Kenyan Fintech Startup, Kwara Raises $3 Million Seed Extension

Kenyan fintech, Kwara, has in the last year soared so high that it more than doubled its client base and after raising a whopping $ 3 million seed extension in 2022 will be hoping to continue its surge for more growth.

The firm which helps to digitalise credit unions (saccos) had also signed an exclusive digital solutions distribution agreement with the national umbrella body that represents saccos, the Kenya Union of Savings and Credit Cooperatives (Kuscco), a move that will give it an edge over similar fintech offerings.

The Kuscco partnership will imply that Kwara will have access to connect to a pool of over 4,000 saccos for its banking-as-a-service product.
The exclusive deal will also give the go-ahead for Kwara to acquire IRNET, a software company and subsidiary of Kuscoo and a provider of Sacco’s. The total amount for the acquisition is not yet known at the moment as it has not been disclosed.

Kwara in a statement said the deal is coming right at the time it is planning to double down on Kenya, more significant as its coming after the $3 million seed round extension.

The recent seed round had existing investors like DOB Equity, Globivest, founder of Kobalt Music, Willard Ahdritz participating. New investors like One Day Yes, Base Capital, the CFO of Revolut, Mikko Salovaara also participated in the round.

The new funding will total Kwara’s seed fund to $7 million after a previous round that had Breega, SoftBank Vision Fund Emerge, Finca Ventures, New General Market Partners and other VCs investing.

The CEO of Kwara, Cynthia Wandia who co-founded Kwara with David Hwan in 2019, while speaking to TechCrunch said:

“We think we’ve barely scratched the surface in the Kenyan market. And so, we are just going to be really investing in products and services that deepen our relationship here”.

“The rationale (of the deal) is clear, first it is an opportunity to generate leads and distribute our core product as fast, and to deepen our competitive moat. We’re entering an exclusive partnership, which also means no other tech company will be able to market with Kuscco. They are stacking their bets on us but we have been able to prove that we can do it as we continue to grow”, Wandia said.

Kwara has seen its clientele base grow from 50 to 120 at the end of 2021, a 100 percent customer retention and this would be a further proof of the value its clients derive from its services.

Part of what ensured its customer success and growth according to Kwara is it’s automated onboarding process that provides a seamless registration for its clients.

The fintech product upgrades the back-office operations of credit unions, assists them to ditch the tedious paper-based processes and physical branches, while also helping them to open up new ways to sign up new members and create novel products.

Kwara also boast of a neo bank app that allows members of partner credit unions have access to instant loans and other third-party services like insurance.

The company in a statement had announced that the user base of the neobank app that gives users the chance of depositing funds directly into their sacco accounts while tracking their finance and payment has grown 35-fold since its 2022 launch.

The company hopes to add more features that would cater for the saccos, with additional product offerings for its members.

Wandia while speaking on what to expect from Kwara in the coming months said:

“We continue to ship more or less enterprise grade features for the large saccos that are well capitalized, the ones who are at the same size and level as some of the banks. There asre specific features they need and specific ways they need to be taken care of so we will continue investing in that. And then investing in the neo banking experience, so adding more features that help the members build a personalized view of their own goals and really start working towards achieving them. Partnering with third parties who are bringing value to these end customers”.

Continuing, she said:
“We believe that every time a sacco member leaves their sacco to get another service just because the sacco doesn’t provide it is a missed opportunity for that member to actually profit from the returns of that product. all income earned on those products actually flows back to the members as dividends”.