Payhippo Raises $3M in Seed Round to Improve SMEs’ Access to Credit Facility

Payhippo, one of the leading SMEs lending platforms in Nigeria, has raised $3 million in seed round funding to improve access to credit facilities and source more talent into its team.

The seed round was led by the co-founders of African cross-border payments company Chipper Cash, Ham Serunjogi and Maijid Moujaled, founder of Flutterwave, Olugbenga Agboola, the CEO of investment banking firm Chapel Hill Denham, Bolaji Balogun, and the founder of Metis Capital Partners, Hakeem Belo-Osagie. Other angel investors include management from Paystack, Brex, and Tala and several LPs from Payhippo’s preseed investors. Institutional investors include TEN13, VentureSouq, and Prodigio Capital.

Payhippo, which is part of the 2021 Y Combinator summer cohort, was founded in 2019 by Chioma Okotcha, Zach Bijesse, and Uche Nnadi. The $3 million raised in the seed round is the largest amount Payhippo has raised to date after receiving $1 million in pre-seed funding earlier this year. The company has now raised a total of $4 million to date.

According to the company’s co-founder and Chief Operations Officer (COO), Chioma Okotcha, Payhippo is looking to hire more engineers and data scientists. She said, “we capture our data from the loans we issue, and more talent in the team would allow us to optimize our technology to serve our customers better.”

Chioma also said the company ensures that the loan disbursement happens within 3 hours after approval, a record that seems unattainable in the traditional banking institutions in Nigeria.

“We really focus on keeping this under three hours and making sure that businesses can get the money they need when they need it. Ours is also a product that works for SMEs in terms of a flexible repayment structure.

“We had seen that traditional banks and lenders wouldn’t loan small businesses mainly because there were no credit scores, or the collateral requirements were too high. We decided to come into the market and create an instant financing option, where we create a credit score that allows small businesses to get the liquidity they need to buy inventory for business continuity,” Okotcha said.

According to the COO, Payhippo uses its own customized credit score formula to determine the value of loans accessible to each business. “We use data from historical records that borrowers have built with us, but we also check their banking history to see the actual performance of their businesses,” she said.

Payhippo says it is banking on its fast turnaround time for loan applications to grow its customer base within Nigeria before venturing to other countries. From inception to date the company is reported to have disbursed about 5,000 loans, valued at $1 million and with a repayment rate of 97%, generating about$64,000 in revenues.

She added that the demand for credit is high, fueling its current 25% month-on-month growth. The minimum loan disbursed is about $200 while the average loan disbursed stood at $1,300. “We know that just 1% of the Nigerian market is about 40,000 businesses, and we want to be in a position where we disburse 40,000 loans in a day,” she said.

Ham Serunjogi, Cofounder and CEO of Chipper Cash, said: “New financial technologies are being developed and implemented changing the competitive landscape in the financial sector in Africa. Access to credit is a critical necessity for small businesses to manage their daily challenges. Payhippo helps address this need through its innovative approach that provides loans to small businesses in less than three hours enabling them to have access to sufficient working capital to grow.”