Nigerian-based digital bank, Kuda, has announced securing $10 million in seed investment and the investors who participated in this round include Berlin-based VC, Target Global, who is the lead investor; Entrée Capital and SBI Investment.
Other notable angel investors participated including Oliver and Lish Jung who invested in Nubank, Revolut, and Chime—other mobile challenger banks in Brazil, the UK and US.
At the time Kuda closed its $1.6 million pre-seed round in September 2019, it was said to have arguably raised the highest pre-seed round for a Nigerian startup.
Founded in 2016 by Babs Ogundeyi and Mustapha Musty as Kudimoney, the startup launched as a lending platform before transitioning into a digital-only bank after receiving a banking license from the Central Bank of Nigeria (CBN) in June 2019.
Without a physical location, Kuda allows users to make airtime purchases, access bill payment options, manages their payments and transfers, in addition to issuing free debit cards and allowing free account opening online.
The company previously had strategic partnerships with three West African banks — Guaranty Trust Bank (GTB), Access Bank and Zenith Bank.
This was done to give users access to Kuda debit cards and enable them to make physical deposits as well as withdrawals via these banks.
“We have built the core banking services in-house so we own the full stack. It means we don’t have to piggyback on another financial institution. We may choose to partner on certain products but we don’t have to.
“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,” he said.
The startup now has more than 300,000 customers—both individual consumers and small businesses—using its platform while processing over $500 million worth of transactions monthly.
Speaking on the deal, Mr Ricardo Schäfer, partner at Target Global, noted that digital challenger banks like Kuda are providing users with a better banking experience than traditional banks.
He noted that this was the reason the VC firm decided to be the lead investor in this round.
“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 said.