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Lulalend to scale neobank offering after R600m funding

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 02 Feb 2023
Trevor Gosling, co-founder and CEO of Lulalend.
Trevor Gosling, co-founder and CEO of Lulalend.

Lulalend, the South African digital provider of SME funding, has finalised a $35 million (R600 million) Series B funding round, led by global impact investor Lightrock.

According to a statement, Lulalend will use the capital to scale its business to adequately address SA’s enduring SME credit gap, which is estimated by the International Finance Corporation to be more than $20 billion per year.

Other participants in the fintech firm’s Series B funding include investment firms the German Development Finance Institution, Triodos Investment Management and Women's World Banking Asset Management, as well as existing investors International Finance Corporation and Quona Capital.

The company says its digital-first approach, alongside its proprietary credit scoring algorithm, has enabled it to offer a faster, simpler and more transparent service for SMEs to access business funding.

By leveraging data from a diverse set of alternative sources, which support quicker and more accurate assessments of business health, Lulalend can review applications and distribute funds in hours as opposed to the weeks or months it takes traditional lenders, it claims.

Lulalend says to date, it has disbursed billions of rand to SMEs across SA.

Trevor Gosling, co-founder and CEO of Lulalend, says: "We are excited to utilise these funds to grow and evolve our products, so we can better serve the needs of South Africa's SMEs.

“We hope that our impact on this vital sector of the economy, which accounts for almost 40% of GDP and 60% of private sector employment, is nothing short of transformative. Our vision is to drive financial inclusion, and act as a catalyst for growth and prosperity across the SME sector."

Founded in 2014, Lulalend’s customer offering has grown to encompass a neobanking proposition named Lula, built in partnership with Access Bank.

Offering a bank account specifically tailored to SMEs, an artificial intelligence-driven cash flow management tool and real-time access to funding, Lula aims to simplify money management for the more than two million formal and informal SMEs in SA.

The platform’s current waiting list consists of 20 000 businesses, highlighting the demand for this new approach to business banking, it notes.

The capital raised will enable Lulalend to increase the size of its loan book, bring new solutions to market, and invest in the technology and talent that will accelerate the rollout of Lulalend’s new digital business banking proposition, adds Gosling.

In addition, in partnering with new investor Women’s World Banking Asset Management, the company says it will work to scale its product to women-owned SMEs in the region.

Lightrock is a global impact investor with a focus on growth capital that backs purpose-driven entrepreneurs tackling the world’s biggest challenges.

“Traditional lenders have historically underserved the SME market, unfairly hindering the growth of companies that make up the backbone of South Africa’s economy,” says Arul Thomas, principal at Lightrock.

“We are delighted to be partnering with Trevor and his dedicated team, who are levelling the playing field for SMEs with their simple, fast and transparent approach to business finance.”