Kwara, a Kenyan fintech company that is digitizing credit unions, recently announced officially that it has raised $3 million in seed funding. In addition, the company has made a deal to acquire IRNET, the software subsidiary of the National Union of all savings and credit cooperative societies in Kenya.
Kwara has also signed an exclusive distribution deal for digital solutions with the Kenya Union of Savings and Credit Cooperatives (KUSCCO), the national umbrella body for SACCOs in Kenya.
The $3 million was raised in a funding round led by existing investors DOB Equity, Globivest, and Willard Ahdritz, the founder of Kobalt Music. The round also saw participation from new investors One Day Yes, Base Capital, and fintech executive Mikko Salovaara, the CFO of Revolut.
This development brings the startup’s total seed funding raised to $7 million. The company plans to use the funds to double its client base and focus on regional growth expansion.
Speaking on the development, Cynthia Wandia, the CEO and co-founder of Kwara, discussed the company’s plans for the new funding saying: “We think we’ve barely scratched the surface in the Kenyan market. And so, we are just going to be really investing in products and services that deepen our relationship here.”
Kwara’s acquisition of IRNET, as well as an exclusive distribution deal with the Kenya Union of Savings and Credit Cooperatives (KUSCCO) will be a significant step forward for all parties involved. KUSCCO, being the largest body of credit unions in Kenya, has fostered the credit union movement in Kenya for decades, while IRNET has offered crucial technical services to hundreds of SACCOs in Kenya.
According to Cynthia Wandia, this exclusive partnership guarantees that no other tech company can market with KUSCCO.
“The rationale (of the deal) is clear, first it is an opportunity to generate leads and distribute our core product as fast, and to deepen our competitive moat,” Wandia said. “We’re entering an exclusive partnership, which also means no other tech company will be able to market with Kuscco. They are stacking their bets on us but we have been able to prove that we can do it as we continue to grow,” she added.
Cynthia Wandia co-founded Kwara in 2019 alongside COO David Hwan. Since then, the Kenyan company has seen immense growth and have branches in South Africa and the Philippines. There has also been a significant growth in its client base which has risen from just 50 at the end of 2021 to 120 clients currently.
The company achieved this while maintaining a 100% customer retention rate which is a testament to the value Kwara delivers to its clients. The startup attributes this success to its automated onboarding process, which it claims has ensured customer success and growth.
Following the KUSCCO partnership, Kwara said it had gained connections to a pool of over 4,000 SACCOs for its banking-as-a-service offering.
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