Nigerian digital bank, Kuda, raises $55m at a $500m valuation

Kuda, a Nigerian digital bank, has raised $55 million in a Series B funding round co-led by existing investors – Valar Ventures and target Global, including SBI and a host of previous angel investors.

This follows a recent raise of $25 million led by by Valar Ventures, the firm co-founded and backed by Peter Thiel, with Target Global and other unnamed investors in March 2021.

Kuda says that the funds raised through its London entity, will be used to expand its Nigerian operations and to prepare for its launch in other African countries.

Kuda claims it now has 1.4 million registered users, a 124% growth from the 625,000 it stated it had in its $25 million raise in March 2021.

Founded in 2019 by Babs Ogundeyi (CEO) and Musty Mustapha (CTO, Kuda has a microfinance banking license from the central bank of Nigeria so it does not partner with other banks to manage and bank deposits.

Kuda recently launched an overdraft product which it claims, has been a major factor in its customer growth. According to Babs Ogundeyi, “It’s a unique product, an overdraft that we pre-qualify the most active users for.” In Q2, the bank qualified over 200,000 users and pushed out $20 million worth of credit. He added that, “With a 30-day repayment, so far default has been “minimal” because of the company’s approach. We use all the data we have for a customer and allocate the overdraft proportion based on the customer’s activities, aiming for it not to be a burden to repay.”

According to Andrew McCormack, a general partner at Valar Ventures; “Kuda is our first investment in Africa and our initial confidence in the team has been upheld by its rapid growth in the past four months. With a youthful population eager to adopt digital financial services in the region, we believe that Kuda’s transformative effect on banking will scale across Africa and we’re proud to continue supporting them.”