Digital investment platform Carrot Credit raises $4.2 million to empower Africans, enabling them to secure loans using their digital investment portfolios as collateral.
Nigerian Fintech Startup Carrot Credit Secures $4.2 Million in Funding for Asset-Backed Lending Expansion
Digital lender Carrot Credit has announced a successful seed funding round worth $4.2 million, led by MaC Venture Capital with backing from Authentic Ventures and Partech Africa. This capital infusion will support the fintech company's expansion across Africa, focusing on product development and service growth.
Founded by Boluwatife Aiki-Raji in 2023, Carrot Credit differentiates itself from traditional digital lenders by offering asset-backed loans to individuals without requiring them to sell their digital investment portfolios. In contrast to typical lenders who focus on unsecured consumer credit or traditional credit checks, Carrot assesses a user's creditworthiness based on the value of their investments.
To facilitate loans, Carrot connects to users' digital investment accounts, including stocks, ETFs, fixed-income assets such as government bonds, and cryptocurrencies. Users can borrow up to 40% of their stock portfolio's value or up to 70% of their fixed-income assets. The platform secures a lien on these assets using API integrations, allowing users to retain ownership while leveraging their investment value.
The loan repayment terms are flexible, with options for fixed durations of 3, 6, or 12 months or adjustable monthly payments. Carrot's interest rates are competitive, providing a strategic advantage over many digital lenders in Nigeria.
Boluwatife Aiki-Raji, CEO and co-founder of Carrot Credit, explains the inspiration behind the company's inception, "Many people invest in various assets, like stocks and fixed income, but often do not realize they hold valuable resources. Our idea was simple: why can't these investments serve as collateral for loans?"
Carrot operates using an embedded B2B2C model, integrating its lending services into other fintech platforms, brokerages, and digital wealth managers across Africa. This approach broadens access to credit by embedding Carrot's services into the daily financial routines of digital-savvy customers.
To date, Carrot has already disbursed over $2 million in loans to more than 10,000 users, demonstrating early traction for its innovative approach. Revenue is primarily generated from interest payments, which remain below market averages.
Competition among digital lenders in Nigeria remains fierce, with players like Sycamore, Carbon, FairMoney, Aella Credit, and others vying for market share. However, Carrot stands out with its flexible repayment options and below-market interest rates,setting it apart from other digital lenders focusing primarily on short-term credit rather than asset-backed lending.
Marlon Nichols, co-founder and partner of MaC Venture Capital, shares his enthusiasm for Carrot's capabilities, "Carrot is leveraging digital assets to create a seamless, low-barrier credit solution in markets where credit has historically been out of reach." By capitalizing on the growing trend of embedded finance in Africa, Carrot Credit could provide a new credit opportunity for a new generation of digital investors and financial platforms.
Main Image: Boluwatife Aiki-Raji, Co-founder and CEO of Carrot Credit
- Carrot Credit, a popular digital lender, announced a successful seed funding round worth $4.2 million, focused on expansion across Africa for product development and service growth.
- Led by MaC Venture Capital, the funding round also received backing from Authentic Ventures and Partech Africa.
- Founded by Boluwatife Aiki-Raji in 2023, Carrot Credit provides asset-backed loans, differentiating itself from traditional digital lenders.
- Users can borrow up to 40% of their stock portfolio's value or up to 70% of their fixed-income assets, with the platform securing a lien on these assets using API integrations.
- As ventures in the fintech sector continue to innovate, Carrot Credit's approach could potentially revolutionize personal-finance, drawing attention from investors in the finance and technology industry.
- With a growing number of startups and fintech companies exploring innovative financing options, Carrot's asset-backed lending model may become increasingly popular in the competitive business landscape.
