Lidya, the digital financial services platform focused on improving access to credit for micro-, small-, and medium-sized enterprises (MSMEs) in Africa has raised $6.9 million in a Series A investment round led by Omidyar Network.
“Lidya was founded on a simple, yet fundamental idea: technology can unleash and empower a generation of business leaders and entrepreneurs throughout Africa by revolutionizing how risk is assessed, credit is underwritten, and customers are banked,” said Tunde Kehinde, cofounder of Lidya.
“We are excited by the overwhelming support from the investor community, which signals a great confidence in our business model and team,” added Ercin Eksin, cofounder of Lidya.
Lidya will use the funds raised in the Series A round to expand its loan book, scale in Nigeria, enter new markets in Africa, and bring in more skilled professionals, particularly data scientists and engineers.
Globally, MSMEs are one of the strongest drivers of economic development, innovation, and employment, and yet access to finance is frequently identified as a critical barrier to growth for these businesses. 40 percent of MSMEs in emerging markets are underserved when it comes to access to credit-representing an estimated $5.2 trillion credit gap. In Nigeria, where Lidya is based, the IFC estimates that there is an MSME credit gap of at least $25 billion.
“Access to flexible, affordable credit is at the crux of unlocking growth in the MSME sector. Lidya is addressing that by using smart algorithms to analyze transaction data from small businesses to assess their creditworthiness,” said Ameya Upadhyay, investment principal at Omidyar Network and Lidya’s newest board member. “This data-driven approach allows the company to offer loans without the need of hard collateral-a requirement that has scuttled MSME financing in Africa. In the process, Lidya gathers insights that help expand its product portfolio to become a holistic partner to small businesses.”
In less than 15 minutes, an MSME can create a free account online or download the Lidya app on to their connected devices. The MSME can then share or load bank account or transaction information to the platform. Following this, the MSME can manage cash flows, customer data, and create and send invoices digitally.
Requesting a loan against a pending invoice is easy and decisions are made within 48 hours. Once approved, funds are disbursed on the same day. To assess credit risk, Lidya uses nearly 100 data points to evaluate each applicant and builds a unique credit score. Businesses can apply for loans ranging from $500 to $50,000, without the need to go to a physical location, present audited financials and projections, or provide collateral. Repayment schedules and fees are agreed upfront and with total transparency.
Since inception in 2016, Lidya has made over 1,500 business loans to help MSMEs in farming, hospitality, logistics, retail, real estate, technology, and health to get the capital they need to grow their operations.
Lidya has also been recently accepted into the MasterCard Start Path Program, a global effort to support innovative startups developing the next generation of commerce solutions.