Nigerian-based financial services startup, Payhippo, announced that it has closed a US$1m pre-seed round. The funds, according to the startup, would be targeted at scaling its offering, and provide vital loans to small businesses.
The pre-seed funding round was led by Pan-Africa VCs, Ventures Platform, Future Africa, and Launch Africa. Other participants in the fundraising round include Africa-focused VC, Sherpa Ventures; Hustle Fund; and Mercy Corps Venture.
The startup, which was launched last year January by Chioma Okotcha, Uche Nnadi and Zach Bijesse, provide loans to small businesses in Africa – small business often neglected by banks because of their lack of credit histories.
Payhippo claims that since its launch, it has disbursed over 2,600 loans to businesses and is currently making a 25% M-o-M revenue growth.
The startup also claimed that during the COVID-19 pandemic-induced lockdown that crippled many businesses, it had a 97% repayment rate.
Speaking on the funding history of the startup, co-founder, Chioma Okotcha said:
“I helped run my family’s business in Nigeria and I know how tough financing can be for SMEs in Nigeria. That’s why I went to work in microfinance policy. But I saw that there was still such a big need for SMEs in Nigeria and the continent.”
Okotcha further added that:
“As a fintech company, the tech component of what we build is so important, because that’s really what drives how we can access the credit readiness of that SME and how much to give them. The tech does all this calculation in the backend, works out the underwriting, evaluates who the customer, and we’re able to give a loan that is within a safe range.”
Kola Aina, General Partner of Ventures Platform Fund, also commented on the funding round:
“Small businesses are at the core of Africa’s economic growth and we are thrilled to partner with Zach, Chioma and Uche as they build Payhippo. They are essentially bridging the US$158 billion SME financing gap.”
Payhippo noted that its goal is to serve the 40 million small and medium-sized businesses in Africa that are unable to gain access to the funds necessary to grow their business.