PayHippo Raises $3Million to Help SMEs Succeed in the Nigerian Economy

SMEs are the engine room of any economy and the highest employment creator to the labour market. The contribution of SMEs to economy is the enormous and a major contributor to the economic growth of any nation.

The opportunity this sector of the economy has created prompted PayHippo a start-up that specializes in digital lending to SMEs to bridge credit the gap created by lack of credit to SMEs. The start-up firm was founded in 2019 by Chioma Okocha, Zach Bijesse, and Uche Nnadi.

PayHippo just raised $3Million seed round funding, the start-up firm plans to give more credit to SMEs to boost the economy in Nigeria and West-Africa. The funding round was led by credible angel investors like Ham Serunjogi and Maijiid Moujaleed, the co-founder of African cross-border payment company Chipper Cash, Olugbenga Agboola of the San-Francisco based payment firm Flutterwave, Bolaji Balogun of the investment banking firm Chapel Hill Denham, and Hakeem Bello-Osagie , the founder of the Metis Capital Patners.

This is the second round funding, the start-up firm received $1Million pre-seed funding early this year. PayHippo co-founder and chief operating officer, Chioma Okocha said, ” We capture our data from loans we issue, and more talent in the team would allow us to epitomize our technology to serve our customers better.”

PayHippo gives credit to SMEs in the space of 3 hours which is an innovative feat most traditional banks cannot achieve. The traditional banking loan requires a lot of stringent conditions.

Chioma also opined, “We really focus on keeping this under three hours and making sure that businesses can get money they need when they need it. Ours is also a product that works for the SMEs in terms of flexible repayment structure.”

According to PWC’s report on SMEs in Nigeria. SMEs contribute 48% to the national GDP, and account for 96% of businesses and 84% of national employment. The major problem hindering the quick growth of SMEs in Nigeria is credit rationing and lack of access to credit from financial institutions in the economy.

PayHippo started in 2019 to fill this financial vacuum in the digital space. Chioma also reiterated, ” We had seen that traditional banks and lenders wouldn’t loan small businesses mainly because there were no credit scores, or the collateral requirements were too high . We decided to come into the market and create instant financing option, where we create a credit score that allows small businesses to get the liquidity they need to buy inventory for business continuity.”

Chioma affirmed,” We use data from historical records that borrowers have built for us, but we also check their banking history to see the actual performance of their businesses.” PayHippo developed a credit scoring formula and a strong data analytical system to determine the value of the loans to give out. The loans are given by PayHippo through mobile phones, since inception it has given from $200-$1,300.

PayHippo was part of 2021 Y Combinator summer cohort. The start-up’s firm strategy is to explore opportunities of over 40Million SMEs in Nigeria’s economy and grow its customer base by giving quick loans to their customers. PayHippo has disbursed 5,000 loans valued at $1Million and with a repayment rate of 97% and it has generated revenue of $64,000.

According to the COO, “We know that just 1% of the Nigerian market is about 40,000 businesses, and we want to be in a position where we disburse 40,000 loans in a day.” she said.

PayHippo is breaking grounds that the traditional banks have neglected. PayHippo is the future of digital lending in Nigeria and Africa.