PayHippo, a Nigerian fintech startup that provides loans to small businesses in Africa, has secured a $1 million pre-seed funding round from Africa tech investors such as Ventures Platform, Future Africa, Launch Africa, Sherpa Ventures, and DFS Lab. International investors Hustle Fund and Mercy Corps Ventures also participated in the round.
Prior to this new investment, the startup had backing from notable Nigerian angel investors and from early-stage venture builder — Aidi Ventures.
PayHippo will use the pre-seed funds to hire more engineers and a Head of Finance to keep up with the current growth.
Founded in 2019 by Zach Bijesse (CEO), Chioma Okotcha (COO), and Uche Nnadi (CTO), the startup discovered that there was a need for financing of $158 billion for SMEs in Nigeria alone. To meet these huge demands, PayHippo has made it easier to finance small and medium-sized businesses in Africa.
Commenting on the SMEs funding gap, Okotcha said: “I helped run my family’s business in Nigeria and I know how tough financing can be for SMEs in the country. That’s why I went to work in microfinance policy. But I saw that there was still such a big need for SME funding in Nigeria and the continent.”
The startup says that most SMEs are creditworthy, but traditional banks and lenders don’t lend to them because there are no credit scores and collateral requirements are too high. That’s why PayHippo assesses their cash flow and business owner data to determine what size of the loan is right for them, builds their PayHippo Scores, and provides financing to them.
PayHippo adds that since it started operations in January of 2020, it has disbursed over 2,600 loans to businesses while recording a 97% repayment rate and growing revenue by 25% month on month. These businesses are the community grocery stores or small retail shops that are part of the critical infrastructure of their communities,
“I am proud of our platform. There are endless issues that Nigerian SMEs experience with financing but we’ve been taking it one step at a time. I talk to our borrowers every day to get product feedback. Our borrowers tell us that our loans are more seamless than anything else they have seen in the market”, says Nnadi.
Kola Aina — General Partner, Ventures Platform Fund said: “Small businesses are at the core of Africa’s economic growth and we are thrilled to partner with Zach, Chioma & Uche as they build Payhippo. They are essentially bridging the $158B SME financing gap.
“Payhippo’s execution has been phenomenal and we are excited to support the impact they will create across the chronically underserved SME funding landscape in the coming years.”
