Carrot Credit score, a Nigerian fintech that gives loans backed by digital funding property like shares, ETFs, and crypto, has raised $4.2 million in seed funding. The fintech will use the funding to scale its credit score infrastructure throughout Africa, increase its group, and deepen integrations with digital funding platforms. MaC Enterprise Capital led the spherical, with participation from Genuine Ventures. 

Launched in 2023 by Bolu Aiki-Raji, Carrot Credit score is a digital lending platform that enables retail buyers to borrow cash utilizing funding property—like shares, ETFs, bonds, or cryptocurrencies—as collateral, with out having to promote them or undergo conventional credit score checks. Via API connections, the fintech verifies customers’ asset positions and locations a lien on them, permitting customers to attract down a share—as much as 40% for shares and as excessive as 70% for fixed-income property—with out liquidating. 

If a person has a portfolio of comparatively secure shares price ₦1 million, Carrot can allow them to borrow as much as 40% (₦400,000). For risky shares, Carrot affords a credit score line of as much as 10% of the portfolio and as much as 70% for fixed-income property like authorities bonds and treasury payments. 

“Individuals had been investing in all forms of issues—shares, crypto, fastened earnings—however many didn’t acknowledge these investments as price something. That was the preliminary concept: why can’t this be collateral?” mentioned Boluwatife Aiki-Raji, CEO and co-founder of Carrot.

The corporate says it costs below-market common rates of interest and affords versatile mortgage repayments. Customers can go for a set mortgage reimbursement (three months, six months, or 12 months) or repay month-to-month at their most popular timeframe. 

Carrot’s method to lending on the continent has been popularised by international companies comparable to BlockFi, Fast Lend, Lantern Finance, SALT amongst others. Nonetheless, the mannequin’s attraction is but to catch on in Africa. Aiki-Raji says Carrot hopes to make the method extra accessible to retail buyers throughout the continent. The startup’s embedded B2B2C mannequin targets fintechs, brokerages, and digital wealth managers throughout Africa.  The corporate, which generates income from the curiosity charged on its loans, says it has already processed over $2 million in loans and serves over 10,000 customers. 

“Everybody writes a deck claiming a trillion-dollar market,” mentioned Aiki-Raji. “I’d relatively outline our market as anybody who can put cash apart in digital property—that’s who we’re constructing for. That features on a regular basis buyers.”

The enterprise competes with different digital lenders—Sycamore, Carbon, FairMoney, Aella Credit score—throughout Nigeria, however claims its versatile reimbursement choices and below-market rates of interest additional differentiate it from Nigeria’s crowded subject of digital lenders, the place most opponents concentrate on short-term credit score relatively than asset-backed lending.

“What excites me about this funding is how Carrot is leveraging digital property to create a seamless, low-barrier credit score answer in markets the place credit score has historically been out of attain,” mentioned Marlon Nichols, co-founder and companion of MaC Enterprise Capital. 

Carrot is among the many first few startups providing another lending mannequin on the continent. As embedded finance good points traction in Africa, Carrot’s method may increase entry to credit score for a brand new technology of digital buyers and monetary platforms.

Editor’s word: On the firm’s request, the identify of one of many buyers within the funding spherical has been faraway from this text.