Payhippo, one of Nigeria’s leading SME lending platforms, has raised $ 3 million in seed funding to improve access to credit facilities and recruit more talent to its team.
The tour de table was led by the co-founders of the African cross-border payments company Chipper Cash, Ham Serunjogi and Maijid Moujaled, founder of Flutterwave, Olugbenga Agboola, CEO of investment bank Chapel Hill Denham, Bolaji Balogun, and founder of Metis Capital Partners, Hakeem Belo-Osagie. Other angel investors include the management of Paystack, Brex and Tala and several LPs of Payhippo’s pre-seed investors. Institutional investors include TEN13, VentureSouq and Prodigio Capital.
Payhippo, part of the 2021 Y Combinator summer cohort, was founded in 2019 by Chioma Okotcha, Zach Bijesse and Uche Nnadi. The $ 3 million raised in the fundraising round is the largest amount Payhippo has raised to date after receiving $ 1 million in pre-seed funding earlier this year. The company has raised a total of $ 4 million to date.
According to Chioma Okotcha, co-founder and chief operating officer (COO) of the company, Payhippo is looking to hire more engineers and data scientists. She said, “We 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. “
Chioma also said the company is ensuring that loan disbursement occurs within 3 hours of approval, a record that seems unattainable in traditional banking institutions in Nigeria.
“We’re really focused on keeping it under three hours and making sure businesses can get the money they need when they need it. Ours is also a product that works for SMEs in terms of a flexible repayment structure.
“We had seen that traditional banks and lenders were not lending to small businesses primarily because there was no credit rating or the collateral requirements were too high. We 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 they need to buy inventory for business continuity, ” Okotcha said.
According to the COO, Payhippo uses its own personalized credit score formula to determine the value of loans available to each business. “We use data from historical records that borrowers have built with us, but we also check their banking history to see the actual performance of their businesses,” she said.
Payhippo says he relies on his quick turnaround time for loan applications to expand his customer base in Nigeria before venturing to other countries. From its inception to date, the company has reportedly disbursed approximately 5,000 loans, valued at $ 1 million and with a repayment rate of 97%, generating approximately $ 64,000 in revenue.
She added that the demand for credit is high, fueling its current 25% month-on-month growth. The minimum loan disbursed is around $ 200 while the average loan disbursed was $ 1,300. “We 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,” she said.
Ham Serunjogi, Co-Founder and CEO of Chipper Cash, said: “New financial technologies are being developed and implemented, changing the competitive landscape of the financial sector in Africa. Access to credit is a critical necessity for small businesses to manage their daily challenges. Payhippo helps meet this need with its innovative approach that grants loans to small businesses in less than three hours, giving them access to sufficient working capital to grow.