Asaak, a Ugandan asset financing startup has secured $30 million in Pre-Series A equity and debt funding to finance motorbikes and smartphones debt purchase schemes for Africans. New and existing investors took part in the round, including Resolute Ventures, Social Capital, HOF Capital, Founders Factory Africa, End Poverty Make Trillions, Decentralized VC, and many other angel investors.
Asaak offers motorbike financing and makes ownership possible to operators, who are often locked out by formal banking institutions due to stringent security requirements and bottlenecks, comprising income history, regular account activity, and nonexistent collateral.
The lending startup has a working relationship with some partners including mobility and e-commerce platforms to make motorcycle ownership seamless for the riders– who earn a living by operating motorcycle taxis popularly called Boda-boda in the East African country (also called Okada in Nigeria).
With the help of Asaak, boda-boda operators are now able to own the motorcycles they ride, this is in sharp contrast to the previous arrangement when most of the riders were either employee of the bike owners or were on a leasing arrangement (hire purchase).
Dylan Terrill, co-founder and Chief Business Officer of Asaak, stressed the importance of the riders in moving people and goods from one location to another, describing them as the lifeblood of Africa’s economy.
“Asaak is unlocking mobility-based work, which moves the economy forward and creates upward mobility for these individuals. Boda-boda riders are the lifeblood of Africa, moving people and cargo from home to school to work. They just need access to motorcycles which leads them to better income opportunities and makes them able to provide for their families,” said Asaak co-founder and chief business officer Dylan Terrill.
How Asaak’s Motorcycle Financing Scheme works
Asaak utilizes behavioral and financial data like earnings from trips made and their ratings from platforms like Bolt, Jumia, Safeboda, and Uber in approving riders for the motorcycle financing scheme.
The data from these platforms aid Asaak to create a credit score for the borrowers. Borrowers can also use the Asaak app or physically visit their branches to know if they qualify for the financing. Drivers usually receive motorcycle financing (about $1,500 worth of credit) within three days of signing up and pay an interest of between 1 to 4% depending on their credit score.
“The more confident that we are with the data that we have to make a lending decision, the less the other requirements they would need to have. We’re trying to make it as easy as possible for people to get loans. But in some cases, yes, it’s necessary (to have a guarantor) and it makes sense from a lending perspective,” Terrill told TechCrunch in a chat.
Transitioning from lending to farmers to bike rider
Asaak was founded by Anthony Leontiev, Edward Egwalu, Kaivan Sattar, and Dylan Terrill in Soroti Uganda in 2016, it veered into motorcycle financing in 2019 after a period of lending to farmers then SMEs. The startup has so far financed the purchase of 5,000 motorcycles and has also started providing smartphones and fuel financing to the operators.
“By financing these types of assets, we’re not just creating a pathway to vehicle ownership, which is good in itself, but we’re creating a stable source of income because of the reliance of drivers throughout the countries that we are in.”
The startup is also working with Samsung to drive smartphone ownership among motorcycle taxi operators. Last month, the company announced another partnership with Untapped Global, an investment company focusing on emerging markets to provide financing for more than 2,000 motorcycles over the next year.
Asaak also partners with Standard Bank, to offer financial services to millions of workers (like motorcycle taxi operators) in the informal sector through the startup’s proprietary digital loan origination system. Through this partnership, its customers will also have access to tailored services encompassing both finance and insurance.
“While we often underestimate the power of the boda-boda (motorcycle transport) in Africa, in many circumstances, it is an ambulance, a pharmacist, and a chef – it brings you everything you need. It takes children to school, it brings people to job interviews, it provides livelihoods for hundreds of millions of Africans,” said Stanbic Bank, Standard Bank’s operation in Uganda, head of direct digital and e-commerce Aaron Akampa.
“Ultimately, this is new ground for Standard Bank – we haven’t partnered with any other players in this space on the continent yet – it’s the first time we are creating a partnership like this and we can’t wait to see what is ahead,” said Akampa.
The partnership with the bank comes as Asaak plans to enter six new markets in Africa soon.