Kenya’s buy-now-pay-later (BNPL) startup, Lipa Later, has raised the sum of $12 million in a pre-series A to expand across Africa. This brings the company’s total funding to about $16 million to date.
The funding, which is a mix of equity and debt, was co-led by GreenHouse Capital and Lateral Frontiers VC, which led the company’s seed investment. The round also saw participation from Cauris Finance, SOSV IV LLC, Sayani Investments, and Axian Financial Services.
The company said this new fund raised will allow them to provide their buy-now-pay-later services to its current pipeline of consumers and also, strengthen their presence in current markets—Kenya, Uganda, Rwanda—and expand into new markets such as Nigeria, South Africa, Ghana, and Tanzania.
Lipa was founded in 2018 by Eric Muli and started as a programme to aid internal employees access mobile phones that allow them to be efficient at their work stations.
Prior to the launch of Lipa Later, Muli had founded Alpha Force Security Ltd – a company that provides the services of security guards to homes and offices in Kenya.
Muli explained that in 2017, the security startup Alpha Force started a mobile phone financing programme for their employees, especially their guards but then discovered that there was no company offering a mobile phone BNPL solution at that time, so they had decided to tackle it themselves.
“We started looking around to see if there’s a BNPL platform in the region, but there was none. So, at that point, we just did it ourselves,” Muli said.
Furthermore, Lipa Later saw the opportunity to provide a BNPL company focused on mobile phones in Kenya, seeing that in 2017, the only available BNPL company was M-Kopa – a startup focused on mainly solar power.
Muli also added that helping their employees get mobile phones was some sort of a pilot.
The initiative brought them close to the market and as a result, they realized that for every one Alpha Force guard who received a phone, there were hundreds of persons out there who also needed a phone but couldn’t afford it.
After research was carried out, Muli and his team became certain that they could extend this solution to more Kenyans, which led to building a tech-enabled product and launch in 2018.
With three years in active operation, Lipa Later has extended its offerings into more retail options like electronics, furniture and home appliances.
Lipa Later has tapped into the rapidly growing online presence across Africa, and has built a unique BNPL option API that integrates into e-commerce platforms and enables merchants to sell products directly to consumers and pay for them in affordable monthly installments other than the traditional offline method of buying items in stores.
“Lipa Later is not a BNPL platform for only phones; it’s for anything that is retail. When we started out, we were doing things heavily manually. But we’re now fully tech-enabled; we integrate directly into e-commerce platforms and payment gateways”, Muli said.
He added, “The company also offers an offline solution for the merchants and small-scale retailers that have not moved online”.
Lipa Later has served about 200,000 customers so far and maintained a 100% year-on-year growth.
Lipa Later’s proprietary credit scoring and machine learning system enable the consumer to sign up and get a credit limit in seconds without the need for bulky documentation and a lengthy credit approval process.
Speaking about the investment, Samakab Hashi, Partner at Lateral Frontier VC, one of Lipa Later’s first and lead investors, said, “Over the last few years, we have watched Eric and his team put together the building blocks for pan-African expansion, and this round of funding takes Lipa Later one step closer to being the dominant BNPL player on the continent.”
“We are excited to be working with our investors as we look to grow and expand to more markets in Africa. In the next 12 months, we are looking to grow and double our presence in the existing markets, even as we open 3–5 new markets in Africa,” Muli added.
“Lipa Later is not only changing the consumer credit landscape across Africa, which to date has been largely inaccessible for most, but also catalyzing the future of shopping, e-commerce, and payments,” said Ruby Nimkar, Partner at GreenHouse Capital.
“They’ve done this in a true product- and customer-led way that benefits both merchants and consumers and has proven to be incredibly scalable across multiple markets.”
The BNPL movement is waxing strong in Africa and so is the competition it brings. Lipa Later, even though it’s one of the early companies in the space in Kenya, has a lot of companies with the capital war chest to contend for market share with.
There is M-Kopa—which have since expanded into phones and retail products—in Kenya and Uganda.
There are also CDCare, PayQart, Carbon, and even M-Kopa in Nigeria, where it just went live on Monday.
In South Africa, there are PayJustNow and Payflex—which was recently acquired by Australian BNPL Zip.But Muli was sure that they don’t only have what it takes to compete but to emerge as industry leaders in the new market.
One of Lipa Later’s cards is its wide array of exclusive merchants and world-renowned brands such as Carrefour, Apple, Tecno, Samsung just to mention a few, a strategy it has used to stay atop the market in East Africa and one it intends to carry along to the new markets.