African challenger bank Kuda raises $55M Series B

Kuda, a London-based mobile-first banking service which operates in Nigeria, announced raising a $55 million Series B co-led by existing investors Valar Ventures and Target Global, according to TechCrunch.

The company says it will use the funding to expand its operations in Nigeria and prepare for launch in other African countries. In addition to Valar Ventures, who led Kuda’s $25 million Series A in March, and Target Global, the round had participation from SBI Investment and other angel investors.

“We’ve been doing a lot of resource deployment has been in our operational entity, in Nigeria. But now we are doubling down on expansion and the idea is to build a strong team for the expansion plans for Kuda,” co-founder and CEO Babs Ogundeyi told TechCrunch.

Kuda Bank offers mobile-first, personalized banking services which are built on API infrastructure, and enable neobank services for a ripe market in Africa. A 2018 report on African banking by McKinsey showed that there is a rise in interest for financial services on the continent, and room for growth with over 300 million people still unbanked.

Kuda currently has 1.4 million registered users, double the amount it had at the time of its Series A and quadruple what it had in November 2020, according to Tech Cabal. The exponential growth of the service shows itself in Kuda’s valuation, now weighing in at $500 million.

“Kuda is our first investment in Africa and our initial confidence in the team has been upheld by its rapid growth in the past four months. With a youthful population eager to adopt digital financial services in the region, we believe that Kuda’s transformative effect on banking will scale across Africa and we’re proud to continue supporting them,” Valar Ventures co-founder and general partner Andrew McCormack told TechCrunch.

One factor separately Kuda from other neobanks is that is already has its own banking license, meaning it can more easily provide new products and update existing ones without consulting and modifying partnerships with external financial institutions.

The platform’s core business model was initially built on providing banking services to those with incumbent bank accounts, but is gradually shifting to help bring pay-in and pay-out transactions to target a greater market share and pull in unbanked consumers.

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