Kenyan Neobank, 4G Capital, Raises $18.5M Series C to scale financial access for SMEs in two markets

Kenyan Neobank, 4G Capital, Raises $18.5M Series C to scale financial access for SMEs in two markets

Kenya-based neobank, 4G Capital that gives unsecured credit facility to Small and Medium Scale Enterprises (SMEs) has raised $18.5 million in Series C funding from a London-based global private equity firm, Lightrock to expand financial lending access for SMEs in Kenya, Uganda, and launch new products.

The new funding round pegs the total equity funding raised by 4G Capital since 2016 at $27.5 million. The deal also includes the backing of Lightrock’s partner Shakir Merali, who now joins 4G Capital’s Board.

Commenting on the round, Wayne Hennessy-Barrett, the Founder and Chief Executive Officer of 4G Capital expressed his excitement over the partnership with Lightrock which he said will deepen their financial inclusion mission.

“We are delighted to partner with Lightrock to further our financial inclusion mission. Lightrock and 4G Capital share a complete alignment of purpose and mission. They bring the unrivaled experience of Africa and emerging markets. This capital will have a transformative effect in enabling us to scale the best products and services to the world’s most important sector.” He said.

With this funding, 4G Capital plans to roll out some new products and services, which include improving credit limit loans, from $1000 with longer repayment periods from the current maximum of one month. All this is in its plan to expand its clientele base and grow its profits.

The new offerings are currently being developed, though it plans to lend to bigger businesses in the agro-value chain, as the company expands its reach from micro-sellers, who have been its primary target market since its launch in 2013.

Barrett hinted at the plan to launch an app later this year that will enable their clients to sell on digital marketplaces and to be connected to other digital providers like delivery services.

4G Capital

Wayne Hennessy-Barrett, the Founder and CEO of 4G Capital

“We will be building new loan products this year, with longer durations and larger amounts, and lend to bigger businesses in the agro-value chain. We are also planning to launch an app that will allow our clients to run their businesses better, have access to our goods and services, and connect them with other providers like FMCG (fast-moving consumer goods) distributors. The future of 4G is an enriched value proposition for our clients driven by data and AI.” Hennessy-Barrett said.

4G Capital’s new retail finance product dubbed Kuza, which allows customers to access goods from FMCG producers and distributors on credit, is already in a trial phase.

Hennessy-Barrett launched 4G Capital in 2013 after a short stint as a loans manager based in Kenya for a lending corporation, an opportunity that saw him travel across Africa and gain insights into the continent’s lending space.

“I spent a lot of time in informal markets and across the board, informing my knowledge of what to look for — the energy, the potential, and the vibrancy of the informal merchants in Kenya; what they needed was somebody to back them,” Barrett noted.

The fintech company which operates a hybrid system of physical web-based and physical offices in a bid to know its customers better was inspired into the lending space with its target being the micro-traders, who are often locked out by formal lending and banking institutions

The company claimed to have extended credit valued at $230 million since launch and loaned over 1.75 million micro-businesses over the same period, recording a 90% year-on-year growth.

After nearly a decade in operations, 4G Capital is also exploring new growth opportunities in West and North Africa with a keen eye on partnerships in Ghana, Nigeria, and Egypt, which will happen after deepening and enriching its market share and customer value proposition in its core markets.

As it plans to scale its operations, 4G Capital plans to invest in data science enhancements for its evaluation algorithm, and grow its management team in evolving its core banking system.

“We want to make sure that we’re growing at the right pace so we have the capital that we need to move to the next phase, and that we’re building the foundations properly to enable that digital scaling,” said Hennessy-Barrett.

Shakir Merali, a Partner at Lightrock said it has become necessary to provide more investment capital to companies like 4G Capital which is providing financial empowerment to African SMEs.

“Often used to justify the backing of many African companies, ‘Financial inclusion has not always translated into positive outcomes for customers. What is needed on the continent is investment capital to back companies with the mission of financial empowerment. 4G Capital provides liquidity to the vast market of economically generative businesses – the mobile phone repairers, hairdressers, and food sellers – that dot the landscape of Africa.

“The systemic value of improving lives is compounded, as productive employment leads to economic outcomes and better education and health outcomes in the communities these businesses serve. That’s where 4G Capital plays. That’s why we believe they are doing necessary work and why we are excited to become a part of their growth journey.” He explained.

 

 

 

Blessed Frank

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