Five years after serving as a credit provider to medium and small-scale businesses in Uganda, Numidia has secured a $12.3 million pre-series A fund to expand across Africa.
The equity-debt funding round was led by Serena Ventures with participation from Breega, 4Di Capital, Launch Africa, Soma Capital, and Y Combinator, VCs that are all making their first investment in Uganda.
"There are so many of these businesses across the continent, we really do believe that we've proven a model in Uganda that can be Pan-African and unlock the potential of these businesses to grow and achieve great things," Numida CEO, Mina Shahid said.
Founded in 2017, Numida has provided more than $2 million in unsecured credit to 3,000 MSMEs in Uganda, disbursing around $250,000 per month, as of 2021. This includes outstanding collections, repayment rates and client retention. Since raising its seed funding in the same year, the Ugandan fintech has grown over 7.5 times propelled by the soaring demand for quick loans.
The startup has to date issued $20 million in working capital to micro and small businesses, having grown from issuing $250,000 a month to $2 million. With this latest investment, the company plans to extend loans to an additional 10,000 businesses, to hit its 40,000 targets, within the next 18 months, a goal that will be brought closer by its entry into two new African markets (selected from Ghana, Nigeria, Egypt, or Kenya).
Numida didn’t set out to offer credit to businesses when it launched. An initial pilot in 2016 was centred around a bookkeeping tool that enabled traditional microfinance institutions (MFIs) to provide unsecured credit to semi-formal businesses, until2017 when the startup pivoted to lending.
"When we started building this business, we saw that a lot of people were getting taken advantage of because they didn’t really understand the user terms because most people don’t actually read these privacy policies or user agreements to understand what they were giving up. And so, we wanted to be very conscious about our approach, and we only ask for information that helps us determine if it is a business and if the person applying for a loan is the owner of the business," Shahid said.
He added that "Numida continues to improve our assessment of risk and our understanding of risk so that we can build a healthy portfolio that can allow us the room to reduce our prices while continuing to provide unsecured working capital loan products to these businesses."