Irish-founded Umba raises $2m in seed funding

Irish founded fintech Umba has raised $2 million (€1.6 million) in seed funding as it seeks to scale its product offerings in the Nigerian and Kenyan markets.

The round was led by Lachy Groom, the former head of issuing at Stripe and Ludlow Ventures. Previous investors Frontline Ventures, Wave and Act Venture Capital also participated in the round. The latest round brings the company's total funding to around $3 million.

The digital bank, which was founded by former Munster rugby player Barry O'Mahony and co-founder Tiernan Kennedy, offers a transparent and accessible digital financial service alternative to legacy African banks, an underserved market in the region, with products such as current accounts, instant peer-to-peer payments, bill payments and lending through a mobile app. Umba plans to expand its products to include debit cards, saving schemes and referrals in both countries.

Platform

"From the outset we built our platform to serve multiple markets, currencies and payment infrastructures. This flexibility is an extremely important consideration as it's much harder to upgrade your systems at a later date," said Umba's chief executive Tiernan Kennedy. "For example bank and debit card penetration is high in Nigeria, so Umba is deeply integrated into those payment methods, while across Kenya and East Africa mobile money is dominant so our platform is tightly integrated with those services, too."

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The company is already building for the future. Mr Kennedy said the Kenya had a lower card adoption but the country was moving in that direction. “We want to be a juggernaut for that,” he said. “We think we will increase banking penetration just by virtue of having a simple service.”

Kenya and Nigeria are the two top markets for venture investment in Africa, with more than 250 million people combined. Umba hasn’t released user number, but Mr Kennedy said it was growing fast. “The market is there,” he said. “We are testing what’s working. We have multiple products - a free bank account with no fees, that is compelling already; then we have thinsg liek bill pay with cashback, and then we are working on things liek saving accounts with the ability to put aside money in multiple pots.”

The region has also been the focus of some activity in recent months. In October, Stripe acquired Nigerian payment service startup Paystack for $200 million. DPO Group was snapped up for $288 million, while Sendwave's acquisition in August for $500 million also indicated the health of the sector.

“Umba is setting itself on a growth trajectory in a market that has seen revolutionary adoption of mobile banking. Customers are seeking convenience, quick turnaround of transactions, low fees and a user friendly platform. These are the hallmarks of the Umba App and ecosystem,” said Kenas Otieno, Umba’s head of compliance.

Inclusivity

“Africa’s growth is centered around financial inclusivity and especially access to affordable credit. Most governments in Africa are currently putting in place policies that are friendly to deepening the financial sector. Umba aims to bridge this gap and offer products that will ensure easy and convenient access to banking products across all divides.”

It is the first investment in the African market for Ludlow Ventures.

“The team at Umba have an excellent service that drives down the cost of banking for their customers and democratises access,” said Ludlow Ventures partner Brett DeMarrais. “The move away from physical branch infrastructure was already underway and it has accelerated this year. As an investor it’s also very encouraging to see the investment activity that has also increased...It’s clear the African market is maturing and that we’re entering a very interesting phase.”

Mr Kennedy noted the year had been challenging, particularly with Covid-19. “We probably would have been so much further along without the pandemic, but on the flip side, our core is a branchless bank that does online sign up through biometrics, the trends that kicked off because of this pandemic - moving towards ecommerce, moving towards doing things online -- all play into our long-term playbook.”

The company, which currently employs 20 people, expects to see further growth in the coming months as it expands its business.

Mr O’Mahony played rugby professionally for four years with Munster before working with a mobile payments company that focuses on the African market. “it was very clear that things were going to go through a huge change,” he said. “We’re kind of living that change. It’s getting more exciting for me as things progress.”