Kenyan Fintech Firm, 4G Capital Raises $18.5 Million In Series C Funding From Lightrock

4G Capital, a Kenya-based fintech company, has in a Series C funding from global private equity firm Lightrock, raised $18.5 million.

The funding is an highlight of  the company’s move to roll-out series of new products and services that would include new loans with an increase in the credit limit from $1,000, while allowing longer repayment periods from the current maximum of one month.

4G Capital, a renowned provider of unsecured credit to micro enterprises, will take advantage of the funding to expand its clientele base while also growing its profits.

Even though the products are still in the stage of development, the company’s intention is to lend to bigger businesses in the agri-value chain, while it continues it expansion as against its major target market, the micro-sellers.

The CEO and Founder of the fintech startup, Wayne Hennessy-Barrett revealed that 4GCapital will additionally launch an app this year, with the mandate of enabling its esteemed clients sell on digital marketplaces, while also being connected to other digital providers like delivery services.

He told TechCrunch:

“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 Hennessy-Barrett.

The company has already started conducting trials of its latest retail finance product known Kuza.

Kuza gives clients the opportunity to access goods from FMCG producers and distributors on credit.

The Kenyan startup had in the little years of existence established physical branches in Kenya, Uganda and other places in it’s push to know it’s customers better physically instead of it being limited to the phone.

“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,” said Hennessy-Barrett.

“I always felt it was important, particularly dealing with people who can be quite vulnerable, to have a personal interaction touch point, which is then augmented by technology.”

With the startup offering short-term loans to micro-businesses in Kenya and Uganda, who may have been locked out by formal banking institutions, Hennessy-Barrett believes physical locations would make it possible for 4G Capital to authenticate that they are dealing with real businesses, besides helping them to deliver business training to their clients.

“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,” he said.

“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.”

4G Capital having had it’s imprints in Kenya and Uganda l, is also exploring new growth opportunities in West and North Africa with a keen eye on partnerships in Ghana, Nigeria and Egypt, and the company believes this which come to fruition after deepening and enriching its market share and customer value proposition in its core markets.

With plans in motion to scale its operations, 4G Capital also intends to invest in data science enhancements for its evaluation algorithm, and grow its management team in evolving its core banking system.

“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,” said Hennessy-Barrett.

The Series C funding round total the total equity funding by 4G Capital since 2016 to $27.5 million, with the  deal also coming with the backing of Lightrock’s partner Shakir Merali, who is now in 4G Capital’s Board.

Merali, while commenting on the deal, said:

“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.”