Ugandan tech startup, Tugende has managed to secure $3.6million in the Series A financing extension round. The new funding campaign follows the $6.3 million raised last year in November led by Toyota’s Tsusho Investment fund. The amount collected in the new funding round brings Tugende’s total financing to $9.9 million in the Series A financing.
Tugende’s new financing round was led by Paris and San Francisco-based VC company Partech, Enza Capital and other unmentioned angel investors’ involvement. The money will be used to grow Tugende’s business in the region and help them satisfy the growing demand for their services. It will also support the closure of its new debt capital to support its robust portfolio in Kenya and Uganda. These services’ demands grew in the country, alongside other types of services, such as online casino games, games, with sites like Betway increasingly becoming popular thanks to tech advancements and the growing gaming industry.
Tugende was launched in 2012 by Michael Wilkinson, leveraging technology, asset finance and customer support to help SMEs (small and medium enterprises) own income-generating assets. The company is currently based in East Africa, although it’s striving to bridge the $331 billion credit gap affecting small and medium businesses across the continent.
The company’s main product is targeted at motorcycle riders in Uganda and Kenya, with hire-purchase and lease-to-own options. The riders get training, life and medical insurance, safety equipment and support from the first step of riding the motorcycle to owning it.
When asked what inspired Tugende’s business model, Wilkerson explained that he used motorcycles for their efficiency and flexibility when he worked as a researcher and journalist in Kenya between 2006 and 2010. Wilkerson found the motorcycles very effective to the point of developing a list of go-to motorcycle riders that he’d call whenever he needed a ride. That was way before ride-hailing rose in popularity in the continent.
These bodaboda riders would earn enough to survive and pay for motorcycle rent, but not enough to build wealth. These little amounts paid for renting a motorcycle would be enough to service a loan, but traditional banking systems required high down payments and significant collaterals.
Wilkerson launched a for-profit organization striving to help these riders own their own motorcycles starting from 2010. The company began with informally handwritten contracts and progressed into technological solutions in 2013, when the company picked the brand name, Tugende.
According to the company’s CEO, motorcycle riders in the region can double their take-home profit to $10 from $5 after joining their platform. Besides motorcycle taxis, the company has expanded the assets they finance to include cars, boat engines, retail shop equipment, refrigerators and other equipment that generates income. The company is currently helping Africans leverage technology to benefit commercially. Once people are able to make some money for themselves, they are then able to support themselves and their families as well as take time off to have fun at betway and other online bookies.
Tugende is among the few East African companies using a unique model to empower the locals into acquiring income-generating assets while offering the support necessary for economic growth. The new equity-based funding will assist the company to scale its operations and continue offering the necessary services to East Africans.
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