Carrot Credit, a Nigerian fintech startup, has recently secured $4.2 million in seed funding to expand its asset-backed lending platform. The funding round was led by MaC Venture Capital, a US-based venture capital firm, with additional backing from Partech Africa and Authentic Ventures. This injection of capital will support Carrot Credit in its product development efforts and facilitate its expansion across Africa.

Founded in 2023 by Boluwatife Aiki-Raji, Carrot Credit offers a unique alternative credit service that allows users to access loans by pledging their digital investments as collateral. This innovative approach sets Carrot Credit apart in Africa’s lending landscape, as it eliminates the need for traditional credit scores and instead leverages users’ investment portfolios. By connecting to users’ investment accounts, which can include stocks, ETFs, and government bonds, Carrot Credit assesses the value of these assets to determine credit lines.

Users can borrow up to 40% of their stock portfolio’s value or up to 70% of fixed-income assets, with Carrot Credit securing a lien on these assets through API integrations. This ensures that users retain ownership of their investments while utilizing their value to access credit. The platform offers flexible repayment terms, including fixed durations of 3, 6, or 12 months, or adjustable monthly payments. Additionally, Carrot Credit’s interest rates are competitively low, giving it a strategic advantage in the digital lending space in Nigeria.

Carrot Credit operates with a B2B2C model, integrating its lending service into fintech platforms, brokerages, and digital wealth managers across Africa. This approach not only widens access to credit but also embeds Carrot Credit’s services into the financial routines of digitally savvy users. Since its inception, Carrot Credit has disbursed over $2 million in loans to more than 10,000 users, demonstrating early traction for its innovative approach. The startup generates revenue from interest payments, which remain below market averages.

Marlon Nichols, co-founder and managing partner at MaC Venture Capital, expressed confidence in Carrot Credit’s potential, stating, “What excites me about this investment is how Carrot is leveraging digital assets to create a seamless, low-barrier credit solution in markets where credit has traditionally been out of reach.” As Carrot Credit expands its operations across Africa, the company aims to make borrowing more inclusive and responsive to the digital investment habits of a new generation of African consumers.

Overall, Carrot Credit’s successful seed funding round represents a significant milestone for the company as it continues to innovate and disrupt the lending industry in Africa. With the support of key investors and a unique value proposition, Carrot Credit is well-positioned to drive financial inclusion and empower users to leverage their digital investments for greater financial flexibility and access to credit.