Cuda Bank, a London-based, Nigerian-operating startup that is taking on incumbents in the country with a mobile-first, personalized and often cheap set of banking services built on new, API-based infrastructure, is on a growth tear. Over the past several months, and to fuel its expansion, it has now raised another round of funding.
ClearTips learned with Cuda, and has confirmed that the startup has closed, through its London unit, a Series B of $55 million — money that it plans to use to double down on new services, not just for Nigeria. is planning, but also to prepare for its launch in more countries on the continent, and in the words of co-founder and CEO Bobs Ogundei, to build a new take on banking services for the “always African on the planet”.
The funding was made at a valuation of $500 million, and it comes on the back of some impressive initial growth for the startup.
“We are doing a lot of resource deployment at our operational unit in Nigeria. But now we are doubling down on expansion and the idea is to build a stronger team for expansion plans for Cuda,” Ogundei told ClearTips in an interview. “We still see Nigeria as an important market and Don’t want to be distracted so don’t want to interrupt those tasks too much. It is a strong market and competitive. This is one that we feel we need to have a firm grip on. So this funding is for investing in expansion and having more experience with respect to expansion in the company.”
Cuda now has 1.4 million registered users, more than double the number it had in March when it had 650,000 registered users – a figure that came to the fore when it announced its $25 million Series A raise led by Weller Ventures .
We understand that this latest Series B was a relatively fast internal round — that is, it’s coming from existing investors. Co-led by Velar Ventures and Target Global, it also includes SBI and many past angels are also participating. CUDA was not actively raising funds at the time the Series B began and closed.
“We realized that Babs & Musti” – co-founder and CTO Mustafa Mustafa – is “ambitious on another level. For them, it was always about building a pan-African bank, not just a Nigerian leader,” said Target partner Said Ricardo Schaefer, who led the round for the firm. “The prospect of banking over 1 billion people from day one was really different to me in the beginning.”
You can see that it’s only been four months since Cuda last announced a round of funding. Equity rounds raised in quick succession, sometimes a few months apart, seem to be the order of the day, with a lot of money being pumped into the venture at the moment, but also by market conditions. When the company in question is showing all the correct growth metrics and is operating in a particularly busy area, many will strike when the iron is hot. (Gopf, which last week confirmed a $1 billion raise just months after the previous round, is another example of this happening from a different corner of the world.)
Neobanks – the disruptive creation of a new generation of banking services based on more modern interfaces and infrastructure based on the concept of API-powered embedded finance – has been one of these sectors, growing at about 50% annually in terms of revenue. Growing and collectively projected to be a $723 billion market by 2028.
Within this, we are seeing a number of strong players built on this model across the globe – Nubank from Brazil, Revolut and N26 in Europe, WeBank in China, Varo and Chime in the US. In this regard, Africa may be the last great untapped region when it comes to banking, a reason why Cuda is being monitored and strongly adopted.
The writing has been on the wall for years. A McKinsey report on Banking in Africa in 2018 identified an increase in interest in financial services, which were delivered digitally, and that growth would be driven by a rapidly growing middle class of consumers, while at the same time being accessible. The continuing death toll of financial services remains unconnected for most of the population on the continent with approximately 300 million people. These are the three basic factors upon which CUDA has built its service.
Cuda is not just a building and parenting and development. Others raising funds for new fintech dramas include payments company Chipper Cash, Airtel Africa, online lender FairMoney and more.
However, CUDA is unique among neobanks in that it is building out its services with its own banking license.
This means it can be more flexible and faster when it comes to creating new products or replacing existing products, and it gives the company another level of credibility in a field where there are already existing ones. Were banking with, they may be more wary of new products. players.
Indeed, CUDA’s initial business model was designed to provide banking services to people who still have accounts with existing banks: people’s salaries would be paid into their old accounts, and then transferred to spending. and used in other ways through their Cuda accounts. . Ogundei said this is slowly changing and more people are now bringing both pay-in and pay-out to their Cuda accounts.
Ogundei would not say which countries would be CUDA’s next targets. But he notes that its most recently launched product, Cuda’s first move into credit through an overdraft allowance, is a sign of things to come.
“This is a unique product, an overdraft for which we pre-qualify the most active users,” he said. In Q2 it qualified over 200,000 users and advanced $20 million worth of credits. He said default so far has been “minimal” due to the company’s approach, with 30 days of repayment.
“We use all the data we have for a customer and allocate overdraft ratios based on the customer’s activities, with the aim of not being burdened with repayments,” he said.
Andrew McCormack, a general partner at Weller Ventures who co-founded the firm with Peter Thiel and James Fitzgerald, said the market’s still-nascent potential, and how Cuda is approaching, was behind the decision to invest a second time in the startup. . .
“CUDA is our first investment in Africa and our initial confidence in the team is fueled by its rapid growth over the past four months,” he said. “With a young population eager to adopt digital financial services in the region, we believe CUDA’s transformative impact on banking will be across Africa and we are proud to continue supporting them.”