Kuda Bank, a Nigerian neobank, has raised an undisclosed equity round in 2024, securing additional capital to support its operations amidst rising losses and declining cash reserves. The funding round comes after the bank's revenue grew to $32 million in 2023, with its user base expanding to 7.2 million, but losses also increasing to $40 million.

Despite previously denying plans to raise funding in 2023, Kuda's latest financial report confirmed the equity round in 2024. The valuation for the round remains undisclosed, but past reports suggested the bank sought $20 million at a $500 million valuation. If achieved, this would signal continued investor confidence in the bank's growth potential, despite its aggressive 15x revenue multiple – higher than profitable neobanks like Nubank (8.4x) and Monzo (5.4x).

In a corporate filing to Company House, UK, Kuda stated, "The Group completed one round of fundraising via equity in 2024, and the directors are confident that should further funding be required, it can be obtained." The bank did not immediately respond to a request for comment on the funding round.

Before raising the equity round, Kuda held $96 million in customer deposits, significantly lower than some of Nigeria's tier-2 commercial banks like Unity Bank ($1.35 billion) and Wema Bank ($1.9 billion). The bank's cash reserves also dropped to $5.3 million, a significant decline from the $30.8 million it had in 2022.

Kuda plans to monetize its proprietary banking software through licensing deals, similar to Sterling Bank, which pitched its core banking technology SeaBaaS to MTN's fintech subsidiary, Momo, in 2023. This strategy could provide an additional revenue stream for the bank as it continues to grow its user base.

Like most neobanks, Kuda remains in a high-growth phase that demands significant capital. However, it still has time – Monzo and Nubank took nearly a decade to turn profitable. With its latest funding, Kuda has secured more runway, but it will need to reduce operating costs ($44.8 million) while driving sustainable growth to achieve profitability.

The funding round and Kuda's growth plans come as the Nigerian fintech sector continues to attract investment and attention. The bank's ability to secure additional funding despite its growing losses is a testament to the confidence investors have in its potential to drive digital banking adoption in Nigeria and beyond.