In 2024, Kuda Bank, a Nigerian neobank, successfully raised an undisclosed amount in equity funding to bolster its financial position. This move came after facing challenges with rising operational costs and diminishing cash reserves. In the previous year, Kuda Bank saw significant growth in revenue, reaching $32 million, and its user base expanded to 7.2 million.
Despite its positive revenue growth, the bank also experienced increased losses amounting to $40 million. While initially refuting claims of fundraising in 2023, Kuda Bank’s latest financial report confirmed an equity funding round in 2024.
Although the specific valuation of the funding round was not disclosed, earlier reports indicated that Kuda Bank aimed to secure $20 million at a $500 million valuation. This would demonstrate continued investor confidence in the neobank, even with its aggressive 15x revenue multiple, surpassing established neobanks like Nubank and Monzo.
Kuda Bank disclosed in a corporate filing to Company House, UK, that they had completed an equity fundraising round in 2024 and expressed confidence in obtaining further funding if needed.
Prior to the equity round, Kuda Bank held $96 million in customer deposits, significantly lower than other commercial banks in Nigeria. Additionally, its cash reserves had decreased to $5.3 million from $30.8 million in 2022.
Kuda Bank’s strategy includes monetizing its proprietary banking software through licensing agreements, a model similar to Sterling Bank’s approach with its core banking technology. This move aims to generate revenue and expand its market presence.
Like many neobanks, Kuda Bank is in a high-growth phase that requires substantial capital investment. Despite the challenges, the bank has extended its financial runway with the latest funding. To ensure sustainability, Kuda Bank will need to focus on reducing operating costs while driving continued growth.