Klump, a Lagos-based Buy Now Pay Later payment platform has closed a $780k pre-seed round. The funds will be used to launch its flagship Pay with Klump™ product with select partners, offering BNPL solutions to customers and businesses.
The round was led by Seedcamp, a London-based investment firm, which has invested in companies like UiPath, Wise, and Revolut. Other participants include MAGIC Fund, Voltron Capital, Yellowwood, Kickoff Africa, Hoaq Capital, Kesho VC, Assembly Investors.
Several angel investors and founders, including Olugbenga “GB” Agboola, CEO of Flutterwave, Will Neale, Founder of Grabyo, Michael Pennington, Founder of Gumtree, Founders of Helium Health, Richmond Bassey, CEO of Bamboo, Babs Ogundeyi, CEO of Kuda Bank, Abdul Hassan, CEO of Mono, Opeyemi Awoyemi, and Selma Ribica also participated in the round.
African consumers typically struggle to access affordable credit to buy what they need at the time they want it. For instance, only about 3% of Nigeria’s entire population for example own a credit card which represents a low utilisation in comparison to other countries of the world.
After years of building products at Andela, Amazon, Dealday, Konga, Paystack, and H-E-B, Celestine Omin and Olufunbi Falayi founded Klump in 2021. The startup gives customers the option to buy and receive their purchases now and spread the payment across four equal instalments.
The first payment is made at the point of checkout, then the remainder can be spread over three months with a low-interest rate on the balance. Merchants on the platform are paid in full on the first day of business.
Klump is able to decide on the creditworthiness of a customer in less than 3 minutes due to their credit eligibility and fraud detection engine. This is faster than the industry norm in Nigeria which stands at two to three days. The startup is not slowing down as they are trying to further reduce the decision time to less than a minute.
Due to the increasing adoption of the Buy Now Pay Later (BNPL) model, Klump wants to become the preferred alternative online checkout and in-store payment processing company offering flexible payment solutions to customers and merchants for products and services.
This is what is fueling their desire to launch their end-to-end BNPL product in partnership with WhoGoHost and Gigalayer. WhoGoHost and Gigalayer are the biggest providers of cloud, domain, hosting services in Nigeria.
The startup also partnered with AltSchool, an alternative tech academic institution, to provide laptop financing to its students, and Beta Store, a B2B retail platform, to provide inventory financing to its retail customers.
Klump will roll out other large-scale partnerships in the next few weeks with a focus on marketplaces with higher-margin, discretionary-spend categories, such as apparel and footwear, fitness, accessories, and beauty. Focus will also be on the education, travel and healthcare industry verticals.
The CEO of Klump, Celestine Omin, said, “our BNPL offering is a natural next step in the development of the African e-commerce sector, and we intend to be at the forefront by developing the capability to make credit decisions on customers in real-time and offer flexible payments to help reduce the economic pressure of one-time payment which has grown astronomically since the emergence of COVID-19. At the same time, we want to help merchants achieve commercial prosperity by providing the tools to offer their customers the option to pay in small instalments.”
In addition, Olufunbi Falayi, Co-founder and Chief Product Officer of Klump, added, “with our end-to-end BNPL product, we can quickly make a sound credit eligibility decision, facilitate transactions to approved customers, make disbursements to merchants, and effectively drive collections from customers with a flexible and efficient collections system. We are keeping mechanisms in place to ensure we promote responsible lending and reduce the risk of customers taking loans they cannot pay back”.
Speaking about the fundraise, Felix Martinez, an investor at Seedcamp said, “we’re thrilled to be backing Celestine and Olufunbi as they lay the backbone in democratising new payment methods across a hugely under-served African market. It was clear to us from our first meeting that their respective experiences scaling some of Africa’s largest startup successes and implementing best-in-class payment solutions for large e-commerce merchants makes them the perfect team to become the responsible BNPL category leader on the continent.”
The funds will further develop Klump’s credit decision and checkout engine, develop merchant partnerships, build the team, and offer affordable financing to its customers.