In July this year, Lupiya, a Zambian microfinance startup announced that it had raised US$1 million in a funding round to enable it continue to scale and roll out its services which would ensure that Zambians, especially women, are able to fully participate in the country’s economy. Founded in 2016 by an economics graduate of Cavendish University, Zambia, Evelyn Chilomo Kaingu, Lupiya is a branchless, digital microfinance platform that leverages technology to make the process of borrowing simpler and easier for people and businesses located across Zambia. In this interview with Afrikan Heroes, Kaingu leads us through the maze of running a startup in the Southern African country, dropping deep insights on how to fundraise effectively from investors as an African startup; how COVID-19 has re-defined most startup’s business models, as well as what the future holds for the four-year-old company.

Not sure we would need a reminder, but in clearer terms, what does Lupiya do?

Lupiya is an online platform and it gives out micro-loans to individuals and small businesses; and specifically women micro-entrepreneurs. We’re available across all demographics in Zambia. We look at women micro- entrepreneurs as well as small businesses on a case by case basis. People can apply for loans on our online platform and we will attend to them based on what their needs are. We’re also able to offer them some pieces of advice about the best types of financing that fit their needs. 

Congratulations on your fundraising from Enygma Ventures, in the middle of a pandemic. That was a very remarkable feat! How did this come about, seeing that Lupiya was founded far back in 2016? How did Lupiya manage to reach this stage even without VC funding. What magic did you do?

Yes, we started in 2016! We began as a small business run by a husband and a wife. We signed up together! At that time, we defined our business model, tilled at our business model canvas to see what was practicable and the viability of the business. We started out with just $500. We lent this out to a small community, the source of our first customers precisely. We had the first hundred customers, and then more. We gave them small loans, micro-loans. We were able to generate our first set of substantial revenue from there. That was how we started. 

We then pivoted to giving our salaried employees loans as well. We extended this to small businesses, to traders, to more women community groups. The focus has been just to generate as much revenue as we can. This is where we are today.

Now, talking about the $1 million funding for Lupiya, because that is one of the pillars of Afrikan Heroes — to improve access to funding for African startups — how did you come to find Enygma Ventures; how did the funding come about? 

From the outset, we have been passionate about raising revenue for the business. And so going into our third year, we already had an idea of what we were looking for: we were looking to transform our business. We understood that one of the ways to do this was to bring partners on board the company. And so, a lot of what we did in our third year centered on applying for every funding opportunity available. Being a startup, there were so many competitions we could participate in. We literally applied for whatever opportunity that was available; be it for grants, or an opportunity for an investor. So, on the investor front, we really submitted a lot of applications. One of them was an open call from Enygma Ventures. 

We submitted an application to them and it turned out successful! There were 12 of us that made the shortlist, out of over 1000 applicants, I think. We then went through a boot camp during which our business models were refined. Then, it was from there that we were able to go through a due diligence process with the VC, Enygma Ventures. During the due diligence stage, we were taken through, basically, understanding what our business would be, going forward. At the same time, there was the confirmation of the data that we had earlier submitted. At the due diligence process too, we were able to get as much information as we could, based on what we were reporting and what we said we were doing in the business. After the reports were confirmed, we signed on with Enygma and were able to raise the $1 million.

Congratulations once again! So, on average, what was the time timeline for all of these like — -from the beginning to the end of the fundraising? How many months, years, did it take you to raise the funding from the day you applied till the day you received the funding? 

We applied in October 2019. The shortlist was presented to us in November, that year. We attended the boot camp from January into February, 2020. From February up until June, 2020, we were working on the due diligence; and then finally getting on with all the documentation and signing and other nitty-gritties that needed to go into bringing a partner on board. So, I’d say from October last year, up until June 2020. 

Still on the funding, what have you learned differently about fundraising as an African startup?

One of the biggest highlights of Lupiya’s $1 million fund-raise was how, as startup companies, we often don’t take time to evaluate our companies. And so, a lot of learning came in that dimension. But I would say that what really helped us immensely to secure the funding was that since inception, we had, as much as possible, tried to organize ourselves as professional as possible. I can take you as far back as 2016 when we had just $500. At that time, one of the key things we insisted on was that everything must be documented. And so when the time came, we produced documents as far back as 2016. We produced all the financials; they were there already. 

