Kuda Bank Raises Fresh $55m to Conquer Banking Sector
By Adedapo Adesanya
Nigerian financial technology startup, Kuda Bank, has raised a Series B of $55 million at a valuation of $500 million to expand its new services for Nigeria and prepare its launch into more countries on the African continent.
The new round was co-led by existing investors, Target Global and Valar Ventures, the firm co-founded and backed by PayPal co-founder, Mr Peter Thiel, while SBI Investment and other previous angels also participated.
With the latest round of financing, co-founder and Chief Executive Officer of Kuda, Mr Babs Ogundeyi, said the company aims to build a new take on banking services for “every African on the planet.”
“We’ve been doing a lot of resource deployment in our operational entity, in Nigeria. But now, we are doubling down on the expansion and the idea is to build a strong team for the expansion plans for Kuda.
“We still see Nigeria as an important market and don’t want to be distracted. So, [we] don’t want to disrupt those operations too much. It’s a strong market and competitive.
“It’s one that we feel we need to have a stronghold on. So, this funding is to invest in expansion and have more experience in the company with relation to expansion,” Mr Ogundeyi said, as per TechCrunch.
Mr Ogundeyi, however, did not say which countries would be Kuda’s next targets but said that its most recently launched product was Kuda’s first move into credit.
The company’s new offering allows credit by way of an overdraft allowance, to this he says, “It’s a unique product, an overdraft that we pre-qualify the most active users for.”
In the second quarter of the year, it qualified over 200,000 users and pushed out $20 million worth of credit. With a 30-day repayment, he said that 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 who co-founded the firm with Peter Thiel and James Fitzgerald, said that the still-nascent potential of the market, and how Kuda is approaching that, were behind its decision to invest in the startup another time.
“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,” he said. “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.”
This comes after they invested in the recent Series A of $25 million in March.
It was also revealed that Kuda was not proactively raising money at the time Series B was initiated and closed.
According to another one of the participants, Mr Ricardo Schäfer, the partner at Target who led the round for the firm said, “We felt that Babs and Musty” — Musty Mustapha, the co-founder and CTO — “are ambitious on another level. For them, it was always about building a Pan-African bank, not just a Nigerian leader.
“The prospect of banking over 1 billion people from day one really stood out for me at the beginning.”
Currently, Kuda has 1.4 million registered users, which is more than double the number it had in March when it had 650,000 registered users.
In December 2020, Kuda, which has its headquarters in Lagos and London, raised $10 million in a seed round, the largest-ever seed round raised by a startup out of Africa.