Cape Town-based fintech startup Lulalend hopes to build a $100-million loan book and has secured a $6.5 million Series A funding round to help it lend money to more small businesses.
The investment was led by two Washington D.C.-based entities, the International Finance Corporation, a member of the World Bank Group, and Quona Capital, a VC firm specializing in financial technology for inclusion in emerging markets, according to Ventureburn.
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Lulalend makes short-term loans to small businesses through an online platform averaging around $10,600 each. Borrowers have either six or 12 months to pay it back, Techcrunch reports.
There is a $23-billion financing gap for South Africa’s small and medium-sized businesses. That’s Lulalend’s market. These businesses contribute an estimated 34 percent of the country’s GDP, according to International Finance Corporation data.
Lulalend was founded in 2014 by CTO Neil Welman and CEO Trevor Gosling.
Gosling is an accountant who sold his gourmet food e-commerce venture 5ounces to consumer internet group Naspers in 2013. He worked as an investment banker for Goldman Sachs in London in 2009 before returning to South Africa.
Welman is a chemical engineer who worked as an investment banker in London for more than 10 years, including four years at Merrill Lynch between 2006 and 2009.
Lulalend plans to use the investment to develop its tech and data team and improve its ability to reach more small businesses to finance.
In addition to investing heavily in marketing its services, the fintech lender intends to reach more small businesses by considering partnerships with banks and telecommunications companies, Techcrunch reports.
Lulalend is targeting a $100-million loan book and building that as quickly as possible, CEO Gosling told Techcrunch.
