One of the largest funding rounds in the tech sector in Nigeria will help bring innovation to financing for micro, small, and medium businesses
Lagos, Nigeria, May 23, 2018 — Lidya, the digital financial services platform focused on improving access to credit for micro-, small-, and medium-sized enterprises (MSMEs) in Africa, today announced that it has raised $6.9 million in a Series A investment round, one of the largest in Nigerian tech history. The funding was led by Omidyar Network, the Silicon Valley impact investment firm established by Pierre Omidyar, the founder of eBay. New investors, Alitheia Capital (via the Umunthu Fund), Bamboo Capital Partners, and Tekton Ventures, also joined the round, which included existing investors Accion Venture Lab and Newid Capital.
“Lidya was founded on a simple, yet fundamental idea: technology can unleash and empower a generation of business leaders and entrepreneurs throughout Africa by revolutionizing how risk is assessed, credit is underwritten, and customers are banked,” said Tunde Kehinde, cofounder of Lidya.
“We are excited by the overwhelming support from the investor community, which signals a great confidence in our business model and team,” added Ercin Eksin, cofounder of Lidya.
Globally, MSMEs are one of the strongest drivers of economic development, innovation, and employment, and yet access to finance is frequently identified as a critical barrier to growth for these businesses. 40 percent of MSMEs in emerging markets are underserved when it comes to access to credit—representing an estimated $5.2 trillion credit gap. In Nigeria, where Lidya is based, the IFC estimates that there is an MSME credit gap of at least $25 billion.
“Access to flexible, affordable credit is at the crux of unlocking growth in the MSME sector. Lidya is addressing that by using smart algorithms to analyze transaction data from small businesses to assess their creditworthiness,” said Ameya Upadhyay, investment principal at Omidyar Network and Lidya’s newest board member. “This data-driven approach allows the company to offer loans without the need of hard collateral—a requirement that has scuttled MSME financing in Africa. In the process, Lidya gathers insights that help expand its product portfolio to become a holistic partner to small businesses.”
How it works
In less than 15 minutes, an MSME can create a free account online or download the Lidya app on to their connected devices. The MSME can then share or load bank account or transaction information to the platform. Following this, the MSME can manage cash flows, customer data, and create and send invoices digitally.
Requesting a loan against a pending invoice is easy and decisions are made within 48 hours. Once approved, funds are disbursed on the same day. To assess credit risk, Lidya uses nearly 100 data points to evaluate each applicant and builds a unique credit score. Businesses can apply for loans ranging from $500 to $50,000, without the need to go to a physical location, present audited financials and projections, or provide collateral. Repayment schedules and fees are agreed upfront and with total transparency.
Since inception in 2016, Lidya has made over 1,500 business loans to help MSMEs in farming, hospitality, logistics, retail, real estate, technology, and health to get the capital they need to grow their operations.
The funds raised in the Series A round will allow Lidya to expand its loan book, scale in Nigeria, enter new markets in Africa, and bring in more skilled professionals, particularly data scientists and engineers.
Lidya has also been recently accepted into the MasterCard Start Path Program, a global effort to support innovative startups developing the next generation of commerce solutions.
Lidya is the future of finance for small businesses in frontier markets. Our goal is to help great business owners access financing and build a credit score through an easy and inspiring lending process. Lidya is currently live in Nigeria and is using world-class technology to help small businesses invoice customers, access credit, and build credit scores to grow their businesses. Lidya was founded by Tunde Kehinde, the former Managing Director of Jumia Nigeria, the largest eCommerce platform in West Africa, and Ercin Eksin, the former Chief Operating Officer of Jumia Africa responsible for operations in six of the largest economies in Africa. Tunde and Ercin also cofounded Africa Courier Express, the largest direct-to-consumer delivery provider in Nigeria. Tunde and Ercin attended Harvard Business School and the University of Chicago-Booth, respectively, for their MBAs. You can learn more here: www.lidya.co.
About Omidyar Network
Omidyar Network is a philanthropic investment firm dedicated to harnessing the power of markets to create opportunity for people to improve their lives. Established in 2004 by eBay founder Pierre Omidyar and his wife Pam, the organization invests in and helps scale innovative organizations to catalyze economic and social change. Omidyar Network has committed more than $1 billion to for-profit companies and nonprofit organizations that foster economic advancement and encourage individual participation across multiple initiatives, including Financial Inclusion, Digital Identity, Education, Emerging Tech, Governance & Citizen Engagement, and Property Rights. You can learn more here: www.omidyar.com.
About Accion Venture Lab
Accion Venture Lab is the world’s leading seed-stage investor in FinTech for the underserved. Venture Lab invests capital in, and provides support to, innovative FinTech startups that increase access to, improve the quality of, or reduce the cost of financial services for the underserved at scale. Since launching in 2012, Venture Lab has deployed over US$10 million across more than 30 startups that work in over 20 countries worldwide. Venture Lab is a part of Accion, a global nonprofit committed to creating a financially inclusive world, with a pioneering legacy in microfinance and FinTech impact investing. Accion catalyzes financial service providers to deliver high-quality, affordable solutions at scale for the three billion people who are left out of–or poorly served by–the financial sector. For more than 50 years, Accion has helped tens of millions of people through its work with more than 90 partners in 40 countries. For further information, visit https://www.accion.org/venturelab.
About Alitheia Capital (via the Umunthu Fund)
Goodwell’s uMunthu fund is a €100-million inclusive growth fund for Sub-Saharan Africa that invests in financial inclusion, agribusiness, and other inclusive growth sectors, with a heavy focus on the digital economy. The fund is part of the third generation of Goodwell funds, with dedicated and experienced local teams, building on the success of predecessor funds in India and West Africa. The investment in Lidya was executed by Alitheia Capital, co-manager of the uMunthu fund. uMunthu’s portfolio companies include Pagatech (Nigeria), Nomanini (South Africa), Musoni Systems (pan-African), WhereIsMyTransport (pan-African), and Oradian (pan-African). For more information, please contact Nico Blaauw, Goodwell, at email@example.com.
About Bamboo Capital Partners
Bamboo Capital Partners (“Bamboo”) is a pioneering private equity firm that delivers positive social and financial value. Bamboo invests in businesses primarily in financial services, energy and healthcare that leverage technology to have impact at scale in emerging markets. Founded in 2007, Bamboo is a longstanding sector leader and through continuous evolution has a honed strategy for growth. Bamboo has raised over $300m across four funds to date. Bamboo has positively impacted over 96 million lives and created over 30,000 jobs through its investments in over 30 countries. The firm has a team of 25 professionals active across Europe, South America, Africa and Asia. For more information, please visit http://www.bamboocp.com.
About Newid Capital
Newid Capital is a direct-investment fund focused on financial services and financial technology companies in developing markets. Through its investments, Newid Capital aims to expand financial services to currently underserved markets and individuals. Newid actively seeks early- and mid-stage startups that are looking for investment and operational assistance. Newid is able to leverage personal experience in building, and exiting, financial services companies from the viewpoint of both the entrepreneur and the investor.