4G Capital, an award-winning African neobank, has closed its $18.5 million Series C investment round with Lightrock, a major global private equity firm.
Since its beginning in 2013, 4G Capital has lent over $230 million in small company working capital loans to over 1,750,000 small businesses. Over 240,000 clients use the service, with 81 percent of them being women and 77 percent running micro and small businesses in rural areas.
“We are delighted to partner with Lightrock to further our financial inclusion mission,” said Wayne Hennessy-Barrett, CEO and Founder of 4G Capital. “Lightrock and 4G Capital share a complete alignment of purpose and mission. They bring unrivalled experience of Africa and emerging markets. This capital will have a transformative effect in enabling us to scale the best products and services to the world’s most important sector.”
The funds will be used to grow the company’s last-mile finance and enterprise training solutions to micro and small businesses (MSEs) in Kenya and Uganda, as well as to expand its use of digital channels and data science to supplement its hybrid “touch-tech” strategy.
This also allows them to develop their Kuza retail finance service, which assists store owners, FMCG manufacturers, and distributors in increasing sales. Kuza is a plug-and-play financial service that allows distributors to stock enterprises using 4G Capital’s credit instead of traditional cash on delivery. Partnerships with P&G, Diageo, and other companies that have adopted the service have been quite successful.
From 2016 to 2020, 4G Capital’s highly scalable and capital-efficient methodology has resulted in the company lending approximately $230 million in return for $9 million raised. The typical lending to the capital ratio in the microfinance business is 3.45, however, 4G Capital has loaned nearly 16 times the capital raised.
“Often used to justify the backing of many African companies, ‘Financial inclusion’ has not always translated into positive outcomes for customers. What is needed on the continent is investment capital to back companies with the mission of financial empowerment. 4G Capital provides liquidity to the vast market of economically generative businesses – the mobile phone repairs, hairdressers and food sellers – that dot the landscape of Africa.”