Despite a waning interest from venture capitalists in startups at the growth stage, LipaLater, a Kenyan Buy Now Pay Later (BNPL) entity with five years under its belt, is embarking on a crowdfunding campaign to raise $1.2 million. However, it’s not just about the funds.
LipaLater, in collaboration with the Kenyan online marketplace SKY. Garden, which faced potential closure after an unsuccessful funding round, is now valued at $30 million. The firm is welcoming investments starting from $100 via the crowdfunding platform Republic. To date, they’ve garnered $27,228 from a pool of 29 investors.
Eric Muli, LipaLater’s founder and CEO, clarified to TechCabal that the crowdfunding initiative isn’t out of desperation. He stated, “We’ve already secured $25 million through a blend of debt and equity. After a substantial debt investment recently, our financial position is strong. The aim of this public crowdfunding is to enhance our debt-to-equity ratio.” Typically, entities in the banking realm maintain a high debt-to-equity ratio, but they strive to remain in line with industry standards to avoid appearing risky to potential investors.
Muli further elaborated on their choice of crowdfunding, citing its simplicity in achieving their objectives. He remarked, “We’ve seen peers successfully raise funds on Republic, which influenced our decision.” Another East African Cleantech firm, Mpower, which had earlier secured $1 million in a seed round, also opts for crowdfunding on Republic. A few months back, MarketForce, a Kenyan e-commerce platform, announced its intent to raise $1 million through the WeFunder platform. AltSchool Africa, an educational technology startup, recently revealed its plans to accept public investments starting at $500 in exchange for company equity. As venture capital deals become scarcer, more startups are expected to explore alternative fundraising avenues like crowdfunding.