Nigerian fintech and lending startup Lidya, has reached a significant milestone by securing $8.3 million in a pre-Series B funding round.
Alitheia Capital, through its uMunthu Fund, led the investment, with participation from Bamboo Capital Partners, Accion Venture Lab, and Flourish Ventures.
This latest round of funding, combined with previous investments of $1.3 million in a seed round and $6.9 million in a Series A round, brings Lidya’s total funding to an impressive $16.5 million.
Lidya’s inception traces back to a critical observation made by its founders, Tunde Kehinde and Ercin Eksin, during their tenure at Africa Courier Express (ACE), a last-mile e-commerce delivery company in Nigeria. They noticed that many of the businesses ACE served were grappling with significant credit and financing challenges. Recognizing the dire need for accessible capital for SMEs, Kehinde and Eksin co-founded Lidya in 2016 as a digital SME lending platform.
On the Lidya platform, businesses can conveniently create accounts and apply for loans ranging from $500 to $50,000, with rapid approval decisions within 24 hours. What sets Lidya apart is its advanced data analytics, leveraging over 100 data points to meticulously evaluate each applicant’s creditworthiness.
Read also: Kora, Finextra to release report on future of fintech in Africa
An Ambitious Global Expansion Strategy
While initially concentrating on the Nigerian market, Lidya executed a strategic maneuver by expanding into Europe, particularly Poland and the Czech Republic, in 2019. This expansion enabled Lidya to address the credit needs of SMEs in these regions. Since then, the company has disbursed over $3 million in loans to SMEs in these two European countries, boasting an exceptional customer repeat rate exceeding 90%.
The decision to venture into Europe was rooted in Lidya’s grand vision to confront the colossal $3 trillion global credit gap. The triumph of its digital lending platform in European markets underscores the company’s commitment to tackling financial challenges on a worldwide scale.
Pioneering an Unconventional Financing Approach
Lidya has adopted an unconventional financing strategy by relying on equity rather than conventional debt financing. This distinctive approach aims to substantiate the efficacy of its lending algorithms and its capability to effectively disburse and recover funds in the market. The company is now in the finalization stages of agreements with banks, family offices, and hedge funds. In addition, Lidya has secured a substantial $300,000 line of credit from Bamboo Capital Partners.
Lidya’s expansion into Europe coincided with the peak of the COVID-19 pandemic, presenting extraordinary challenges to the team. Operating in a decentralized manner, the company successfully initiated operations in two new countries while concurrently managing its Nigerian operations. The team’s unwavering dedication and commitment to its mission allowed Lidya to surmount the hurdles posed by the pandemic.
African mobility Fintech, Moove secures $76 million for expansions
A Vision for a Prosperous Future
With its latest funding infusion, Lidya is primed for substantial growth. The company’s strategic agenda includes the expansion of its teams in Lagos, Prague, and Warsaw, as well as the allocation of a portion of the funds to bolster lines of credit. Lidya’s vision is resolute: to emerge as the premier financial institution catering to the unique needs of SMEs in its target markets. The company’s pioneering lending approach, coupled with its unyielding commitment to SME empowerment, positions it as an exceptionally promising contender in the global fintech landscape.
Tokunboh Ishmael, co-founder and managing director of Alitheia Capital, expressed unwavering support for Lidya’s mission of facilitating access to credit for dynamic and burgeoning small businesses. Ishmael underscored the profound alignment between Lidya’s mission and the overarching objective of driving growth and fostering social impact by enabling access to finance and financial services.
Lidya’s audacious expansion journey, spanning from Nigeria to Europe, epitomizes an extraordinary trajectory. It underscores the company’s steadfast dedication to addressing monumental global financial challenges and propelling the growth of SMEs on a global stage.