Nigeria-based lending and business financing platform, Payhippo, has been accepted into Y Combinator's Summer 2021 cohort, joining 167 startups, four of which are African.
Co-founded in January 2020 by Zach Bijesse (CEO), Chioma Okotcha (COO), and Uche Nnadi (CTO), Payhippo has raised $1m in pre-seed, backed by VCs which include Ventures Platform, Future Africa, and Launch Africa.
Getting into the Y Combinator accelerator programme will give the platform access to $125,000 seed fund and other networking and mentorship opportunities.
The accelerator gets a 7% stake in startups they invest in, and Okotcha revealed in an interview with Business Insider Africa, that at first, this condition caused a bit of mixed emotions when the news of their acceptance into the cohort came.
"We had mixed feelings at first because 7% of your company is a lot to give up. We called up a few YC alumni from our market and got their input. Ultimately we went with Y Combinator because we saw how much we could learn from the YC partners and the overall network."
However, she believes that joining YC will bolster the startup's credibility in the public eye, and boost validation.
"We believe it’s already paying dividends both for operations as the brand name and global recognition of Y Combinator has brought interest from lending capital partners…the YC brand name signals to the job market that working at Payhippo means people can contribute and do meaningful work."
As a business financing platform focused on Small and Medium Enterprises (SMEs), Payhippo helps SMEs access loans and build their credit history with an average monthly loan size of $1,600 from which they make $96 — a 6% interest.
Payhippo claims to have disbursed 3,000 loans worth over $4.1m to SMEs in Nigeria in a year and eight months of operations.
Okotcha explains that expansion plans for the startup include growing the team by hiring more people and increasing their talent channel.
"We’ve been hiring like crazy, investing in and looking to hire a head of finance, engineers, and SME salespeople. It is exciting to see an increase in our talent pipeline now as we have joined YC. We’re always looking for more talent, so reach out to introduce yourself."
It won't be out of place to question the role that Payhippo's acceptance into Y Combinator plays in solving issues like lack of trust and low access to collateral-free loans for SMEs in rural areas in Nigeria.
Probably, the funding, mentorship, and network that Y Combinator provides can help the founders gain useful insight into reaching more people and tackling Nigeria's unique crediting challenge.