CEO and founder of 4G Capital; Wayne Henessy-Barrett
Kenya’s fintech company 4G Capital has raised $18.5 million in its Series C financing round from global private equity company Lightrock. 4G Capital provides unsecured credit to micro-enterprises, helping them scale their businesses. The recent funding round brings the total equity funding raised by 4G Capital since 2016 to $27.5 million.
The funding acquired by 4G Capital comes as it plans to release a series of new products and services. One of the most noteworthy of these imminent products and services include loans with bigger credit limits and longer periods for repayment from what the fintech already offers. These, however, are under development.
4G Capital also wants to extend its credit facilities to much larger business businesses in the agri-value chain, a step out of its “micro businesses’ clientele. What this means is that the fintech is trying to expand its target which since inception has been micro businesses.
4G Capital is also looking to launch an app that’ll allow clients to sell on digital marketplaces and be connected to other digital providers, later this year. “We will be building new loan products this year, with longer durations and larger amounts and lend to bigger businesses in the agri-value chain…We are also planning to launch an app that will allow our clients to run their businesses better, have access to our goods and services, and connect them with other providers like FMCG (fast-moving consumer goods) distributors. The future of 4G, is a really enriched value proposition for our clients driven by data and AI,” said Wayne Hennessy-Barrett, CEO and founder of 4G Capital.
The fintech is also testing out a retail finance product it is calling Kuza. This will enable its users to gain access to goods from FMCG producers and distributors on credit.
When he launched 4G Capital, Wayne Hennessy-Barett was looking to narrow the financing gap for small businesses. “I spent a lot of time in informal markets and across the board, informing my knowledge of what to look for — the energy, the potential and the vibrancy of the informal merchants in Kenya; what they needed was somebody to back them. I could see how a lot of banks and financial institutions had closed the community branches, off-offshored call centres to emerging markets where labour costs were lower. But banks didn’t know their customers anymore and, therefore, weren’t able to make good lending decisions,” he said.
According to him, apart from helping 4G Capital deliver business training to its clients, physical locations and addresses help them to verify that they are dealing with real and existing businesses. “I always felt it was important, particularly dealing with people who can be quite vulnerable, to have a personal interaction touchpoint, which is then augmented by technology. It makes us much more resilient in terms of fraud prevention, of money laundering, financing of terrorism and things like that, which, unfortunately, if you’re lending blind, then you don’t necessarily know who’s on the other end. We know our clients better than anybody else because we are alongside them in the markets. Nonetheless, we’re not running brick-and-mortar conventional micro-finance operations – we have very lightweight teams of three to five people who are incredibly efficient in terms of their productivity,” he said.
According to him, 4G Capital has extended loans worth $230 million since 2013 to more than 1.75 million micro-businesses, and has recorded YoY growth of 90 percent.
As part of the deal, Lightrock’s partner Shakir Merali will be joining 4G Capital’s board. “Often used to justify the backing of many African companies, ‘financial inclusion’ has not always translated into positive outcomes for customers. What is needed on the continent is investment capital to back companies with the mission of financial empowerment. 4G Capital provides liquidity to the vast market of economically generative businesses – the mobile phone repairers, hairdressers and food sellers – that dot the landscape of Africa,” Shakir Merali said.
Now, the fintech is looking at exploring newer opportunities in West and North Africa and has its eyes on Nigeria, Ghana and Egypt. It also wants to invest in data science enhancements for its evaluation algorithm and increase its management team. “We want to make sure that we’re growing at the right pace so we have the capital that we need to move to the next phase, and that we’re building the foundations properly to enable that digital scaling,” the CEO and founder said.
