Nigerian loan start-up Payhippo has raised $ 3 million in a fundraising round to provide loans to small and medium-sized enterprises (SMEs) in West Africa. Unlike traditional banking institutions, Payhippo says it disburses short-term loans in under three hours. In Nigeria, banks often have strict loan acquisition policies, including a physical visit to a branch.
Since its inception in 2019, the company has disbursed 5,000 loans worth $ 1 million and with a repayment rate of 97%, earning them $ 64,000 in revenue, according to Tech Crunch.
âWe’re really focused on keeping this under three hours and making sure businesses can get the money they need when they need it,â said Chioma Okotcha, co-founder and COO of Payhippo. âOur product is also a product that works for SMEs in terms of a flexible repayment structure. “
The $ 3 million funding is the largest amount Payhippo has raised to date after receiving $ 1 million in pre-seed funding earlier this year.
Tech Crunch reports that the round was led by angel investors, including Ham Serunjogi and Maijid Moujaled, co-founders of African cross-border payments company Chipper Cash; Olugbenga Agboola from San Francisco-based payment company Flutterwave; Bolaji Balogun, CEO of investment bank Chapel Hill Denham; and Hakeem Belo-Osagie, the founder of Metis Capital Partners.
Co-founder Okotcha said her company is looking to hire more engineers and data scientists. âWe capture our data from the loans we issue, and more talent on the team would allow us to optimize our technology to better serve our clients,â she said.
Payhippo’s decision to focus on SMEs stems from the fact that SMEs account for over 90% of businesses and 84% of jobs in Nigeria. However, the majority of them do not have access to bank credit.
âWe had seen that traditional banks and lenders weren’t lending to small businesses primarily because there was no credit rating or the collateral requirements were too high,â Okotcha told TechCrunch.
âWe decided to enter the market and create an instant financing option, where we create a credit rating that allows small businesses to get the cash flow they need to buy inventory for business continuity. “
âWe use the data from historical records that borrowers have built with us, but we also check their banking history to see the actual performance of their business. “
Payhippo, which was founded by Okotcha, Zach Bijesse, the managing director, and Uche Nnadi, the technical director, plans to meet the credit needs of some 40 million SMEs.
âWe know that only 1% of the Nigerian market represents around 40,000 businesses, and we want to be able to disburse 40,000 loans per day,â Okotcha said.