Kuda Technologies, a London-based digital bank with a focus on Nigeria and Africa markets, has raised $25 million Series A funding to launch a simplified lending service currently undergoing a trial with select customers, grow its digital banking services, and its talent and leadership base.
Led by Valar Ventures, the new investment takes Kuda Bank’s total funding close to $40 million. Barely six months ago, Kuda had raised $10 million, the largest seed round ever raised in Africa.
This is the first time Valar Ventures – founded by Peter Thiel – is investing in Africa, having already backed other notable fintech firms including Germany’ N26, the UK’s Wise, and Mexico’s Albo. .
Other participants in the funding include several existing investors such as Target Global, a venture capital firm headquartered in Berlin.
Founded in September 2019 by Babs Ogundeyi and Musty Mustapha as a full-service digital bank, Kuda has grown to provide business-to-consumer (B2C) and business-to-business (B2B) services to over 600,000 customers in Nigeria and processed over $2 billion in transactions as of February 2021, up from $5.2 million in February 2020.
“At Kuda, we know that the companies which are best able to leverage technology and talent will be the same companies which are best positioned to provide huge numbers of people across Africa with access to a vastly improved financial system that places the customer at its centre,” Babs Ogundeyi, CEO of Kuda said in a statement.
Kuda’s funding is a further indication that investors’ interest in Africa-focused fintech companies is on the rise and could break the ceiling previously set in 2019. Last week, Flutterwave another Nigerian-founded payment company raised $170 million to take its valuation to over $1 billion.
But importantly, Kuda’s raise is a signal to digital lenders that competition is about to assume more intensity. Kuda has always boasted it was the ‘Bank of the Free’ based on free transaction services it provided to its users. While it is unlikely that it would give zero-interest loans or even single-digit interest loans, customers are more likely to see a reduction in its loan offers. Kuda is also one of the very few digital lending businesses in South Africa, the continent’s second-largest economy.
Following the raise, Kuda will also expand to other African countries.
“Nigeria is at a tipping point in the adoption of digital banking,” Andrew McCormack, General Partner, Valar Ventures, said. “With the rapidly growing, youthful population who are open to new financial alternatives, Kuda is well-positioned to benefit and will transform the landscape of African banking. We are excited to lead their Series A and continue on the journey alongside Kuda.”
McCormack will join the Board of Kuda Technologies following the conclusion of the funding round.
Kuda employs more than 120 employees across 3 office locations: London, Lagos, and Cape Town. With a microfinance banking license in Nigeria, custom-built banking technology, and no physical branch network, Kuda
