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Nigeria’s Kuda raises $10M to be the mobile-first challenger bank for Africa

The African continent is currently one of the fastest-growing regions when it comes to mobile growth, and financial technology companies that are building services to meet that rapidly-expanding market are getting a lot of attention.

In the latest development, Kuda, a startup out of Nigeria that operates a popular mobile-first challenger bank for consumers and (soon) small businesses, is announcing that it has raised $10 million — the biggest seed round ever to be raised in Africa. The funding comes on the back of strong demand for its services and its ambitions — according to CEO Babs Ogundeyi — to become the go-to bank not just for those living on the continent, but for the African diaspora.

“We want to bank every African on the planet, wherever you are in the world,” he said in an interview. It’s starting first in its home market: 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.

Kuda

“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.

The rise of the challenger bank has been one of the more interesting developments in the world of consumer fintech, with companies like N26, Monzo, Starling, Chime, NuBank and Revolut finding a lot of traction with younger users.

But unlike many of these, Kuda does not partner with other banks to manage and bank 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.

“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. “Nigeria has the potential to be a great national economy if it’s well harnessed,” he said. “Tech is contributing significantly to that. That is why there is a lot of interest and why we are excited to be there.” Ogundeji said.

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