Challenger banks continue to make significant advances in attracting customers away from the big incumbents by providing more modern, user-friendly tools to manage their money. Today, one of the trailblazers in this area, Kuda Technologies, is announcing funding to continue building out its specific ambition: to provide a modern banking service for Africans and the African diaspora, or as co-founder and CEO Babs Ogundeyi describes them,
“every African on the planet, wherever you are in the world.” The company, which currently offers mobile-first banking services in Nigeria, has picked up $25 million in a Series A being led by Valar Ventures, co-founded and backed by Peter Thiel, with Target Global and other unnamed investors participating. This is the first time Valar — which has invested in several fintech startups, including N26, TransferWise, Stash, and, just in the last week, BlockFi and BitPanda — has backed an African startup.
Kuda currently provides services for consumers to save and spend money, and it has recently introduced overdrafts (essentially revolving credit for individuals). Ogunyemi said in an interview that the plan is to use these new funds to continue expanding its credit offerings, build-out services for businesses, add in more integrations, and move into more markets.
The funding is coming on the heels of robust growth for Kuda, which is co-headquartered in London and Lagos. Four months ago, when we last wrote about the startup, it had just closed a seed round of $10 million led by Target Global. That was, at the time — and I think still is — the largest-ever seed round raised by a startup out of Africa, and thus as much of a milestone for the tech industry there as it was for Kuda itself.
At the seed round, Kuda had registered 300,000 customers: now, that figure has more than doubled to 650,000, and tellingly, that base is spending more money through the Kuda app.
“In November, we were doing about $500 million in transactions per month,” Ogundeyi said, for services like bill payments, card transactions, and phone top-ups. “We closed February at $2.2 billion.”