Kenyan fintech startup Power has raised $3 million in a seed round as it looks to improve on delivering its offerings to Kenya and expand to Zambia and other South-African countries.
Power provides employees access to financial tools such as short and long-term loans, investment opportunities, and insurance products. The fin-tech is now scaling in Kenya and making an entry in Zambia, supported by a $3 million seed funding round led by DOB Equity with participation from QED Investors, Quona Capital, Zephyr Acorn, and Norrsken Impact Accelerator.
The operation in Zambia will be a bit different from the Kenyan one. Brian Dempsey, co-founder and CEO, told Techcrunch that Power plans to be a technology partner instead of an active lender in the South African nation and has signed a deal with First Capital Bank to kick-start its latest strategy.
“In southern Africa, we have a bank partnership in Zambia, Malawi, Mozambique, Botswana, and Zimbabwe. We’re starting in Zambia. And what we are trying to look for in our partners is a typical bank that is banking a lot of companies, corporates or SMEs but not really banking a lot of retail consumers but have strategic intent to expand their offering and grow their loan book and deposit-based savings,” he said.
The company plans to continue partnering with banks leveraging the technology to allow them to offer a new range of services to workers. Power is also eyeing expansion to at least ten African markets over the next three years.
In addition, QED Investors’ Africa Head and Partner, Gbenga Ajayi, expressed enthusiasm for collaborating with Power in Kenya to offer targeted financial services to a demographic that has been overlooked or underserved by current providers. He looks forward to sharing insights gained from similar businesses worldwide to support Power’s growth in Kenya and across Africa.
Read also: Kenya’s MyHealth Africa raises $1 million for service expansion
Power’s unique offering
Power allows employees to access a part of their salary in advance. It also provides long-term loans based on the employees’ earnings on its balance sheet for 2-3% monthly interest.
Individuals can also purchase various insurance products and make repayments over an extended period, which attracts the same interest, giving them access to packages by partner companies that require lump-sum payments.
Besides, those signing up for the investment service are introduced to money-market and pension funds, in which a pre-determined amount from their salaries is invested.
Most lenders rely on credit reference bureaus to make lending decisions. However, Power only lends to employees and contractors of companies they have on-boarded on their platform. The HR personnel of those onboarded companies can access, approve, and reject employee loan requests. This ensures that the fin-tech can reduce the risk of default and ensure that borrowers can only get the money they can afford to pay back.
The startup has so far on-boarded 75 companies in Kenya, giving it access to over 40,000 workers, out of which it’s been able to serve 15%. The company has disbursed over $1.5 million in loans since its launch.
“We integrate to their payment or payroll system allowing their workforce to download the Power app. We then conduct digital identity checks, and open up our four key services to them,” said Dempsey, who co-founded Power with Chandra Singh in 2020.
“Once we connect into a company, we already know how much the individuals are earning, how long they’ve worked there. We know whether they’re full-time, part-time contractors, or gig workers.”
We connect into the credit bureau real time to pull information on other facilities they might have in the market. And we use all that information to provide a unique amount, interest rate and loan tenure for workers,” he said.
Read also: Kenyan EdTech startup, Zeraki raises $1.8 million for regional expansion
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