Lulalend, South Africa’s online short-term funding for small and medium enterprises (SMEs) has raised $6.5 million Series A financing co-led by IFC and Quona Capital which is sponsored by Accion, with participation from existing investors Accion Venture Lab and Newid Capital.
The new funding will provide growth capital to help Lulalend scale in response to South Africa’s significant funding gap for small businesses.
According to Trevor Gosling, co-founder and CEO of Lulalend, “69 percent of small and medium-sized businesses in South Africa say that access to working capital would help their businesses grow. Yet for years in South Africa there’s been a massive funding gap for small-and medium enterprises, the very lifeblood of the economy. This fundraise from Quona Capital, a leading VC globally in emerging markets fintech, and IFC, a member of the World Bank Group, provides us with the growth capital and support we need to scale and drive exciting partnerships.”
Lulalend was established in 2014 by Trevor Gosling and Neil Welman to allow SMEs to apply for and receive funding without visiting a bank branch.
Leveraging data from alternative and online sources, Lulalend utilizes a proprietary scoring algorithm that allows it to evaluate applicants and provide funding to SMEs quickly, conveniently, and transparently. Most of the funding provided by Lulalend to small and medium-sized businesses is used for inventory or equipment, renovations or marketing.
“Quona Capital has been excited about Lulalend from the very earliest stage,” said Johan Bosini, Quona Capital partner. “Lulalend has built a seamless user experience that solves a massive funding gap faced by so many SMEs in South Africa — enabling SMEs to grow and thrive, rather than getting stuck due to lack of working capital. We’re happy to partner with the IFC to fund this growing company.”
Quona Capital has a strategic relationship with Accion, a nonprofit financial inclusion pioneer Accion which made an investment though its seed-stage investment initiative Accion Venture Lab in 2016. This round was a follow-on investment.
“Small business lending is changing, and by partnering with digital innovators like Lulalend we can capitalize on new sources of data and models to deliver finance to reach more small businesses in South Africa, thus driving job creation and economic growth,” said Kevin Njiraini, IFC’s Regional Director for Southern Africa and Nigeria.
The partnership with Lulalend is part of IFC’s comprehensive program to deepen small business development and promote access to finance to improve economic inclusion and create job opportunities.