Obtaining a loan, particularly for small businesses, was previously tough; now, because to fintech such as 4G Capital, that process has been simplified, and as a result, these fintechs are receiving the attention they deserve.
4G Capital, a Kenyan fintech firm that provides unprotected lending to micro-businesses, recently received $18.5 million in Series C funding from global private equity firm Lightrock.
The latest funding round takes 4G Capital’s total equity funding raised since 2016 to $27.5 million. The purchase also has the support of Lightrock’s partner Shakir Merali, who has joined the 4G Capital Board of Directors.
The equity funding arrives as the fintech prepares to launch a slew of novel products and services, such as new loans with credit limits of up to $1,000 and payback terms of up to six months, up from the current ceiling of one month. All of this is part of its strategy to broaden its client base and increase profits.
The products are presently in the works, but as the firm grows its reach beyond micro-sellers, who have been the startup’s primary market since its inception in 2013, the objective is to lend to larger enterprises in the agri-value chain.
Wayne Hennessy-Barrett, the CEO and creator of 4G Capital, revealed that the firm would also create an app later this year that will allow customers to sell on digital marketplaces and interact with other digital providers such as delivery services.
According to Hennessy-Barrett, the company plans to build an app that will help customers operate their businesses more efficiently, gain access to its goods and services, and link them with other suppliers such as FMCG (fast-moving consumer goods) wholesalers. The future of 4G is a truly enhanced value proposition for our clients, powered by data and artificial intelligence.
4G Capital has granted credit worth $230 million and lent to over 1.75 million micro-businesses since its start, according to Hennessy-Barrett, representing a 90 percent year-on-year increase.
The lender has also partnered with a number of debt investors, including Alphamundi, a Swiss impact investor, Citi Bank, the Ford Foundation, Kenya’s Co-operative Bank, and high-net-worth individuals, to advance them $3 million in credit in 2020, a facility that was guaranteed by the US International Development Finance Corporation.
Fintechs are beginning to extend credit to people and SMEs with no financial footprints by analyzing new-age mobile and online data.
Fintechs founded in Africa, like 4G Capital, have since developed and are gaining pace in Africa. This fintech is assisting small businesses in obtaining loans without having to worry about high-interest rates or significant collateral.
These lenders’ new offerings are allowing them to extend and grow outside a single region. After nearly a decade in business, 4G Capital is looking for additional expansion prospects in West and North Africa, with a focus on partnerships in Ghana, Nigeria, and Egypt.
This will happen after the company has expanded its market share and enhanced its unique selling proposition in its major markets.
Most of these lenders have created a real office to undertake proper verification of their clients to ensure that they are in fact, in business, in order to ensure that the majority of the individuals acquiring loans are genuinely business people.
4G Capital opened physical locations in an effort to get to know its consumers better rather than relying just on phone contact.
Physical sites, according to Hennessy-Barrett, allow 4G Capital to verify that they are working with legitimate businesses while also assisting them in providing business training to its customers.
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