Kuda, a Nigerian fintech startup formerly known as KudiMoney has raised $10 million investment to fund ambitious plans to compete directly with traditional banks.
The $10 million was led by Target Global with Entrée Capital and SBI Investment also participating, along with a number of other notable individual fintech founders and angels.
The list includes Raffael Johnen (founder of Auxmoney), Johan Lorenzen (founder of Holvi), Brandon Krieg/Ed Robinson (founders of Stash), and Oliver and Lish Jung (angel investors in Nubank, Revolut, and Chime).
The funding comes on the back of strong demand for Kuda’s services and its dreams to become the go-to bank not just for those living on the continent, but for the African diaspora according to CEO Babs Ogundeyi. “We want to bank every African on the planet, wherever you are in the world,” he said in an interview with Techcrunch.
Ogundeyi who founded Kuda with Musty Mustapha further revealed that since launching in September 2019, it has picked up around 300,000 customers — first consumers and now also small businesses — and on average processes over $500 million of transactions each month.
Before this new funding, Kuda had raised $1.6 million in a pre-seed round to launch a beta of its service Ogundeyi said.
Kuda does not partner with other banks to manage and back deposits with the challenger bank to in turn focus on customer service, and building user-friendly experiences and value-added services around money management. Instead, Kuda has obtained a microfinance banking license from the central bank of Nigeria.
This means that it manages payments, transfers, issues debit cards (in partnership with Visa and Mastercard). It also, he said, has partnerships with the incumbent banks Zenith Bank, Guaranteed Trust and Access Bank for people to come in for physical deposits and withdrawals when needed.
“We have built the core banking services in-house so we own the full stack,” he said. “It means we don’t have to piggy back on another financial institution. We may choose to partner on certain products but we don’t have to.” He added that the plan will be to get full licenses “in what we consider key regions” but possibly partner in others where the existing infrastructure makes it more logical to do so.
“The reason for the full license is because of monetization,” he added. “As a bank you need to be able to lend, and in Nigeria if you don’t have a full license it’s hard to lend and make money.”
“The emergence of digital challenger banks, providing customers with a free, digital and significantly better banking experience compared to services offered by traditional banks, has seen huge success across the globe,” said Dr. Ricardo Schäfer, Partner at Target Global, in a statement.
“Kuda is one of Africa’s leading digital challenger banks and one of the fastest-growing fintechs on the continent. We are very excited to be working with Babs, Musty, and the entire Kuda team to further build on the fantastic momentum they have had since inception and support them in taking the company to the next level.” He is joining Kuda’s board with this round.
“Kuda’s relentless drive and ability to execute quickly has allowed it to carve out a highly disruptive business model in the finance and banking industry,” added Avi Eyal, partner at Entrée Capital.