Access to finance remains a major barrier to small business growth, with data showing a financing gap of $330 billion for small businesses which make up 90% of African businesses.
That’s the gap that Kenya’s integrated financial fintech, Pezesha, is looking to fill as it expands into Nigeria, Rwanda and Francophone Africa following a pre-Series A funding round from $11 million led by Women’s World Banking Capital Partners II with participation from Verdant Frontiers Fintech Fund, blockchain builder cFund and Cardano Input Output Global (IOG). The round also included $5 million in debt to Talanton and Verdant Capital Specialist Funds.
The fintech’s new growth strategy follows its plan to propel its integrated financing offering beyond its current markets, including Uganda and Ghana, to close the financing gap affecting millions of micro, small and medium-sized enterprises (MSMEs) in these markets.
Founded in 2017 by Hilda Moraa, Pezesha has built a scalable digital lending infrastructure that enables traditional and non-traditional financial institutions to offer working capital to MSMEs.
“The opportunity and impact of solving working capital issues for SMEs is enormous. [We are] address the root cause, namely information asymmetry issues, to ensure the quality and accountability of borrowings. Pezesha solves this problem with our robust API-based credit scoring technology,” Moraa, also CEO, told TechCrunch.
Pezesha appeals to local and international banking institutions, HNWIs and DeFi to obtain additional liquidity for subsequent loans. Picture credits: Pezesha
The fintech works with partner companies such as Twiga and MarketForce, which integrate its credit scoring APIs into their platforms to allow their customers to get real-time loan offers.
Pezesha said he is currently working with more than 20 partner companies which have enabled him to lend to over 100,000 businesses to date. It expects that number to increase before the end of the year as 10 more companies integrate into its infrastructure. The fintech is able to provide loans of up to $10,000 at single-digit interest rates and a one-year repayment period.
Pezesha plans to create a $100 million funding opportunity each year for businesses by tapping into local and international banking institutions, high net worth individuals and decentralized finance.
“We’re building for the future and that means harnessing new innovations to gain additional liquidity that allows us to offer affordable loans to SMEs,” said Moraa, a two-time founder, who launched Pezesha after leaving with success Weza Tele in 2015.
Charles Hoskinson, the co-founder of IOG and Cardano, while commenting on their investment in Pezesha, said in a statement that “Facilitating the movement of capital to emerging markets to support economic growth and job creation is a fundamental promise of blockchain and cryptocurrencies. Our vision centers on using technology to make it easier for people around the world to borrow and lend to each other in a regulated way. This investment in Pezesha is a significant milestone and we are thrilled to be part of their growth story.
IOG’s investment in Pezesha follows a previous ad that the two companies had partnered to build a peer-to-peer financial operating system for Africa.
Picture credits: Pezesha
Moraa said working with strategic partners like Cardano will open up the market for debt liquidity and provide the affordable capital essential for all sectors of the economy to grow.
The fintech plans to open up more lending opportunities to women entrepreneurs who continue to be excluded from the formal banking sector.
“Pezesha is dedicated to solving Africa’s working capital problem through its strong lending infrastructure, and this investment will enable them to deepen the range of financial products offered especially to women-owned MSMEs,” said Christina “CJ” Juhasz, chief investment officer of Women’s Asset Management at the World Bank.
Pezesha did not reveal how much he had raised in the past, but Moraa noted that 20% of his initial pre-seed investment in 2017 came from local angels. The fintech, which raised seven figures last year, counts Seedstarts, GreenHouse Capital and Consonance Investment Managers, among its many investors.
“We have the right business model, we are profitable and we continue to seek the type of investors that align with our goals and values,” Moraa said.
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