Lulalend will unveil South Africa’s newest digital bank, Lula, by March after it secured $35 million to expand its business.
Lulalend, a startup founded in 2014, will partner with Nigerian lender Access Bank to establish Lula.
The neobank will offer a bespoke suite of products that address the challenges faced by small and medium-sized enterprises in managing their finances.
“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.”
The global digital banking market size was valued at $803 billion in 2019 and is projected to reach $1.6 trillion by 2027, according to a report published by Financial Sector Conduct Authority.
While SMEs are one of the largest contributors to private employment in South Africa, a significant proportion of these businesses remain unbanked or under-serviced by traditional lenders with limited access to credit.
The $35 million was raised through Series B equity funding led by Lightrock LLP, the German development finance institution and the International Finance Corporation.
Lulalend, which was founded by Gosling and Neil Welman, raised $6.5 million in 2019 in its Series A funding and has grown to employ 150 people.
Lula already has 20,000 clients on the waiting list, Gosling said.