In pre-Independent Nigeria, esusu was a system that allowed groups of people within a society, particularly in Yorubaland, to contribute to informal savings and credit associations for their mutual benefit.
Esusu has since evolved to incorporate different forms and it’s now propelled by digitalisation. It has also crossed borders to gain acceptability across other parts of Africa and in recent times in the United States.
Serena Williams, global tennis champion, recently picked interest in Esusu, a U.S. based fintech start-up that allows renters to build and improve credit by reporting their rent payments to credit bureaus.
The company raised a $10 million Series A round, led by Motley Fool Ventures. The startup which was co-founded by Nigerian, Abbey Wemimo, has now raised over $14 million in venture funding since its launch.
According to reports, Williams invested an undisclosed amount through her venture capital firm, Serena Ventures, as part of the start-up’s first funding round.
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Explaining why she took the step, Williams said she started Serena Ventures to invest in diverse founders and early-stage companies that outperform and generate impact, while at the same time empowering others and creating opportunities.
“Esusu is definitely one of those companies,” Williams told CNBC. “Esusu is really focused on credit building and creating pathways to financial inclusion not only for working families but for individuals as well.”
While there is a lot of interest in the US housing market, for families getting approved for a home is as difficult as it has been in years. The prevalence of small mortgages has decreased since the Great Recession. Between 2009 and 2018, the number of mortgages of $10,000 to $69,999 declined 38 percent and those for $70,000 to $150,000 fell 26 percent. By contrast, mortgages above $150,000 fell 26 percent. By contrast, mortgages above $150,000 increased by 65 percent.
Founded in 2018 by Nigerian-US-based Abbey Wemimo and Samir Goel, an Indian immigrant, Esusu is attempting to provide opportunities to the individuals and families who are would likely be affected by the low availability of small mortgages by leveraging the Nigerian-originated informal savings systems. It only adds some twist to it.
The company uses its platform to record and report rental payments to the largest credit bureaus in the US: Equifax, TransUnion, and Experian.
To grasp the opportunity for investors like Williams, consider the approximately 41 million families who live in apartments, according to the US’s National Multi-Family Housing Council, and the 45 million Americans who do not have a credit score, according to a 2020 report by the Consumer Financial Protection Bureau.
Esusu now works with 30 percent of the biggest landlords on the National Multifamily Housing Council.
In an interview with CNBC, Wemimo said the company exists in 2 million households across all 50 states and wants to grow that to cover 5 million households within the next year.
“This is really a massive market that has been long underserved,” Williams said. “We invested in Esusu’s mission and have a strong conviction in the potential of this space. The tech-enabled model really creates a win-win situation for stakeholders, renters to landlords. Our significant investment in Esusu will help the company scale and unlock opportunity.”
While the founders said the new funding will be used to scale the business and increase cybersecurity, Williams now joins other big names—Equity Alliance, Next Play, Concrete Rose, and others, including Motley Fool Ventures—who are investors in the company.
Ollen Douglass, managing director of Motley Fool Ventures, described the fintech as an excellent example of an innovative fintech company leveraging technology to deliver scalable and much-needed financial solutions for underserved populations.
“Their inclusive credit building offerings can unlock access to credit for low-to-medium income households across the country,” he said in a release.
Nigerian-born Wemimo further said that the Series A financing enables Esusu to double down on growth through product innovation, top talent recruitment, and building the most comprehensive financial health platform in the market for low-to-medium-income families.
