Lidya Raises Funding to Expand Access to Capital for Underserved Small Businesses in Nigeria
By PR Newswire
Lidya, a leading fintech platform based in Nigeria, announced today that it has closed a US$1.25 million seed funding round to further its mission of easing access to finance for small and medium enterprises (SMEs) across Africa. The round was led by Accion Venture Lab, the seed-stage investment initiative of financial inclusion leader Accion, which 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. Newid Capital and several angel investors also contributed to the round.
Lidya’s new round of funding will allow the company to accelerate product development and further develop its team. The company’s credit algorithms allow small businesses to build a credit score and access financing to grow their businesses. Lidya currently operates in Nigeria where 20,000 businesses have registered for the service. Lidya’s digital platform uses over 100 different data points to help any SME access much-needed working capital and build a customized credit score. Once a customer has been evaluated by the platform, qualified businesses receive a loan in as little as 48 hours based on their risk and capacity. Lidya has financed businesses spanning the agriculture, consumer goods, services, and creative industries, among others, and is targeting ₦1.5 billion in loan originations to SMEs in Nigeria in its first year of operations.
“Our vision is to digitize and streamline the credit assessment process to make it easy for any SME across Africa to access the funding they needed to grow their business,” said Tunde Kehinde, the co-founder of Lidya.
“This round of funding and backing from our world-class group of investors is a strong validation of the potential of fintech in Africa and will position the company to be the go-to source of financing for entrepreneurs looking to grow their business,” said Ercin Eksin, co-founder of Lidya.
The International Finance Corporation (IFC) estimates that the emerging market MSME financing gap alone stands at more than US$2 trillion. MSMEs contribute up to 33 percent of GDP in emerging economies, but face a significant shortage of capital to fund their businesses. Given their small loan sizes and the high costs typically associated with serving them, banks and traditional lenders are often reluctant to serve these businesses. At the same time, the size of funding needed by many of these businesses make them too large to be eligible for funds from traditional non-bank financial institutions such as microfinance providers.
“Small businesses around the world today are unable to get the financing they need to grow and thrive,” said Michael Schlein, CEO and President of Accion. “Innovative fintech startups like Lidya are addressing this need with technology and new sources of information to help entrepreneurs obtain the necessary capital to hire employees, expand to new markets, and sustain successful businesses.”
Accion Venture Lab Director of Investments Amee Parbhoo said, “Lidya’s promising and scalable model and strong management team position it well to address the unmet need for capital faced by many small enterprises. We at Accion Venture Lab are excited to bring our experience with other small business finance innovators to support Lidya’s effort to meet this need in Nigeria.”
“Newid Capital is pleased to back such a successful team in their work with Lidya,” said Ainsley Morris, partner at Newid Capital. “Tunde and Ercin are well-poised to create a revolutionary model that will expand SME financing across Africa.”
Lidya is a leading Africa-focused fintech platform working to ease access to finance for SMEs across Africa. Through its digital platform, Lidya analyzes over 100 data points to build a customized credit score, assess a customer for a loan and disburse loans to qualified businesses in as little as 48 hours. Lidya currently operates in Nigeria where 20,000 businesses have signed up for its service. Lidya is Co-Founded by Tunde Kehinde and Ercin Eksin, seasoned emerging markets entrepreneurs who co-founded Jumia, the leading eCommerce platform in Africa and Africa Courier Express, the leading last-mile eCommerce delivery company in Nigeria.
About Accion and 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 25 startups that work in over 20 countries worldwide. Venture Lab is a part of Accion, a global nonprofit dedicated to building a financially inclusive world by giving people the financial tools they need to improve their lives. Over more than 50 years, Accion has helped to build 65 next generation microfinance institutions on four continents that today reach millions of clients. Accion’s impact investing initiatives are pushing beyond microfinance to catalyze more than 30 innovative startups dedicated to improving the efficiency, reach, and scope of financial services for the poor. For further information, visit https://www.accion.org/venturelab.
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.