The challenge we had often had with a few startups that had tried getting funding from us was that a lot of them didn’t tend to be organized. Yes, financials really matter to any financial institution; be it bank or even to an investor. Looking back, I believe being accountable enough and ticking all of the boxes in financials is one of the biggest things that were a winner for us. This fact was highlighted during the fundraising process. Plus, we were able to provide information timely; as well as in an organised manner.

Zambia doesn’t feature that much on the African startup funding scene — I mean, with most funding going to South Africa, Kenya, Nigeria, Egypt, etc. — what do you think is the cause of this, and what do you suggest should be done to improve this situation?

I’m glad that you’ve raised this. I think a lot of it points to the fact that Zambia is a very small financial ecosystem as opposed to, say, most Western economies. I remember reading a research which concluded that some countries in our region needed to come together to try and emulate certain other financial ecosystems in Africa like Kenya, like Nigeria, for example; and to also boost the confidence of investors. 

Again, a lot of startups in our region are very, very small. Therefore, in this regard, how much revenue you’re able to generate counts for investors. The size of the business, therefore, matters as well as the financial ecosystem. 

Nevertheless, a lot of push has come from the Zambian government in recent times. We have seen attempts by the government to open up the startup ecosystem and support it as much as possible. This is something that other countries have been doing for some time now. Zambia is only starting to do so. And so, we are beginning to see a large number of people move away from job dependability, towards entrepreneurship.

Therefore, with a lot of government efforts recently being poured into boosting this ecosystem, we should be expecting more entrepreneurs coming through soon. 

We understand that most of Lupiya’s services are internet-based. In a country where internet penetration rate is so low, about 14.3% in 2018, how does this affect Lupiya’s business model; and to have survived for more than 3 years now, what is Lupiya doing right, and what lessons can it share with other startups with similar environments as Zambia’s?

A lot of what we have done: the application process and the on-boarding process of a customer are online; but some of the things we do are also physical. So, although we were online, we needed to ask ourselves certain questions: a) Could we find the necessary partners who would collaborate with us to create a solid customer base? b) Could we then target actual customer segments and reach out to them and then onboard them onto our platform? 

Basically, once we signed off these partnerships, I think it became very easy for customers to find us online. In essence, we put in a lot of physical efforts when reaching out to our customers. Therefore, the biggest thing for us has been both physical and online presence. We have put in a lot of physical energies into bringing customers online. 

It’s only until now that COVID-19 has meant that we’d be completely online. And that has been what we’ve been doing in the past few months. We wanted to make sure that all our online processes are fully automated, from the start of loan on-boarding up until the actual disbursement of cash, including collections of dues. So I guess this is where we’ve been able to pivot back and forth between having some physical presence as well as being online. COVID-19 has also provided a good opportunity for us to review the safety of our platform to provide these services.

And speaking of Covid-19, which has affected most startups in Africa, how has it been at Lupiya, and what has Lupiya done differently to survive the pandemic?

For us, COVID-19 has grown some customer segments as well as reduced some. For instance, there is one particular loan product that requires some physical element. Before we were able to on-board the customers of that product online, we’d already been badly struck by COVID-19 and the restrictions that came with it.

But then being an online platform — the only online platform in our country in this product category — we were once again, presented with a huge opportunity to announce our products as well as the safest ways we could attend to our customers without any form of physical interaction. As a result of that, we have seen a sharp rise in the numbers in terms of customer acquisition. These people are increasingly applying for loans online in the convenience of their homes and offices. This is blessing in disguise. But, not everything really worked out well due to COVID-19. 

Speaking about loans: given the economic demographics in Zambia, what do you think you have learned about credit lending business in Zambia; is there a big market for that? 

I think there is a lot of untapped market segments here; but then again, we are very limited in terms of how many people have access to financial services. However, that suddenly changed a lot with mobile money. So, we have seen a lot of penetration of financial services, by way of mobile money and that has been how a lot of our customer segments are currently being reached. 

Our platform is not just limited to a web interface; we are also available via mobile. And that is also where part of our reach has been. 

Again, although financial literacy rate [in Zambia] is low, we are also seeing a lot of economic activities happening in smaller regions within the country. With economic activity comes financial access. And so, we are also trying to position ourselves in terms of which opportunities come first, and whether we can take advantage of that. Definitely, the plan is for us to scale. But if the market eventually becomes saturated that we can’t get any more from it, we may consider scaling to other countries.

It’s a great pleasure to know that you have achieved a lot both as an entrepreneur and as a woman founder. Tell us, what has your experience as a woman founder in Zambia taught you; that is, what lessons can you share with female startup founders in Africa?

