There’s a new exciting trend in the African tech ecosystem: African founders backing fellow founders especially in pre-seed and seed funding, which is an indication that the African tech ecosystem is maturing. 

On Wednesday, Payhippo, a fintech startup providing capital for small businesses in Nigeria, was another example of the existence of this trend when it announced that it has closed $3 million in seed funding led by a number of African tech founders.

The round was led by Ham Serunjogi and Maijid Moujaled, co-founders Chipper Cash; Olugbenga “GB” Agboola, founder Flutterwave; Bolaji Balogun, CEO Chapel Hill Denham; and Hakeem Belo-Osagie, founder Metis Capital Partners. 

Angel investors from Paystack, Brex and Tala also participated in the round. TEN13, VentureSouq, and Prodigio Capital were the only institutional ventures that wrote a check for this round.

This investment comes barely 5 months after the startup raised a $1 million institutional pre-seed. Besides the earlier undisclosed capital raised from friends and family, the company’s total fundraised is now at $4 million.

Capital is a lifeline of business

There are over 40 million small and medium businesses (SMEs) in Nigeria. These businesses account for 96% of its total companies, 84% of employment, and 48% of the national GDP. But only a few of these businesses have access to capital, mostly due to heavy collateral requirements and long time of loan processing.

Payhippo is at the forefront of solving this problem. Founded by Zach Bijesse, CEO, Chioma Okotcha, COO, and Uche Nnadi, CTO, Payhippo provides small businesses with short-term working capital with average loan amounts of $1300. The company also allows SMEs to build their credit score based on their track record of repaying their loans on time. SMEs even become eligible for higher amounts of capital as their credit score goes up.

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If capital is a lifeline of a business, then it’s safe to say Payhippo is guarding the lifeline of Nigerian SMEs. 

“This funding will allow us to invest in hiring more engineers and data scientists. We aim to improve our technology and enhance our lending offerings as we continue to address the persistent financing gap for small businesses in Nigeria,” Okotcha, COO at Payhippo, said. “At Payhippo, our vision is to provide millions of small businesses with sufficient and available capital to run and grow their businesses.”

The company said it has disbursed 5000 loans to SMEs since it launched in January 2020. In September 2021, the Payhippo reportedly earned $64,000 in revenue from $900,000 disbursed, experiencing 25% monthly growth with a 97% repayment rate on loans. 

Commenting on his investment in Payhippo, Bolaji Balogun, founder/CEO at Chapel Hill Denham said: “We’re excited at how Payhippo is using technology to provide SMEs in Africa with access to finance required to run their business needs. By lending to small businesses, Payhippo is allowing business owners access to much-needed working capital to grow their businesses and create jobs in the economy.”

For Serunjogi and Moujaled, the two co-founders of Chipper Cash, the African fintech which attained a unicorn status on Tuesday, they are bullish on supporting new financial technologies being developed and implemented to change the competitive landscape in the financial sector in Africa.

“Access to credit is a critical necessity for small businesses to manage their daily challenges. Payhippo helps address this need through its innovative approach that provides loans to small businesses in less than three hours, enabling them to access sufficient working capital to grow.” Serunjogi said.

Payhippo plans to use the new funding to improve its technology capabilities and expand its talent pool.

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