Kudi, a Nigeria based Financial Technology (FinTech) company focused on digital payments and collections, raised USD 5.0 million (503.6 million shillings) in Series A funding.
The funding round was led by San Francisco based Partech Ventures, an investment firm that finances and supports technology and digital companies.
The funding round was also joined by Michael Seibel, the CEO, and a partner at Y Combinator, an American based seed accelerator. Existing investors Khosla Ventures and Y Combinator also participated in the funding round.
Kudi has raised a total of USD 6.7 million having raised USD 1.7 million in seed capital. Kudi seeks to make financial services accessible and affordable for all Africans, and they achieve this by enabling the underbanked and unbanked Africans access to basic financial services like money transfers, bill payments, and cash withdrawals through an agent network and through mobile phones.
Since its launch in January 2017, Kudi has grown its agent network to over 4,500 merchants and is adding new agents every day. The company makes it easy for agents to sign-up and have more visibility into the company’s day-to-day operations. They process over USD 30.0 million (3.0 billion) in payments each month.
Kudi will use the funding to grow its team, grow its agent network, develop and launch new financial services products such as savings, loans, and insurance and build partnerships with banks and other FinTech companies.
FinTech remains the most attractive sector and was the highest funded sector for investors in 2018 with 4 of the 10 largest deals made in 2018 being from this sector.
The growth in the funding of FinTech companies is expected to improve due to;
FinTech lending and microfinance institutions, in general, have been a major attraction for investors in Kenya and Sub-Saharan Africa.
Lack of access to finance is a major issue for entrepreneurs and Micro, Small and Medium Enterprises (MSMEs) across Africa. According to the IMF, there are 44.2 million MSMEs in Sub-Saharan Africa with potential demand for USD 404.0 bn in financing.
The current volume of financing in Sub-Saharan Africa is estimated at USD 70.0 billion signifying a huge financing gap of USD 331.0 billion. Microfinance institutions aim to bridge this gap by offering convenient access to credit.