Kenya’s fintech Power set to scale after $3M seed round • TechCrunch

After working in Africa’s microfinance space for seven years, including in Botswana’s Letshego, Brian Dempsey took a break in 2020 to build Power Financial Wellness, operating from Kenya.

Dempsey said the launch of Power was informed by the trends he noticed in the microlending space, and the experience of his assignments in the microfinance sector.

“During my time with the microfinance institutions, I noticed that close to 65% of the workers who banked with us would spend all their money in the first five days of the month. And then they get access to expensive microcredit [from loan apps]which caused them to struggle from a financial health perspective,” says Dempsey, co-founder and CEO of Power.

“This is what informed the launch of Power. We focus on helping workers access affordable and appropriate financial services,” he said.

Power is now scaling in Kenya, and is entering Zambia, backed by $3 million in seed funding it has secured in a round led by DOB Equity with participation from Bolt by QED Investors, Quona Capital, Zephyr Acorn and Norrsken Accelerator.

The start-up gives partner employees access to short- and long-term loans, investment opportunities and insurance products. Unlike other microlenders that rely on credit reference agencies to make lending decisions, it only lends to employees and contractors (gig workers) of companies they’ve brought onto their platform, reducing the risk of default and ensuring borrowers have access to funds that they can repay.

The startup has so far partnered with 75 companies in Kenya, giving it access to more than 40,000 workers, of which it has been able to service 15%.

“We integrate into their payment or payroll system, allowing their workforce to download the Power app. Then we perform digital identity checks and open up our four key services to them,” said Dempsey, who co-founded Power with Chandra Singh in 2020.

“When we join a company, we already know how much the individuals earn, how long they have worked there. We know whether they are full-time, part-time contractors or gig workers. We connect to the credit bureau in real time to retrieve information about other facilities they may have in the market. And we use all that information to provide a unique amount, interest rate and loan term for workers,” he said.

Power gives employees the opportunity to access a percentage of their income upfront, and long-term loans on the balance, based on their income, for 2-3% interest a month. The platform also allows HR to access, approve or reject employee loan requests.

Individuals can also purchase various insurance products and repay over a longer period of time, which attracts the same interest, giving them access to packages from partner companies that require lump sum payments.

In addition, those who sign up for the investment service are introduced to money market and pension funds, into which a predetermined amount from their salary is invested.

“Basically, it’s a deduction at source, which means that whatever we offer to the workers is deducted from their earnings before it hits their checking account,” he said.

The company has so far disbursed more than $1.5 million in loans since its launch. It plans to reach 250 companies in Kenya.

Power has also expanded into Zambia, where it plans to be a technology partner rather than an active lender, and has signed a deal with a South African bank to launch its latest strategy.

“In southern Africa, we have a banking partnership in Zambia, Malawi, Mozambique, Botswana and Zimbabwe. We start in Zambia. And what we try to look for in our partners is a typical bank that banks a lot of companies, companies or small and medium-sized enterprises, but that doesn’t really bank a lot of private customers, but has a strategic intention to expand the offer and expand the loan book and deposits . -based savings, he said.

He says they plan to continue to work with banks that leverage technology to allow them to offer a new range of services to workers, completely disrupting the market. Power is also looking to expand into at least 10 markets in Africa over the next three years.