Nigerian fintech and lending startup Lidya has announced that it has completed its US$8.3 million pre-Series B funding round.
Alitheia Capital led the investment through its uMunthu Fund with the participation of Bamboo Capital Partners, Accion Venture Lab and Flourish Ventures. In addition to the US$1.3 million seed round secured in 2017 and US$6.9 million Series A a year later, Lidya has currently raised a total of US$16.5 million and this investment will see Lidya grow its lending operations for small and medium businesses across its markets.
The idea of Lidya came to life after the CEOs Tunde Kehinde and Ercin Eksin identified the need to offer lending services whilst at their previous company Africa Courier Express (ACE). ACE was a last-mile e-commerce delivery company that provided logistics services to businesses and consumers.
The founders, who also held founding and executive roles at Jumia Nigeria, realised that a large number of businesses that they worked at ACE had many credit and financing issues. Although other alternatives existed, the founders felt these platforms could not adequately cater to their ever-growing needs.
As a result, the co-CEOs launched Lidya as a digital SME lending platform in 2016. On the platform, businesses can create accounts and apply for loans ranging from US$500 to US$50,000, with decisions made within 24 hours.
Lidya claims to use 100 data points to evaluate each applicant and build a credit score for them to assess credit risk. When the company announced its raise in 2018, it had disbursed 1,500 business loans and was poised to enter new African markets. But it chose Europe instead.
In October 2019, Lidya announced that it had leading operations in Poland and the Czech Republic but it was not until March and April 2020 the company’s activities in Eastern Europe fully kickstarted. Since then, Lidya claims to have disbursed over US$3 million to SMEs in the two countries. To date, the company has disbursed over 25,000 loans and claims to have more than a 90% customer repeat rate.
So, what was behind the decision to expand to Europe instead of other African markets? “We wanted to build a global business from day one given the size of the problem where there is a US$3 trillion credit gap,” CEO Kehinde said to TechCrunch. “We challenged ourselves not to limit ourselves to one market and went through some data before expanding to Europe.”
In regards to the investment, Alitheia Capital co-founder and managing director, 'Tokunboh Ishmael said: “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.”
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