NIGERIAPayhippo, a fintech startup, has raised US$1 million in pre-seed funding to scale its offering, which provides vital loans to small businesses.

Investors include Ventures Platform, Future Africa, Launch Africa, Sherpa Ventures, DFS Lab, Hustle Fund and Mercy Corps Ventures. Payhippo had previously raised external capital from Nigerian angel investors and early-stage venture builder Aidi Ventures.

Payhippo said it will use the funds to hire more engineers and a Head of Finance to keep up with the current growth.

Launched in January of last year by Chioma Okotcha, Uche Nnadi and Zach Bijesse, Payhippo provides loans to small businesses in Africa, often neglected by banks because of their lack of credit histories, in under three hours.

“I helped run my family’s business in Nigeria and I know how tough financing can be for SMEs in Nigeria. That’s why I went to work in microfinance policy. But I saw that there was still such a big need for SMEs in Nigeria and the continent,” said Okotcha.

“Small businesses are at the core of Africa’s economic growth.”

Kola Aina – General partner, Ventures Platform Fund

Bijesse, who previously worked at African SME lender Lidya, said there is need to provide same-day financing as per requirements of small businesses.

“Since we started in January of 2020, Payhippo has disbursed over 2,600 loans to businesses. These are the community grocery stores or small retail shops that are part of the critical infrastructure of their communities, but are left outside of the traditional financial system,” he said.

Bijesse also said that Payhippo has had a 97% repayment rate while growing revenue 25% month on month.

Bijesse co-founded the startup along with Chioma Okotcha (COO) and Uche Nnadi (CTO). Okotcha has worked in microfinance policy, ran her family’s SME in Nigeria, and helped build the international NGO Teach For Nigeria across multiple states in the country.

Nnadi was a full-stack engineer at consumer lending fintech Earnest and has been mentoring Nigerian engineers for several years.

So far, Payhippo, which helps customers generate their own alternative credit scores, has disbursed over 2,600 loans to businesses, and had a 97 per cent repayment rate.

“Small businesses are at the core of Africa’s economic growth and we are thrilled to partner with Zach, Chioma and Uche as they build Payhippo. They are essentially bridging the $158 billion SME financing gap,” said Kola Aina, general partner, Ventures Platform Fund.

Most of these businesses in Nigeria are creditworthy, but traditional banks and lenders don’t lend to them because there are no credit scores and collateral requirements are too high. Payhippo assesses businesses, builds their Payhippo Scores, and provides financing to them.