Investor Updates: January 14 2022 - Fintech Farm to launch neobank in Nigeria

Story 1: Fintech Farm to launch neobank in Nigeria

Highlights

• Fintech Farm is a new UK-based fintech startup and has raised a $7.4 million seed round to launch digital banks in emerging markets, including Nigeria.
• Led by Flyer One Ventures and Solid, the investment round will help accelerate Fintech Farm’s plans to launch in eight countries over the next two years. The startup plans to take a credit-led neobank model.
• With plans to launch in Nigeria this quarter, it will be competing with other indigenous players with similar approaches including FairMoney and Carbon. Fintech Farm hopes to edge out the competition by providing cheaper and more accessible financing via credit cards.

-Source: TechCrunch

Zoom Out 

In recent years, several neobanks have launched in Africa as they look to challenge incumbents in their respective markets. These startups don’t operate a monolithic model. In Nigeria, for instance, players such as Sparkle provide banking services to individuals and businesses on a single platform, Brass and Prospa target varying sizes of businesses, while Kuda, VBank, FairMoney, and Carbon offer tailored services to individuals. Currently, digital banks are among the most funded players by VCs in fintech. 

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Story 2: Kenya’s Lipa Later to expand with $12m raise

Highlights

• Kenyan consumer credit platform, Lipa Later, this week confirmed a $12 million pre-Series A fundraising with which the startup hopes to expand to new markets in Africa.
• The round, a mix of debt and equity, was led by Cauris Finance, Lateral Frontiers VC (one of Lipa Later’s first investors), and GreenHouse Capital.
• Founded in 2018, the buy now, pay later (BNPL) company plans to expand in its existing markets Kenya, Uganda, and Rwanda and enter new ones, Tanzania, Ghana, and Nigeria.

-Source: Disrupt Africa

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Lipa Later has exclusive partnerships with retailers across its markets, a proprietary credit scoring and machine learning system that instantly sets limits for consumers, and BNPL API that integrates into e-commerce platforms. The latest investment positions Lipa Later to expand its product offering and edges the startup closer to becoming one of the dominant players in the nascent BNPL space in Africa. In Kenya, the gross BNPL merchandise value is expected to grow from $51.6 million in 2020 to $589.5 million in 2028.

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Story 3: Canada puts $13m in Shell fund for energy access in Africa.

Highlights

• Canada’s development finance institution (FinDev) has donated $13m to the Energy Entrepreneurs Growth Fund (EEGF) to finance energy companies in Africa.
• The Shell-founded, $120m Growth Fund offers financial and technical assistance to early and growth-stage companies working towards increasing access to clean, safe, dependable, and affordable energy for off-grid houses and businesses in sub-Saharan Africa.
• FinDev’s funding is particularly expected to help address the energy needs of women in Africa, both consumers and entrepreneurs. Last year, EEGF invested in pan-African energy firms Baobab+, Yellow, and Redavia. 

Source: Nairametrics

Zoom Out

Globally, sub-Saharan Africa (SSA) has the lowest energy access rates. Only about half of its people have electricity, with roughly 600 million people lacking power. The Africa energy sector thus represents an investment opportunity with estimates suggesting the region needs an annual investment of $70bn in renewable energy projects until 2030 for clean energy transformation to happen.