Self-styled, “Bank of the Free,” Nigerian fintech startup, Kuda Bank has raised $55 million in Series B funding as it looks to expand into other African countries. It also plans to launch new product offerings for its Nigerian market.
The funding was made at a $500 million evaluation and comes after raising a $25 million Series A in March 2021 and a $10 million seed round in November 2020. With a $1.6 million pre-seed raise in September 2019 and a $15,000 pre-seed in 2018, its total raise comes to $91.6 million.
The round was co-led by previous investors, Valar Ventures and Target Global. Other investors that participated include Japan-based Strategic Business Investor (SBI) Investment and past angel investors.
Incorporated in 2018 as Kudimoney, the company changed its name to Kuda just before its $1.6 million raise in 2019. The company is the brainchild of co-founders Babs Ogundeyi and Musty Mustapha, CTO, and was founded as a lending platform before transitioning into a digital bank.
Kuda now has 1.4 million registered users — more than double the number it had in March when it had 650,000 registered users.
Per TechCrunch, this Series B round was relatively fast as the company was not actively looking to raise money.
“We felt that Babs and Musty are ambitious on another level. For them, it was always about building a pan-African bank, not just a Nigerian leader,” said Ricardo Schäfer, Partner at Target Global.
According to Ogundeyi, Kuda’s initial business model was built around providing banking services to people who still held accounts with incumbent banks. But this is gradually shifting as more people are paying in and out of their accounts.
Although he does not state the countries where Kuda would launch, he hints that its latest product, the Kuda Bank Overdraft is a sign of things to come.
“It’s a unique product, an overdraft that we pre-qualify the most active users for,” he said. In Q2, it qualified over 200,000 users and pushed out $20 million worth of credit. With a 30-day repayment, he said, so far, default has been “minimal” because of the company’s approach.
“We use all the data we have for a customer and allocate the overdraft proportion based on the customer’s activities, aiming for it not to be a burden to repay,” he added.
Andrew McCormack, a general partner at Valar Ventures, says, “Kuda is our first investment in Africa, and our initial confidence in the team has been upheld by its rapid growth in the past four months.
“With a youthful population eager to adopt digital financial services in the region, we believe that Kuda’s transformative effect on banking will scale across Africa and we’re proud to continue supporting them,” he concludes.