PayHippo Differentiates with Speed

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A Nigerian startup called PayHippo has raised a $1 million pre-seed round to help it build out an SMME microlending business. The product launched in January 2020.

A growing list of companies is addressing the microlending space in Africa. Most are attacking the issue in individual countries or regions within the continent.

The addressable market for SMMe small loans in Africa is so vast that it will be a while before the space is saturated. However, many markets, Nigeria among them, already have multiple active competitors. And each is looking for an edge to differentiate their offering.

For its part, Payhippo looks to stand out by promising a lending decision in three hours or less.

According to a Medium.com article posted Friday by Payhippo co-founder and CEO Zach Bijesse, before this new round the company got by on funding from friends, family, and “notable Nigerian angel investors.” It also cites funding from Aidi Ventures, a firm that aggregates angel funding for early-stage African startups.

The list of pre-seed round investors includes regional investors Ventures Platform, Future Africa, Launch Africa, Sherpa Ventures, and DFS Lab. Also participating are international investors Hustle Fund (which says it invests in “hilariously early” startups and, oddly, has its own hustle porn merch store), and Mercy Corps Ventures.

The company, which launched its product in January 2020, has identified a clear opportunity — granting credit to SMMEs that traditional banks will not service. It sizes that market at $46 billion in Nigeria alone.

As noted, Payhippo is hardly the first to identify the massive need for SMME micro-financing in Africa.

One notable competitor is Ghana-based OZÉ, which raised a $700,000 seed round in January. Expanding from Ghana into Nigeria was one of the stated purposes for the seed round.

OZÉ, in addition to offering SMME loans, provides a SaaS platform for small businesses to move off of paper ledgers and manage their businesses more effectively.

We did a podcast with OZÉ founder Meghan McCormick around the time the company announced its seed round.

Meghan told us that a big part of OZE’s mission is to build a set of SaaS tools that SMMEs can use to capture the data flowing through their businesses in order to make better decisions. Without this data, she contends businesses will find it nearly impossible to grow.

“The analogy we use is like a business using a notebook or not keeping any records. By using a notebook, it's like a bucket with lots of holes in it,” Meghan said. “So you pour that capital in the top, and it pours out through all the holes. And at the end of the day, your bucket is empty again. So at OZÉ, we tried to patch up those holes through data-driven management.”

OZÉ also offers small loans to SMMEs, starting at $100 and ranging up to $5,000. An average loan is around $3,500. To learn more about OZÉ, can check out the podcast with Meghan.

Another Payhippo competitor is Lydia, founded in 2016 by Nigerian Tunde Kehinde. Lydia positions itself as an SMME lender in “fast-growing” economies. In addition to Nigeria, Lydia operates in the US, Poland, Portugal, and the Czech Republic.

Lydia offers loans as low as 150 USD and promises a five-minute setup process and a loan decision within 24 hours.

Bijesse is a former investment officer at Lydia. It was at Lydia where Bijesse says he identified an unmet market need for same-day financing for SMMEs who urgently need capital.

Payhippo’s core value statement is “hassle-free financing.” And its key promise is “loans to small businesses in less than three hours.”

This is an excerpt from the African SMME Tech Report on Substack. Please click HERE to subscribe. 

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