Firm and Gates Basis evaluation completed a number of years in the past. The identical examine estimated there may very well be almost $1.three billion in income up for grabs if Nigeria may attain the identical digital-payments penetration as Kenya.
A variety of startups — established and new — are going after that prize within the West African nation — a number of with a technique to scale in Nigeria first earlier than increasing outward on the continent and globally.
San Francisco-based, no-fee cost enterprise Chipper Money entered Nigeria this month.
Sequence B-stage Nigerian funds firm Paga raised $10 million in 2018 to additional develop its buyer base (that now tallies 13 million) and broaden to Asia and Latin America.
Kuda CEO Babs Ogundeyi believes the startup can scale and compete in Nigeria on various elements, one being monetary security. He names the corporate’s official financial institution standing and the Nigeria Deposit Insurance coverage Company safety that brings as one thing that may entice cash-comfortable financial institution shoppers to digital finance.
Ogundeyi additionally factors to choices and value.”We glance to be the following technology financial institution the place you are able to do every thing— financial savings, funds and transfers — and in addition the one which’s least costly,” he mentioned.