Lulalend will launch South Africa’s newest digital bank, Lula, in March after raising R606 million to expand its operations.
Lulalend, a 2014 startup, will collaborate with Nigerian lender Access Bank to launch Lula. The new bank will provide a tailored suite of products to address the financial management challenges that small and medium-sized businesses face.
“The support that business owners get through existing banks is not at the level that it should be, and that’s our core focus,” Trevor Gosling, chief executive officer of Lulalend said in an interview on Tuesday.
“We’re not deviating and looking to do a consumer product, it’s all completely focused on the SMEs and their needs.”
According to a report published by the Financial Sector Conduct Authority, the global digital banking market was valued at $803 billion in 2019 and is expected to grow to $1.6 trillion by 2027.
While SMEs are one of the largest contributors to private employment in South Africa, a sizable proportion of them are unbanked or under-served by traditional lenders, with limited access to credit.
Lightrock LLP, the German development finance institution and the International Finance Corporation led the $35 million Series B equity funding round. Lulalend, founded by Gosling and Neil Welman, raised $6.5 million in Series A funding in 2019 and now employs 150 people.
According to Gosling, Lula already has 20,000 clients on the waiting list.