UD Round-Up #03: The Bounce Is Back

How much would you pay today, to own 10% of a bank which is going to become the largest bank in Nigeria within the next 10 years and the largest in Africa within the next 20 years?

If you’re Target Global or Valar Capital, the answer is $55M. The two investors co-led a $55M round in Kuda Bank that valued the company at $500M. (link)

Here’s Ricardo Schäfer, the partner at Target who led the round:

Babs and Musty are ambitious on another level. For them, it was always about building a pan-African bank, not just a Nigerian leader. The prospect of banking over 1 billion people from day one really stood out for me at the beginning.

Here’s Andrew McCormack, a general partner at Valar Ventures:

Kuda is our first investment in Africa and our initial confidence in the team has been upheld by its rapid growth in the past four months. With a youthful population eager to adopt digital financial services in the region, we believe that Kuda’s transformative effect on banking will scale across Africa and we’re proud to continue supporting them.

The Nigerian investor community is split on this deal. Only three Nigerian technology companies have hit a valuation above $500M - Interswitch, Flutterwave, and Jumia. Kuda hit this milestone much faster than the others and with significantly fewer revenues.1

Rihanna’s Maiguard @knightofdelta

$159k revenues, $2.7 million in losses and $500 million valuation. Wonderful.

10:40 AM ∙ Aug 7, 2021

---

74Likes27Retweets

Now, not many local funds are invested in Kuda Bank. Some of them might have seen the deal early and passed, others may not have even seen it at all. The company raised a $10M Seed round last November. The valuation was not disclosed but it’s probably safe to assume it was significantly less than $500M. So perhaps there are a few sour grapes behind the comments we’re seeing from some investors that missed on making high returns from investing early in Kuda. It’s important to note that Target Global led the seed, participated in the Series A round, and co-led the Series B round. Valar Capital led the Series A round and co-led the Series B round. So the valuation is almost entirely based on the assessment of these two investors.

Does that mean the valuation is unrealistic? I don’t think so.

The largest bank in Africa today