Nigeria’s lender Payhippo raises $3 million in seed funding to extend quick loans to SMEs – Mymobiapps
Nigeria’s lending startup Payhippo has raised $3 million in a seed spherical, funding the corporate plans to use in sourcing the expertise wanted to optimize its know-how because it ramps up effort to extend speedy credit score to extra small and medium-sized enterprises (SMEs) in the West African nation.
The spherical was led by an array of angel traders, together with Ham Serunjogi and Maijid Moujaled, the co-founders of the African cross-border funds firm Chipper Cash; Olugbenga Agboola of the San-Francisco primarily based funds agency Flutterwave; Bolaji Balogun, the CEO of funding banking agency Chapel Hill Denham; and Hakeem Belo-Osagie, the founding father of Metis Capital Partners.
This is the biggest quantity Payhippo has raised to date after receiving $1 million in pre-seed funding earlier this yr.
The firm’s co-founder and chief operations officer, Chioma Okotcha, mentioned they’re trying to rent extra engineers and knowledge scientists.
“We capture our data from the loans we issue, and more talent in the team would allow us to optimize our technology to serve our customers better,” she mentioned.
Payhippo says it disburses short-term loans in lower than three hours, a document that continues to be unmatched by conventional banking establishments in the nation, which regularly require debtors to meet stringent conditions, like common account exercise and the upkeep of minimal working balances. A financial institution mortgage software additionally requires a go to to bodily branches and intensive paperwork.
“We really focus on keeping this under three hours, and making sure that businesses can get the money they need when they need it. Ours is also a product that works for the SMEs in terms of a flexible repayment structure,” Okotcha mentioned.
SMEs are the force behind Nigeria’s economy accounting for 96% of companies and 84% of employment in the nation. However, a scarcity of entry to credit score continues to hinder their development and restrict their contribution to the nation’s GDP, according to a study about financial institution loans and SMEs in Nigeria, revealed by the Ilorin Journal of Human Resource Management.
It is that this financing hole that Payhippo was designed to bridge because it was based in August 2019.
“We had seen that traditional banks and lenders wouldn’t loan small businesses mainly because there were no credit scores, or the collateral requirements were too high. We decided to come into the market and create an instant financing option, where we create a credit score that allows small businesses to get the liquidity they need to buy inventory for business continuity,” Okotcha advised Mymobiapps.
“We use data from historical records that borrowers have built with us, but we also check their banking history to see the actual performance of their businesses,” mentioned Okotcha.
Payhippo applies its personal credit score scoring formulation that makes use of totally different SME knowledge to decide the worth of loans to give out. The loans are disbursed via cellphones. The common mortgage disbursed by Payhippo is about $1,300, with the minimal mortgage being about $200.
Payhippo says it’s banking on its quick turnaround time for mortgage functions to develop its buyer base inside Nigeria earlier than venturing to different international locations. The firm says it has up to now disbursed about 5,000 loans since inception, valued at $1 million and with a compensation price of 97%, incomes them $64,000 in revenues. It added that the demand for credit score is excessive, fueling its present 25% month-on-month development.
Going ahead, the corporate targets to faucet the credit score wants of the almost 40 million SMEs in Nigeria to develop its enterprise.
“We know that just 1% of the Nigerian market is about 40,000 businesses, and we want to be in a position where we disburse 40,000 loans in a day,” she mentioned.
Payhippo is one amongst many digital lenders in Nigeria providing short-term loans to SMEs. Others embrace Carbon and FairMoney. Last yr, FairMoney disbursed a complete mortgage quantity of $93 million, representing a 128 proportion level improve from 2019. Carbon additionally disclosed in an earlier interview that it had hit 659,000 prospects final yr and had disbursed $63 million in loans, a rise of 9.1 proportion factors from the 2019 monetary yr.
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