Payment startup, Payhippo has annonced that it just raised $1m in Pre-seed funding in a bid to step up the pace in the lending space.

The payment startup which provides loans to small businness in Africa has just completed the pre-seed funding round from Africa tech investors such as Ventures Platform, Future Africa, Launch Africa, Sherpa Ventures and DFS Lab. It also includes international investors Hustle Fund and Mercy Corps Ventures.

Before the pre-seed funding, the startup says it had prior Friends and Family backing from notable Nigerian angel investors and early stage builder – Aidi Ventures.

Speaking on the funding round, Kola Aina, General Partner, Venures Platform Fund said, “Small businesses are at the core of Africa’s economic growth and we are thrilled to partner with Zach, Chioma & Uche as they build Payhippo. They are essentially bridging the $158B SME financing gap.” 

With the market size for SME lending in Nigeria estimated at $46B, Payhippo’s founders say they have a personal connection to this market opportunity. According to Chioma Okotcha,Payhippo Cofounder and COO, she says, “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 still that there was still such a big need for SMEs in Nigeria and the continent.”

The aim they say is to provide seemless financing for Nigerian small businesses, “I am proud of our platform. There are endless issues that Nigerian SMEs experience with financing but we’ve been taking it one step at a time. I talk to our borrowers every day to get product feedback. Our borrowers tell us that our loans are more seamless than anything else they have seen in the market.” Uche Nnadi, Payhippo Cofounder and CTO.

The startup says small businesses hear about Payhippo through our direct outreach and then sign up via payhippo.africa. They then we assess cash flow and business owner data to determine what size loan is right for them. Most importantly, business owners build a Payhippo score to access up to 3x the amount of financing over time.

The startup has had what it best describes as a fast traction, as while growing revenue 25% month on month, Payhippo has had a 97% repayment rate despite since January 2020.

The startup since it started in January of 2020, 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.