Earlier this month, Kuda’s CEO, Babs Ogundeyi, proudly announced that the Nigerian online challenger bank had achieved almost N₦56 trillion (~$60 billion) in transaction value since its launch in 2019.
However, recent revelations indicate that Kuda’s user base has reached 7 million retail and business customers, falling short of the ambitious projections presented during its 2023 fundraising efforts.
In February 2023, Kuda aimed for new investments, projecting a user base doubling from 5 million to 10 million by the end of 2023. Despite eventually securing an estimated $20 million in mid-2023, the bridge round closed at the same $500 million valuation as its 2021 Series B round.
While Kuda has expanded its user base five-fold since 2021, the fintech is still awaiting license approvals to operate in Ghana, Uganda, and Tanzania, having yet to gain a foothold in any other African country. Its growth has primarily come from servicing Nigerians both at home and abroad, including its expansion to the U.K. in late 2022.
However, this growth has come with challenges. Kuda’s reported losses rose from $2 million in 2020 to $14 million in 2021, mainly attributed to operational expenses, marketing, and talent acquisition. The neobank faced setbacks due to an ill-conceived lending product, resulting in a non-performing loan ratio of 69%, significantly exceeding the industry average.
In response, Kuda made strategic adjustments, reducing marketing spending in June 2022 and restructuring its overdraft product. Recently, it introduced a POS terminal for business customers, entering the competitive agency banking market.
As of 2022, Kuda generated primary revenues through fees and commissions, concluding the year with nearly $20 million in annualized revenues and $100 million in monthly deposits. At a $500 million valuation, Kuda’s revenue multiple was 25x in 2022, forecasting $40 million in revenue for 2023.
However, the emphasis on startups meeting revenue targets becomes crucial, especially amidst the current venture capital slowdown. Kuda’s ability to achieve profitability and demonstrate strong unit economics aligning with growth objectives will be pivotal for its future success. The neobank’s aspirations for global expansion, targeting 50 million users across four continents and over $1 billion in revenues, pose significant challenges that hinge on securing additional venture capital and navigating market realities.
