Asaak, a Ugandan asset financing firm, has raised $30 million in pre-Series A loan and equity capital. Resolute Ventures (USA), Social Capital (California, USA), HOF Capital (New York, USA), Founders Factory Africa (South Africa), End Poverty Make Trillions (California, USA) , Decentralized VC, and a number of angel investors were among the new and current investors in the round.
The latest investment continues the increasing interests of investors in asset financing startups in East Africa. Tugende, a leading Ugandan fintech lender that specializes in asset lending in Kenya and Uganda, closed a $17 million investment round at the end of 2021. InfraCo Africa, also recently invested in Uganda’s Zembo, contributing over €3 million to support the company’s electric motorbike business in Kampala, along with a consortium that includes DOB Equity and Mobility 54.
Why The Investors Invested
The startup has generated considerable traction since it was founded. The company has so far subsidized the acquisition of 5,000 motorcycles and has begun supplying the operators with smartphones and fuel funding.
It has also formed strategic partnerships to help it scale, the most notable of which being a deal with Samsung to encourage motorbike taxi drivers to get smartphones. Last month, the company announced a new agreement with Untapped Global, an emerging markets investment firm, to offer financing for over 2,000 motorcycles over the next year.
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The startup is also announcing a new partnership with Standard Bank, a South African bank headquartered in Johannesburg with a presence in 20 African countries, to provide financial services to millions of workers in the informal sector (such as motorcycle taxi drivers) using the startup’s proprietary digital loan origination system. As a result of this partnership, Asaak consumers will have access to customized financial and insurance services.
“While we often underestimate the power of the boda-boda (motorcycle transport) in Africa, in many circumstances, it is an ambulance, a pharmacist, and a chef — it brings you everything you need. It takes children to school, it brings people to job interviews, it provides livelihoods for hundreds of millions of Africans,” said Stanbic Bank, Standard Bank’s operation in Uganda, head of direct digital and e-commerce Aaron Akampa.
“Ultimately, this is new ground for Standard Bank — we haven’t partnered with any other players in this space on the continent yet — it’s the first time we are creating a partnership like this and we can’t wait to see what is ahead,” said Akampa.
Asaak wants to reach six more African markets in the near future as a result of its cooperation with the bank.
A Look At What The Startup Does
Asaak provides motorcycle financing to operators who are frequently turned down by traditional banks because to demanding security requirements such as history history and consistent account activity.
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The company collaborates with a variety of partners, including mobility and e-commerce platforms, to make motorcycle ownership more accessible to riders who make a profession running motorbike taxis (bodabodas), a common mode of transportation in Africa, particularly in big cities like Kampala.
Bodaboda operators can now own the motorcycles they ride thanks to Asaak, whereas earlier, most of them were either employed by bike owners or rented or leased motorcycles.
“Asaak is unlocking mobility-based work, which literally moves the economy forward and creates upward mobility for these individuals. Bodaboda riders are the lifeblood of Africa, moving people and cargo from home to school to work. They just need access to motorcycles which leads them to better income opportunities and makes them able to provide for their families,” Asaak co-founder and chief business officer Dylan Terrill said.
Anthony Leontiev, Edward Egwalu, and Kaivan Sattar are also members of the founding team.
Asaak qualifies riders for motorbike finance utilizing behavioral and financial data from platforms like as Bolt, Jumia, Safeboda, and Uber, such as earnings, trips taken, and ratings.
Asaak produces a credit score for debtors using rider data from these networks. Borrowers can also check their eligibility for borrowing by using the Asaak app or visiting your local branch. Drivers typically receive motorbike financing (about $1,500 in credit) within three days of signing up, with interest rates ranging from 1% to 4% depending on their credit score.
“The more confident that we are with the data that we have to make a lending decision, the less the other requirements they would need to have. We’re trying to make it as easy as possible for people to get loans. But in some cases, yes, it’s necessary (to have a guarantor) and it makes sense from a lending perspective,” said Terrill.
After a time of lending to farmers and SMEs, Asaak, which began operations in Soroti, Uganda in 2016, pivoted its focus to motorbike finance in 2019.
“By financing these types of assets, we’re not just creating a pathway to vehicle ownership, which is good in itself, but we’re creating a stable source of income because of the reliance of drivers throughout the countries that we are in.”
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer