The archive · Money & Fintech · Product decision · 2018–2026
Kuda's 'bank of the free' bet: $91M raised, 7M users, then a pivot to profitability
Nigerian neobank Kuda bet free mobile banking would win Africa's unbanked; it hit 7M users and $500M valuation, then cut losses 84% chasing profit.
Kuda
What the business is
Nigeria's mobile-first challenger bank offering no-fee current accounts, payments, savings and overdrafts through its own license.
Starting capital：€15K pre-seed (2018); $1.6M (2019); $10M (2020); $25M Series A (2021); $55M Series B at $500M valuation (Aug 2021); $20M in 2024 at about $500M — over $90M total
How it started
Babs Ogundeyi and Musty Mustapha founded Kuda in 2018 on the thesis that Nigerian banks charged fees for everything and left most people poorly served, so a free mobile account could win them. It was structured with a London headquarters and Nigerian operations, building on API-based infrastructure with its own license.
What happened
Kuda grew from 650,000 registered users in March 2021 to 1.4 million by August 2021 as it raised a $25M Series A and then a $55M Series B within five months, reaching a $500M valuation. By 2024 it counted 7 million registered users and had issued overdrafts, but group losses were $35.11M in 2023; the Nigerian unit's naira revenue nearly doubled to N21.2 billion in 2024.
How it ended up
Still operating: 2024 losses narrowed 84% to $5.83M, Q1 2025 saw 300M+ transactions worth N14.3 trillion, and in March 2026 Kuda laid off staff across departments as it restructures toward profitability, targeting 1.7M monthly active users by December 2026.
Background
Kuda is a Nigerian digital bank founded in 2018 by Babs Ogundeyi and Musty Mustapha, built around one promise: banking that costs nothing. It offers no-fee current accounts, payments, savings and overdrafts through its own license, on API-based infrastructure, targeting a market where incumbent banks charged for everything and left much of the population poorly served.
The bet was that free mobile banking would win the mass market fast, and that a licensed, data-rich base could then monetize through credit and expansion. Growth validated the first half: users went from 650,000 in March 2021 to 1.4 million by August 2021, and investors — Valar Ventures and Target Global — put in $25M then $55M within five months, valuing Kuda at $500 million and taking its total raised past $90 million.
Scale kept coming — 7 million registered users by 2024 — but profit did not come with it. Group losses hit $35.11M in 2023, and though Kuda cut them 84% to $5.83M in 2024 while its Nigerian unit's revenue nearly doubled to N21.2 billion, the company laid off staff in March 2026 as part of a restructuring toward profitability.
By early 2026 Kuda was forecasting 40% revenue growth and targeting 1.7 million monthly active users by December 2026, prioritizing engagement and monetization over headline user counts. It remains Nigeria's best-known homegrown neobank, having last raised at roughly a $500M valuation in 2024.
What has to be true
- A genuinely free account was a sharp contrast in a market where bank fees were the norm, so customer acquisition compounded without expensive marketing.
- Owning the license let Kuda ship products like overdrafts directly, turning usage data into credit decisions incumbents could not match.
- The 2021 valuation boom funded expansion, but naira devaluation and a colder funding climate made dollar-denominated losses the binding constraint.
- Management responded by cutting operating and staff costs and tilting toward business customers, pivoting from growth to unit economics.
What can be applied
A free core product wins users fast in an underbanked market, but the pricing that made growth easy makes profit hard; the model only works when the network monetizes through credit and services.
Aftermath
As of the sources checked, Kuda remains live with about 7 million registered customers. Its 2024 results cut group losses 84% to $5.83M; its Nigerian unit nearly doubled revenue to about N21.2 billion, and it processed over 300 million transactions worth roughly N14.3 trillion in Q1 2025. In March 2026 it laid off staff across departments as part of a restructuring, saying the move prepared it for the next phase of growth; it targets 1.7 million monthly active users by December 2026 and last raised $20M in 2024 at about a $500M valuation. Profitability is the stated goal.
Sources
- Kuda, the African challenger bank, raises $55M at a $500M valuation
- Target Global backs Kuda Bank on path to unicorn
- Breaking: Kuda cuts losses to $5.8m as Fintech shifts focus to profitability
- Kuda lays off staff in restructuring push despite narrowing losses
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