Uganda’s asset financing platform Asaak has secured $30 million in a pre-Series A equity and debt funding round, which saw the participation of angel investors, new and existing investors including Decentralized VC, End Poverty Make Trillions, Founders Factory Africa, HOF Capital, Social Capital and Resolute Ventures.
The traditional lenders (commercial and microfinance banks) are known to be strict on a number of terms and conditions when it comes to accessing finance from them. Not only do they require collateral, but they also require the provision of a guarantor, income history of the prospective borrower and many other requirements. As a result of these “difficult” requirements, many people especially low and middle-income earners shy away…let me rephrase…are shut out from accessing these services. In the first place, these traditional lenders do not seem to cater for the aforementioned category of people as their packages are hardly designed to suit them. This is where startups are taking over as they are leveraging the shortcomings of the traditional lenders.
Asaak, like a handful of other startups, provides financing. Primarily, it provides financing for motorbikes and works with partners in the mobility and e-commerce platforms, as they are one of the largest markets for motorcycles. Thanks to Assak, motorbike (boda boda) users can now own the vehicles they use in their businesses or day-to-day operations instead of renting or leasing…
According to Dylan Terrill, Asaak’s co-founder and Chief Business Officer, “Asaak is unlocking mobility-based work, which literally moves the economy forward and creates upward mobility for these individuals. Bodaboda riders are the lifeblood of Africa, moving people and cargo from home to school to work. They just need access to motorcycles which leads them to better income opportunities and makes them able to provide for their families”.
Now here’s how Asaak operates! The fintech platform uses behavioural and financial data (including earnings, number of trips and ratings from platforms such as Jumia, Safeboda, etc) to determine if a rider should be approved for vehicle financing or not. Using the aforementioned data, the fintech creates a credit score for its users. “The more confident that we are with the data that we have to make a lending decision, the less the other requirements they would need to have. We’re trying to make it as easy as possible for people to get loans. But in some cases, yes, it’s necessary (to have a guarantor) and it makes sense from a lending perspective”, Dylan Terrill, Asaak’s co-founder and Chief Business Officer said.
Asaak which started as a platform that provided funding for farmers and later SMEs switched to motorcycle financing after recognizing the huge opportunity present in the field. According to the startup, it has purchased 5,000 vehicles so far. The startup has also started providing funding for smartphones and fuel. Smartphones are becoming a huge requirement for ride operators, especially those working in delivery and e-commerce. Fuel funding is also another complementary service and it makes so much sense that Asaak provides it. “By financing these types of assets, we’re not just creating a pathway to vehicle ownership, which is good in itself, but we’re creating a stable source of income because of the reliance of drivers throughout the countries that we are in.”
For its smartphone financing option, the startup is working with Samsung which is one of the leading global brands. Other partnerships the company has onboard include a partnership with Untapped Global and another one with South Africa’s Standard Bank. Untapped Global is an investment company and is looking to provide financing for at least 2,000 motorcycles in the space of one year. The partnership with Standard Bank will see Asaak users enjoy benefits that’ll include financial and insurance services.
Standard Bank’s Head of Digital and e-Commerce in Uganda – Aaron Akampa, mentioned that “While we often underestimate the power of the boda-boda (motorcycle transport) in Africa, in many circumstances, it is an ambulance, a pharmacist, and a chef – it brings you everything you need. It takes children to school, it brings people to job interviews, it provides livelihoods for hundreds of millions of Africans. Ultimately, this is new ground for Standard Bank – we haven’t partnered with any other players in this space on the continent yet – it’s the first time we are creating a partnership like this and we can’t wait to see what is ahead”.
Asaak still has plans on expanding throughout Africa and has mentioned that it will be entering six new markets in the nearest future.