Lidya, a digital financial services platform focused on meeting the needs of micro-, small- and medium-sized enterprises (MSMEs) in Africa, has raised US$6.9 million in a Series A investment round, believed to be one of the largest in Nigerian tech history.
The round was led by Silicon Valley investment firm Omidyar Network, which was established by eBay founder Pierre Omidyar. Alitheia Capital (via the Umunthu Fund), Bamboo Capital Partners and Tekton Ventures also joined the round, which included existing investors Accion Venture Lab and Newid Capital.
"Lidya was founded on a simple, yet fundamental idea: technology can unleash and empower a generation of business leaders and entrepreneurs throughout Africa by revolutionizing how risk is assessed, credit is underwritten, and customers are banked," said Tunde Kehinde, co-founder of Lidya.
Ercin Eksin, also a co-founder, added: "We are excited by the overwhelming support from the investor community, which signals a great confidence in our business model and team."
According to Lidya, Globally, MSMEs are "one of the strongest drivers of economic development, innovation, and employment," but access to finance is often cited as a critical barrier to growth. The company notes that "40% of MSMEs in emerging markets are underserved when it comes to access to credit-representing an estimated $5.2 trillion credit gap. In Nigeria, where Lidya is based, the IFC estimates that there is an MSME credit gap of at least $25 billion."
That's big bucks.
"Access to flexible, affordable credit is at the crux of unlocking growth in the MSME sector. Lidya is addressing that by using smart algorithms to analyze transaction data from small businesses to assess their creditworthiness," said Ameya Upadhyay, investment principal at Omidyar Network and Lidya's newest board member. "This data-driven approach allows the company to offer loans without the need of hard collateral-a requirement that has scuttled MSME financing in Africa. In the process, Lidya gathers insights that help expand its product portfolio to become a holistic partner to small businesses."
Since it was formed in 2016, Lidya has made over 1,500 business loans to help MSMEs in farming, hospitality, logistics, retail, real estate, technology and health to get the capital they need to grow their operations.
The funds raised in the Series A round will allow Lidya to "expand its loan book, scale in Nigeria, enter new markets in Africa, and bring in more skilled professionals, particularly data scientists and engineers," the company noted.
— The staff, Connecting Africa