Kuda Raises $25m to Provide Banking Service for Africans

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Emma Okonji

Kuda Technologies has raised a $25 million funding that will enable it continue to build out its specific ambition to provide a modern banking service for Africans and the African diaspora, its co-Founder and CEO, Mr. Babs Ogundeyi has said.

The technology company, which currently offers mobile-first banking services in Nigeria, has picked up $25 million in a Series ‘A’ being led by Valar Ventures, the firm co-founded and backed by Peter Thiel, with Target Global and other unnamed investors participating.

This is the first time that Valar, which has invested in a number of fintech startups, including N26, TransferWise, Stash and, just in the last week, BlockFi and BitPanda, has backed an African startup.

Kuda currently provides services for consumers to save and spend money, and it has recently introduced overdrafts essentially revolving credit for individuals.

Ogundeyi said in an interview that the plan is to use these new funds to continue expanding its credit offerings, to build out services for businesses, to add in more integrations and to move into more markets.

The funding is coming on the heels of very strong growth for Kuda, which is co-headquartered in London and Lagos.

It was reported four months ago that the company closed a seed round of $10 million led by Target Global, which is the largest-ever seed round raised by a startup out of Africa.

According to Ogundeyi, “At the time of the seed round, Kuda had registered 300,000 customers: now that figure has more than doubled to 650,000, that base is spending more money through the Kuda app. In November we were doing about $500 million in transactions per month for services like bill payments, card transactions and phone top-ups. We closed February at $2.2 billion.”

Kuda, he added, is following in the footsteps of a number of other so-called “neobanks”, building a suite of banking services with a more accessible user interface and a more modern approach: you interact with the bank using a mobile app, and in addition to basic banking services, it provides tools to help people manage their money more intelligently.

As Ogundeyi describes it, most people who are employed by companies will have “salary accounts” at banks, where companies pay in a person’s wages on a regular basis.

These, he said, will typically be at incumbent banks, but they do not offer the same ranges of services to customers. No mobile apps, no facilities to buy mobile top-ups or make other kinds of bill payments, no AI-based calculators to figure out your monthly spend and provide suggestions on how to manage budget.

Kuda’s deposits, Ogundeyi said, typically start as basic transfers that people make from those “salary accounts” elsewhere. These start out small, may be 20 per centof a person’s wages, but as those users find themselves using Kuda’s payment and other tools more, they are increasing how much they transfer in each payment period.

“As the trust increases you’re naturally more comfortable having money with Kuda,” he said.

Kuda, on the other hand, has its own microfinance banking license from the central bank of Nigeria. This means that on top of building those same money management services, Kuda can also issue debit cards, in partnership with Visa and Mastercard, manage payments and transfers, and build all of the services in the stack itself, including those salary account services and loans,

Ogundeyi further said.