I would say this based on my experiences running a microfinance business. Sometimes, you see a lot of proposals, particularly from women. I think one of the highlights from these proposals is that women don’t tend to like to work together as teams. 

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Again, it is very important that women founders try to grow their businesses first before looking for financing. A lot of women don’t have the expertise that is required to run businesses. There’s a lot of drop rates with women too. They start one business, and within one year if they are not successful, they drop it and jump onto the next one. But then, running a successful business also depends on the experience you are gaining from the business. A lot of women lose this experience by jumping from one business to another. I guess a lot of consultation is what is going to be of some help. 

To all women entrepreneurs, I would like to just highlight this as much as possible: Just don’t give up! Stay in the game as long as you can. 

There is no better time for a woman to start a business than now. There’s an increasing number of platforms that are supporting women today, just to add one more value to the entire ecosystem. Women can, just as much as possible, leverage these opportunities because I think they are not going to be there forever. A time will come when a saturation point will be reached, and everything would no longer be the case. 

Looking back, as far back as 2016, when Lupiya was founded, what do you wish you had done differently?

On a personal level, I would say: get as many necessary skills as possible, based on what you are looking to achieve in your business. That would be the biggest thing that will most probably change if I got another chance to go back. I wish I could code a little bit more, because we are a technology company and that is what we do predominantly. 

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Honestly, I don’t think I will change a lot because much of the failure that we went through was what shaped us into what we are today. However looking back, maybe we would have to change a couple of loan products that we created without analyzing a lot about their risk implications. We found ourselves in some hot water because of this. From there, we started being a little bit more risk averse. That experience also taught us how to position ourselves in the market better; how to target particular customer segments better. On a general note, I don’t think I will take a lot of things away, apart from gaining as much knowledge as is necessary that is needed for me to have right now.

What lessons can you share with startup founders in Africa generally, given the frustrations and policy instability associated with running a startup in Africa? 

When you look at it this way, there probably isn’t going to be a perfect market environment, but I think there are always going to be perfect opportunities for you to deliver a product that is in need. I believe that if you are also able to meet a need, a market is always going to come up. I think a lot of what we entrepreneurs tend to do is that we start by first looking for a product’s market fit, instead of creating solutions to current problems plaguing a market, a solution the market might actually need. 

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Over all, I think there isn’t always going to be a perfect scenario. A lot of times when entrepreneurs model their businesses, there are lots of things that they thought were going to be possible. I give you an instance: it was our initial plan to be an online platform completely; but then, came the challenge of reaching certain customer segments. First, we learned this wasn’t going to be possible because a lot of them didn’t have access to the internet. How were we going to deliver our product with that? 

So, I think, African startups should constantly study how best they can deliver on what they have in a particular situation. Everything needs to be looked at on a case by case basis; but again, there could be some odd times the market environment might not just be conducive for a particular product type’s growth. If it’s that the case, I think, it may be wise for one to pivot into a different product or environment altogether. I think that is probably how we can tackle such challenges as entrepreneurs.

Given its demanding nature, how do you cope with the stress that comes with entrepreneurship, especially as it relates to your mental and physical well-being?

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One thing I learned early on in my incubation days is to capitalize a lot on the efforts of your team. What I did was to surround myself with people who were able to give me what I needed, and what I wasn’t able to do. And I’ll give you a simple example: when Lupiya was started, I knew I needed an accountant to get me where I needed to be —  because I was going to be looking for an investment. This thinking also came about because, during my days as a full time employee, there was a time I was looking for a loan and my bank told me I was low income and I wasn’t qualified for it. I did a research afterwards about what I needed to do to qualify, about what I needed to do to organize myself, to be able to qualify for the financing. 

And so, I brought an accountant on board. Again, if I was going to go online, I needed a person with technical skills to assist. Luckily for me, my husband is a software engineer, and so I knew his skills were to be onboarded to facilitate the project. 

A lot of the gains I made centered around just leveraging whatever was available in my ecosystem. In the beginning days, I relied heavily on promises to build my support team. I would say I would give you a few shares in the company! Can you come? I don’t have the cash to do it. I can’t pay you, but I hope my shares mean something at some point. And if you could, I was able to repay at some point. So that was just a lot of what I think I did to overcome a lot of the hard times associated with being an entrepreneur. 

Really grateful for this opportunity and we wish Lupiya the best of the future. 

Thank you so much. Thanks for having me.

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