Carrot Credit raises $4.2 million in a seed funding to expand asset-backed lending across Africa

Carrot Credit, a Nigerian fintech startup revolutionising access to credit through digital investment assets, has raised $4.2 million in seed funding to scale its innovative lending platform across Africa. The round, led by MaC Venture Capital, saw participation from Partech Africa and Authentic Ventures, signalling strong investor confidence in Carrot’s mission to redefine credit access for retail investors on the continent.

Founded in 2023 by Boluwatife Aiki-Raji, Carrot Credit enables retail investors to borrow money using their investment portfolios, comprising stocks, exchange-traded funds (ETFs), bonds, or cryptocurrencies, as collateral, without the need to liquidate their assets or undergo traditional credit checks.

The platform leverages API integrations with digital investment platforms to verify users’ asset positions and place liens on them. This allows borrowers to access up to 40% of the value of stable stock portfolios, 10% for volatile stocks, and as much as 70% for fixed-income assets like government bonds and treasury bills. For instance, a user with a ₦1 million portfolio of stable stocks could borrow up to ₦400,000, while those holding fixed-income assets could access up to ₦700,000.

The startup’s model addresses a critical gap in Africa’s financial ecosystem, where access to credit is often limited by stringent requirements and high interest rates.

Aiki-Raji, CEO and co-founder of Carrot Credit, explained, “People were investing in all types of things – stocks, crypto, fixed income – but many didn’t recognise those investments as worth anything. That was the initial idea: Why can’t this be collateral?”

Carrot Credit’s platform offers flexible loan repayment options, allowing users to choose fixed repayment periods of 3, 6, or 12 months or to pay back monthly at their preferred pace. The company claims its interest rates are below the market average, making it an attractive option for retail investors. Since its launch, Carrot has processed over $2 million in loans and amassed a user base exceeding 10,000, demonstrating significant traction in Nigeria’s competitive fintech landscape.

Carrot Credit will leverage the new round to scale

The $4.2 million seed funding will enable Carrot to scale its credit infrastructure, expand its team, and deepen integrations with digital investment platforms across Africa. The company operates an embedded B2B2C model, targeting partnerships with fintechs, brokerages, and digital wealth managers to broaden its reach. This approach aligns with the growing trend of embedded finance in Africa, where seamless financial solutions are integrated into non-financial platforms to enhance user experiences.

Carrot’s asset-backed lending model draws inspiration from global players like BlockFi and Robinhood, which have popularised similar offerings in developed markets. However, this approach remains nascent in Africa, where retail investors often lack access to such innovative credit solutions. Carrot aims to bridge this gap by making asset-backed lending more accessible to everyday investors.

“Everyone writes a deck claiming a trillion-dollar market,” Aiki-Raji noted. “I’d rather define our market as anyone who can put money aside in digital assets; that’s who we’re building for.”

The startup faces competition from established Nigerian digital lenders such as Sycamore, Carbon, FairMoney, and Aella Credit, which primarily focus on short-term, unsecured loans. Carrot differentiates itself through its asset-backed model, flexible repayment terms, and competitive interest rates. By leveraging digital assets as collateral, Carrot eliminates the need for traditional credit scoring, which often excludes individuals with limited credit histories, a common challenge in Africa.

Marlon Nichols, co-founder and partner at MaC Venture Capital, expressed enthusiasm for Carrot’s vision, stating, “What excites me about this investment is how Carrot is leveraging digital assets to create a seamless, low-barrier credit solution in markets where credit has traditionally been out of reach.” The involvement of prominent investors like MaC Venture Capital, Partech Africa, and Authentic Ventures underscores the potential of Carrot’s model to transform Africa’s credit landscape.

Carrot’s approach is mainly viewed by industry analysts as a timely response to the growing adoption of digital investments in Africa. According to a 2024 report by the African Securities Exchanges Association, retail participation in African stock markets has surged, driven by increased access to digital trading platforms. Similarly, crypto adoption has grown rapidly, with Nigeria ranking among the top countries globally for crypto transactions. Carrot’s ability to tap into these trends positions it as a pioneer in alternative lending on the continent.

As embedded finance gains momentum in Africa, Carrot’s model could pave the way for broader credit access among digital investors. The startup’s focus on partnerships with fintechs and wealth managers aligns with the continent’s shift toward integrated financial services. By enabling retail investors to unlock liquidity from their portfolios without selling, Carrot is not only addressing immediate financial needs but also encouraging long-term wealth creation.

With the new funding, Carrot plans to expand its operations beyond Nigeria, targeting key African markets with growing digital investment ecosystems. The company also aims to enhance its technology stack, improving the efficiency of its API-driven lending process and ensuring robust risk management to protect both borrowers and investors.