Africa focused digital bank, Umba has announced the raising of a $2 million seed funding for the expansion of its network across the continent. Founded by Tiernan Kennedy and Barry O’Mahony with the mission to open up banking services for the huge underserved market that exists in Africa, Umba, through a mobile app gives customers access to a free checking account, free instant peer-to-peer money transfers, lending, deposits, bill payments and cashback. The company currently operates in Kenya and Nigeria, the top two markets for venture investment in Africa with a population of about 250 million.
The $2 million funding which was raised from Lachy Groom, Ludlow Ventures, Frontline Ventures, Wave and Act Venture Capital will enable Umba to expand and scale their product offering across these two markets in the coming months, adding debit cards, saving schemes and referrals. The investors in Umba’s seed funding round include Lachy Groom, Ludlow Ventures, Frontline Ventures, Act Venture Capital.
Umba’s CEO, Tiernan Kennedy, underlined the advantage that Umba brings to the digital mobile banking market, having been built with expansion capabilities from the outset. “From the outset we built our platform to serve multiple markets, currencies and payment infrastructures. This flexibility is an extremely important consideration as it’s much harder to upgrade your systems at a later date. For example, bank and debit card penetration is high in Nigeria, so Umba is deeply integrated into those payment methods, while across Kenya and East Africa mobile money is dominant so our platform is tightly integrated with those services, too. Having a platform that can service those diverse sets of needs is a key reason why Umba can scale up this business fast”, says Tiernan Kennedy.
Lachy Groom was formerly the Head of Issuing at Stripe, the American financial services company which recently acquired Nigeria’s Paystack. He is also a prolific investor who has made notable investments in productivity tool, Notion and email app, Superhuman. Ludlow Ventures was one of the investors in Honey, a rewards platform that was acquired for $4 billion, last year by Paypal. Frontline Ventures and Act Venture Capital are early investors of Umba who made follow-on investments in this round. Wave also participated in this seed round.
Ludlow Ventures Partner, Brett DeMarrais has highlighted the increase in venture activity in Africa and the opportunity it brings. “Umba is the first investment we’ve made in the African market and it’s one we were excited to participate in. The team at Umba have an excellent service that drives down the cost of banking for their customers and democratises access. The move away from physical branch infrastructure was already underway and it has accelerated this year. As an investor it’s also very encouraging to see the investment activity that has also increased—from the Jumia IPO to the Visa investment in Interswitch to the acquisitions this year of PayStack, DPO & Sendwave. It’s clear the African market is maturing and that we’re entering a very interesting phase”, says Brett DeMarrais.
Mobile money accounts in Kenyan and Nigerian markets have increased significantly thanks to legacy banking barriers and a fast growing e-commerce market that is being driven by rapid smartphone and internet penetration. Similarly, there is still an unmet demand for lending of €177.6 billion ($217.6 billion) per year between Kenya and Nigeria, according to estimates from The World Bank. Umba was established to meet the needs of this rapidly-growing African mobile payments market where the presence of secure mobile banking apps options are limited. This market opportunity has drawn attention from fintech investors and comes shortly after Stripe’s $200M acquisition of Nigerian payment service startup Paystack as well as the acquisition of DPO Group for $288m and Sendwave for $500m, showing a booming ecosystem breaking records in venture rounds and acquisitions.
Umba’s Head of Compliance, Kenas Otieno addressed this need for the platform in the current fintech climate. “Umba is setting itself on a growth trajectory in a market that has seen revolutionary adoption of mobile banking. Customers are seeking convenience, quick turnaround of transactions, low fees and a user friendly platform. These are the hallmarks of the Umba App and ecosystem. Africa’s growth is centered around financial inclusivity and especially access to affordable credit. Most governments in Africa are currently putting in place policies that are friendly to deepening the financial sector. Umba aims to bridge this gap and offer products that will ensure easy and convenient access to banking products across all divides”, says Kenas Otieno.