Tunde Kehinde, co-founder Lidya
Nigerian fintech and digital lending platform Lidya announced on Wednesday that it raised $8.3 million in a pre-Series B funding round. Founded in 2016 by Tunde Kehinde and Ercin Eksin, the platform provides loans to Small and Medium-scale Enterprises (SMEs) across industries of farming, hospitality, logistics, retail, real estate, technology, and health.
Lidya operates a credit algorithm that enables its customers to build a credit score and gain access to its loan products. The process of applying for loans is done online through the Lidya mobile app, which customers can use to share details that prove their worthiness to receive a loan. Lidya is operational in New York, Lagos, Porto, Warsaw, and Prague and as of October 2019, had provided approximately 10,000 loans in Nigeria.
The funding round was led by Alitheia Capital via its uMunthu Fund. Other investors that participated in the funding round include Flourish Ventures, Bamboo Capital Partners, and Accion Venture Lab.
In March of 2017, Lidya raised $1.25 million in a round led by Accion Venture Lab with participation from Newid Capital, Savannah fund, and David Chan. The startup raised $6.9 million in its Series A round led by Omidyar Network. In total, the startup has raised $16.5 million from all its rounds. The company plans on growing its lending operations for SMEs across the various markets it already operates.
SMEs can apply for loans between $500 to $50,000 depending on their credit score, decisions are reached and loans disbursed within 24 hours. The company says that it uses 100 data points to evaluate each applicant and build a credit score for them to access credit risk. As of 2018 when the company announced a funding round, it had disbursed more than 1,500 unique loans and chose to enter into the European market instead of widening its horizon in Africa as many has expected.
The company launched operations in Poland and the Czech Republic in 2019 which fully kickstarted in March and April 2020 respectively. According to the startup, more than $3 million has been disbursed to SMEs in the two aforementioned countries. The company said that more than 25,000 loans had been issued and said that it has a customer repeat rate of 90 percent.
Explaining the reason for the Europe expansion, the startup’s CEO – Tunde Kehinde said that “We wanted to build a global business from day one given the size of the problem where there is a $3 trillion credit gap. We challenged ourselves not to limit ourselves to one market and went through some data before expanding to Europe”.
Lidya started its operations in Europe in the heat of the pandemic and according to Tunde Kehinde, this made running operations tough for the startup’s Europe team. “It is difficult enough to attempt to launch in two new countries but try doing that remotely. We’re so decentralized. We had operations in Nigeria, and we were launching in Eastern Europe remotely, making sure the puzzle stays together. The team really stepped up. Everyone doubled down on the mission and we came out of the year without having any deterioration”, he said.
“Now the focus is to get back to gear. We want to be able to do 5x what we’ve done historically by this time next year. If we do that, we’ll be successful, and our customers will be successful as well”, he added.
“Lidya is tackling the fundamental challenge of providing access to credit for dynamic small and growing businesses that otherwise have limited options for financing working capital to scale their businesses in Africa and Europe. Alitheia Capital and Goodwell are pleased to be backing a team whose mission aligns with our objective of driving growth and social impact by enabling access and inclusion to finance and financial services”, Alitheia Capital co-founder and managing director Tokunboh Ishmael said while speaking on the investment.
“We’re really excited about the fact that we started in Nigeria and now our product is live in two European countries. Typically people come into Nigeria from other parts of the world but we’ve gone from Nigeria to other parts. We’re proud of the traction we’ve gotten in our push to build the biggest finance house for SMEs in our markets”, the startup’s CEO said about the funding round.