PayHippo, a financial technology startup based in Nigeria has raised $1m pre-seed for its large scale expansion. The startup is looking to expand to other Nigerian cities as well as build its team of engineers.
PayHippo was founded in January 2020 with the goal of providing SMEs with access to financing as well as help build credit scores. This is something conventional banks struggle with as they offer limited financial access to these businesses despite controlling two-thirds of the country’s economy.
SMEs also contribute over 70% of employment opportunities in the country.
Speaking about the fundraise, co-founder of PayHippo, Chioma Okotcha said, “As a fintech company, the tech component of what we build is so important, because that’s really what drives how we can access the credit readiness of that SME and how much to give them. The tech does all this calculation in the backend, works out the underwriting, evaluates who the customer, and we’re able to give a loan that is within a safe range.”
Having identified the need and growth potential of SMEs in the country, enabling secure lending for them poses an opportunity worth seizing. The startup started disbursing its first set of loans in 2020 after the pandemic laid waste to some businesses and led to salary cuts.
Since its debut in 2020, PayHippo claims to have supplied N1.4 billion in over 2,600 loans to businesses. Most of these businesses include grocery stores and small retail stores.
How PayHippo works
PayHippo’s automated products collects ample data from its clients in order to understand their business model and provide assistance tailored to their needs.
As a fintech company, they aim to use technology to calculate client averages and evaluate cash flows in order to provide a loan offer within a safe range. This is to ensure a smooth repayment process.
PayHippo’s repayment plan is rather flexible as loanees are not required to pay back until the end of the loan cycle. This enables the business to fully utilize the loans awarded to them before returning the principal amount and interest. PayHippo claims to have so few defaulters with a repayment rate of 97%.
What to Expect
With such a sturdy plan in place, the firm believes in the growth potential of SMEs in Nigeria. The $1m cash injection will help the startup hire more engineers and a Head of Finance to keep up with the expansion.
This will also enable PayHippo reach more small businesses in need of financing and credit building. Since these SMEs constitute over 60% of the country’s economy, the expansion will further increase the net value of the economy and offer revenue addition.
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