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Verdant Capital Raises USD 9.9 M Series A Equity Capital for Tugende, a Leading Technology Enabled MSME Lender in East Africa

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Edmund Higenbottam, MD of Verdant Capital - Investorsking.com

The transaction is the most recent for the award-winning fintech and financial inclusion investment banking franchise of Verdant Capital.

Partech Africa, a member of the Partech Group, a leading global technology venture capital fund, and Enza Capital invested in the USD 3.6 million extension round – agreed and structured in 2020 – bringing the total Series A volume to USD 9.9 million. This adds to the first close which was led by Mobility 54, the Africa-focused venture capital entity backed by the Toyota Group as well as USD 12 million of debt financing raised over the last 18 months, through institutional investors from the UK, Germany, Switzerland, the Netherlands and South Africa. Verdant Capital serves as Tugende’s financial advisor and arranger for its equity and debt capital raises.

The MSME credit gap across sub-Saharan Africa amounts to more than USD 331 billion per year, with a gap of USD 37 billion in East Africa alone. The growth of innovative and technology enabled business models, such as Tugende’s, are helping fill the credit gap left by traditional banks. The capital raises for Tugende strengthen its balance sheet and allow the expansion of its loan portfolio. Having built its leading position financing boda bodas (motorcycle taxis) in Uganda, Tugende launched its Kenyan operations in late 2019, kick-starting its regional expansion, while continuing to add new asset products for other types of informal sector clients. The equity investments and partnerships with leading equity firms will also accelerate Tugende’s technology development and organisational growth.

Tugende uses asset finance, technology, and a high touch customer support model to help micro, small and medium enterprises (MSMEs) own income-generating assets. Tugende has served over 43,000 clients with more than 16,000 having achieved ownership of at least one asset. Its core asset finance packages include medical and life insurance, training, safety equipment and digital credit profiles in addition to affordable asset finance. Tugende has broadened the productive assets it finances to include fishing boat engines, cars, refrigerators and other income generating equipment and is also currently piloting financing for e-mobility assets. All payments are digital and Tugende provides proprietary credit scores automatically to all clients to help them monitor their performance and unlock new opportunities like discounts and new products.

Tugende’s Series A transaction cements Verdant Capital’s track record in raising capital for high impact emerging financial technology leaders and bringing these businesses to a broad range of global investors. In recognition of Verdant Capital’s strong capital raising volumes in the last 12 months across East, West and South Africa, Verdant Capital was awarded Best Fintech Capital Raising Team in Africa, by cfi.co in its Q1 2021 business and finance awards. In the recent cfi.co awards, ESG and impact investing themes were writ large with BBVA and Credit Mutual, from Spain and France, respectively, winning accolades for Responsible Investment Management and Neuberger Berman’s award for its North American ESG investment platform.

Verdant Capital won the award following a period of record deal volumes in Africa, with some USD 500 million of capital raising and M&A in the Fintech sector in 2020. Verdant Capital successfully completed transactions in the sector with a total value of USD 40 million in 2020. The capital raises included businesses such as Tugende, Retail Capital, a South African SME-credit tech player, and Planet42, a South African car-subscription business.  Based on the growth in its own pipeline, Verdant Capital expects sector-wide deal volumes in 2021 to exceed the levels set in 2020.

Verdant Capital’s ability to showcase its clients to a global audience is further enhanced by its proprietary annual global investor conference, Video Africa. The second edition hosted in March was attended by 45 leading specialist investors from 22 countries, showcasing 18 of the firm’s leading fintech and financial services clients from across Africa.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Fund Raising

Bankly, Nigerian Fintech Startup Raised $2 Million in Seed Round

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Bankly, a fintech startup that focused on digitizing cash for the Nigerian unbanked population, announced it has raised $2 million in a seed round.

The company founded by Tomilola Adejana and Fredrick Adams in 2018, is digitizing the popular traditional thrift known locally as esusu or ajo collection for over 100 million adults in Nigeria.

The first phase is building agent networks which is good but that’s not the goal,” CEO Adejana stated. “Just in the same way mobile inclusion happened, you need to then focus on acquiring customers who, after transferring cash to their mobile accounts, use it to buy airtime or make payments. We call that the three-phase process. The distribution first, then focusing on the consumer, after that full digitization. This is how we reach financial inclusion.L-R: Fredrick Adams (CPO) and Tomilola Adejana (CEO)The fintech startup operates like a traditional bank with fewer revenue, assets, customers and operational costs. However, because Bankly does not spend a lot on acquiring customers and building physical presences like Kuda Bank, it can pass those costs to customers as interest and still report decent margins going forward.

The company presently has 15,000 agents across the country, up from 2,000 in 2020.

Speaking on finding investors, Adejana said “We’ve had to be patient to make sure that we were talking to people who deeply understand the problem and are passionate about solving it and are not about getting returns as soon as possible,” she said.

The seed round was led by Vault, the holding company of VANSO, a fintech that was sold to Interswitch in 2016, Plug and Play Ventures, Rising Tide Africa and Chrysalis Capital.

