Asilimia, a Kenyan fintech, raises $2 million in a pre-seed round with plans to extend loans to MSMEs and expand in East Africa

According to data from Kenya’s bureau of statistics, informal businesses power the country’s economy, accounting for 33.8 percent of GDP and 83.4 percent of total employment outside of small-scale agriculture.

These businesses contribute significantly to the country’s economy, but they are underserved by traditional banking institutions, making it difficult for them to obtain the financing they require to grow.

On the other hand, the financing gap left by traditional banking institutions has provided an opportunity for innovation, resulting in the birth of fintechs such as Asilimia. Over the last three years, the Kenyan startup has provided a lifeline to Kenyan traders by enabling them to conduct mobile money transactions free of transfer fees via its Leja app.

And now, with $2 million in pre-seed funding ($1 million in equity and $1 million in debt), the startup is on its way to the next stage of growth, which will involve extending loans to traders, providing more relief to this subgroup that is frequently left out and regarded as high risk by the traditional banking sector.

The funding was provided by a number of investors, including Fredrik Jung Abbou, a two-time unicorn founder and Norrsken Impact Accelerator, as well as the French Public Investment Bank (Bpifrance) and GreenTec Capital Partners in the debt round.

Asilimia intends to use the funds to hire new employees as it refines its technology and expands into another market in East Africa. Based on data from its Leja app, it will also make loans to micro, small, and medium-sized enterprises (MSMEs).

“We have entered a phase where we are exploring ways to extend much-needed credit enabling traders to buy equipment or products to sustain their businesses,” Asilimia co-founder and CEO Tekwane Mwendwa told TechCrunch.

Morgane Kablan is the other co-founder and chief operating officer of the company.

Asilimia will enter a market with about 100 lending apps, including Branch by San Francisco-based Branch International Ltd and PayPal-backed Tala.

In a previous interview, the Digital Lenders Association of Kenya told TechCrunch that the 25 apps it represents disburse about $40 million per month. The apps provide collateral-free loans, making them appealing to borrowers in need of quick cash.

Leja not only allows users to make free mobile money transactions, but it also supports bookkeeping, making it easier for traders to track their revenues and outflows without the need for technical or accounting knowledge. Asilimia intends to use the platform’s valuable data to extend loans to users.

Mwendwa stated that Asilimia will develop credit scoring models based on the collected data to determine how much credit will be extended to borrowers.

“Because all of this information is in the app, we will consider their business-to-business transactions, cash flow, sales, liabilities, and expenses.” This is possible because traders enjoy using our app, which, unlike other lending apps, allows them to manage their inventory. “I like to think of our app as an operating system for informal businesses, and we’re pleased that it’s a one-stop shop for traders,” Mwendwa said.

“Another issue that traders face is airtime top-up. We interact with them on a daily basis and understand their pain points, so we want to provide them with all the assistance they require to continue doing business – we will also extend no-interest airtime top-up credit,” he said.

According to Tekwane, a typical user makes about three transactions per day through the app, and the business is growing at a rate of 30% per week. Its apps are used by approximately 27,000 people, with total transactions through the Leja app amounting to approximately $20 million.

The startup has previously gone through the prestigious Station F incubation program in Paris as well as the Norrsken Impact Accelerator program. The startup won the Africa Cup at the 2019 SA Innovation Summit in 2019, resulting in a $350,000 investment from Unicorn Group, a pan-African investment firm. It used the money to fund its expansion, which included adding Leja to its portfolio.

Beyond East Africa, Asilimia is looking into expansion opportunities in other regions in order to continue bridging the financing gap that traders across the continent are experiencing.

“MSMEs play an important role across Africa, and making it easier for them to succeed is good for the continent as a whole,” said Funda Sezgi, co-founder and managing director of Norrsken Impact Accelerator.

“Tekwane and his team have created a viable solution, and we are delighted to be assisting them as they drive prosperity in a critical sector of the African economy.”