Lipa Later, a Kenyan consumer credit platform powered by technology, plans to expand to other countries in Africa after the successful completion of a $12 million pre-Series A round of fundraising.
In the equity and debt fundraising round, Cauris Finance, Lateral Frontiers VC, GreenHouse Capital, SOSV IV LLC, Sayani Investments, and Axian Financial Services all participated, as did Lateral Frontiers and GreenHouse Capital.
The firm, which was formed in 2018 as a buy-now-pay-later (BNPL) company, is now looking to expand into new countries, including Tanzania, Ghana, and Nigeria, as well as its current markets, which include Kenya, Uganda, and Rwanda.
“We are thrilled to be collaborating with our investors as we seek to develop and expand into new African markets.” said the company. “In the next 12 months, we want to increase and quadruple our footprint in the current regions, while also expanding into three to five additional African markets,” said Eric Muli, co-founder and CEO of Lipa Later.
With unique collaborations with businesses across these regions, Lipa Later allows buyers to pay for items in monthly installments without incurring interest charges. In one example, Lipa Later’s cooperation with the French retailer Carrefour (which has a regional presence) lets clients to pay in monthly installments for a variety of things, including furniture, electronics, and even perishables.
Customers are charged a monthly interest rate (in the case of Carrefour, it is around 2.3 percent) on the credit that has been provided to them. In order to expand its reach into other African nations, the business intends to form more agreements with retailers.
“Lipa Later is not only transforming the consumer credit environment in Africa, which has been mostly unavailable to the majority of the population up to this point, but it is also accelerating the future of shopping, e-commerce, and payments.” Ruby Nimkar, a partner at GreenHouse Capital, stated, “They’ve done it in a really product- and customer-led approach that helps both merchants and customers, and it has shown to be very scalable across many countries.”
Consumers may sign up for Lipa Later and get a credit limit nearly immediately thanks to the company’s own credit score and machine learning algorithm. In addition, the business has developed a BNPL API that can be integrated into e-commerce platforms, allowing merchants to sell things directly to customers while simultaneously allowing consumers to pay for items in monthly installments.
The latest financing comes on the heels of an unknown 2020 investment by the Tokyo-based Uncovered Fund, which invests in early- and seed-stage firms in Africa and is located in Tokyo. Lipa Later was one of five firms to gain money as a result of this round.
BNPL market in Kenya, where it competes with companies such as Aspira, Miti, Flexpay Technologies, and Julla. Lipa Later is one of the top participants in the BNPL industry in Kenya. According to the findings of this 2021 study conducted in Kenya, the BNPL payment sector in the nation has undergone tremendous development as a result of the country’s high e-commerce penetration as well as the consequences of the country’s economic downturn as a result of the COVID-19 epidemic. The BNPL sector in Kenya is predicted to grow at a compound annual growth rate (CAGR) of 30.8 percent between 2021 and 2028. According to projections, the gross BNPL merchandise value would increase to $589.5 million in 2028, up from $51.6 million in 2020.
While trying to expand throughout Africa, where opportunities are aplenty as e-commerce and alternative credit sources grow, Lipa Later will have to contend with competition from South African companies such as Payflex (which was recently acquired by Australian company BNPL Zip) and PayJustNow, as well as Nigerian companies such as PayQart and Carbon Zero.