Given our over twenty years experience in Nigeria’s fintech industry and previous exits, we strongly believe that Bankly understands the nuanced needs of this market — not to mention the team, strategy, and technology — to succeed in bringing affordable financial services to the unbanked. We are delighted to participate in this financing round as Bankly moves into its next growth stage,” Idris Alubankudi Saliu, partner at Vault said.

According to Adejana, the startup plans to grow its customer base to 2 million unbanked Nigerians in the next three years. She explained that the goal is to deepen the Central Bank of Nigeria’s goal of increasing people in the financial system from 60 percent to 80 percent by 2025.

We’re thrilled to have closed this milestone fundraise and to have such seasoned fintech investors who understand the market join us on this journey to bank Nigeria’s unbanked. Now we have built the agent network and are poised to serve customers directly via offline and online channels. Partnerships, collaboration, and a deep understanding of the needs of the unbanked will be vital to our success,” said Adejana.

 

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Fund Raising

Healthcare Startups Raised $38B in a Year; Total Investments Jumped to $135.5B

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Global investments in healthcare startups set a new record in 2020, as investors flocked to this sector due to the pandemic.

According to data presented by StockApps, healthcare startups raised over $38bn in funding rounds since mid-March 2020, with the total value of investments into this hub reaching $135.5bn last week.

Almost $12B of Investments in Q1 2021, the Highest Quarterly Figure So Far

In 2015, healthcare startups worldwide raised $5.4bn in funding rounds, with the cumulative value of investments reaching $24.4bn that year, revealed the CrunchBase data. This figure surged by more than 68% during the next two years, reaching $45.2bn in the fourth quarter of 2017.

Statistics show that 2018 delivered $20.2bn of investments into healthcare startups, with the cumulative funding value rising to $65.4bn that year. In 2019, the cumulative funding value jumped by $24.7bn to $90.1bn. However, the year 2020 set a new record, despite the global slowdown in venture capital funding amid the COVID-19 crisis.

The Crunchbase data revealed the first quarter of 2020 delivered $7.4bn worth of investments into healthcare startups, a 68% increase year-on-year. After a slight drop to $7.2bn in the second quarter, quarterly investments jumped to $10bn between June and September 2020. By the end of the year, the cumulative funding value rose by another $9.1bn and hit $123.8bn.

The strong investment activity continued in 2021, with almost $12bn worth new funding rounds since January, the highest quarterly figure so far.

North America represents the leading region with $85.5bn of investments in healthcare startups. The US companies raised more than 97% of that amount, with California and San Francisco as the leading hubs. Asian startups hit $83.5bn in total funding, ranking as the second-leading region globally. European healthcare startups follow with $15.9bn worth funding rounds.

Three Largest Funding Rounds Worth $2.3bn

The CrunchBase data also revealed the three largest healthcare startup funding rounds in the last year hit $2.3bn value.

In May 2020, MGI Tech, a gene-sequencing equipment unit of Chinese genome giant BGI Group, announced the completion of a $1 billion series B funding round led by IDG Capital and CPE, the biggest investment in the last year.

Three months later, JD Health, the healthcare unit of Chinese e-commerce giant JD.com, raised more than $830 million from Hillhouse Capital in Series B funding, the second-largest investment in 2020. The company announced it would use this capital to further strengthen its pharmacy supply chain capabilities and explore additional healthcare services opportunities in the broader healthcare sector.

Last week, ElevateBio, a cell and gene therapy technology company focused on powering transformative cell and gene therapies, announced it had raised $525 million in Series C funding, the third-largest investment in the last year. This new funding led by Matrix Capital Management will help the company increase its manufacturing capacity and advance its cell and gene therapies.

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Fund Raising

Kwik Delivery Raises $1.7m Pre-Series A Fund to Drive Expansion into New Markets

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Kwik Delivery, a Lagos-based last-mile delivery startup has raised $1.7 million in its pre-Series A financing round. The funding was as equity from institutional and high net worth investors.

According to its Founder & CEO, Romain Poirot-lellig, the latest funding will be used to grow the company faster and conquer new markets.

Launched in 2019, Kwik Delivery is an on-demand, last-mile delivery platform that connects African businesses to independent delivery riders, dubbed Kwiksters.

The company services B2B and B2C deliveries, with parcels varying from pharmaceutical products to spare parts for cars, cosmetics, and food during the lockdown.

Since its launch, the company has grown considerably. The company commenced its truck deliveries arm in November 2020. The following month, it raised $2 million from a combination of Nigerian and international investors.

Last week, the company launched its last-mile delivery service in Abuja and currently offers 1-hour delivery through its fleet of bike delivery partners. It also provides access to a host of 4-wheel vehicles in the country’s capital.

Romain believes Kwik Delivery has demonstrated to customers and investors alike its efficiency as well as the relevance of its bold technology-based approach during a most challenging period.

With its latest funding, the company plans to solidify its market in Abuja and also expand into new markets.

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