Kuunda, a fintech company focused on providing financial services to businesses across emerging markets, has secured a $5 million secondary share deal that will allow early investors to exit their investments. The transaction highlights the growing importance of secondary share sales in Africa’s startup ecosystem, where investors are increasingly seeking ways to realise returns without waiting for a company to be acquired or go public.
Unlike traditional fundraising rounds, which inject fresh capital directly into a company, secondary transactions involve the sale of existing shares from current shareholders to new investors. As a result, the $5 million deal primarily provides liquidity to participating shareholders rather than automatically increasing Kuunda’s operating capital.
For early-stage investors, the ability to sell shares can be an important milestone. Venture capital investments often require several years before investors can recover their capital or generate returns. Secondary transactions offer an alternative route by allowing shareholders to sell some or all of their stakes when suitable buyers emerge.
Kuunda operates in a financial technology sector addressing the financing needs of businesses that often struggle to access conventional banking services. Fintech companies across Africa have developed solutions covering payments, digital lending, working capital and financial management, helping businesses manage cash flow and expand their operations.
However, investing in these companies can involve considerable risk. Investors must often commit capital for extended periods while startups build their products, attract customers and establish sustainable revenue models.
The $5 million secondary share deal could therefore provide participating early investors with an opportunity to unlock value from their investments and redirect funds into other ventures. It may also create opportunities for new shareholders to acquire an ownership stake in Kuunda.
Secondary transactions can benefit founders and companies as well. By providing liquidity to existing shareholders, they can help reduce pressure for immediate acquisitions or public listings. They may also support employee share programmes and give investors greater flexibility in managing their portfolios.
Nevertheless, the value of such transactions depends on the company’s financial performance, the price agreed by buyers and sellers, and the rights attached to the shares being transferred.
Founded in 2018, Kuunda provides lending technology that enables banks, mobile money operators, payment networks and other financial service providers to offer credit through their existing platforms. Its model focuses on mobile money agents, small merchants and consumers who may face difficulties obtaining loans through traditional financial institutions.
The company reports that its infrastructure has facilitated more than 870 million loans, delivering over $4.4 billion in credit to 14.6 million agents, merchants and consumers. Kuunda currently operates in five markets and plans to expand into seven additional markets.
The secondary transaction was led by E4E Africa, which increased its stake in Kuunda as part of its long-term investment strategy. Existing investors Accion Ventures, Portugal Gateway Fund and Seedstars Africa Ventures also increased their holdings.
The deal comes as African startups face pressure to demonstrate sustainable business models and provide investors with clearer routes to profitability and returns. Although venture capital funding supports innovation and business expansion, investors can remain locked into private companies for years before an acquisition or public listing creates an opportunity to exit.
Kuunda’s transaction demonstrates how secondary share sales can help address this challenge. By allowing early investors to realise returns while the company remains privately owned, the deal offers an alternative to conventional exit routes.
For Africa’s fintech sector, such transactions could help attract investors seeking evidence that startup investments can generate financial returns before a major corporate sale or initial public offering.
Kuunda’s next challenge will be to sustain its lending operations, deepen partnerships with financial institutions and execute its planned expansion. Its ability to maintain responsible lending practices while reaching more underserved customers will also be important to its long-term performance.
The he $5 million secondary share sale represents more than a change in ownership. It highlights an evolving investment environment in which African fintech companies can provide liquidity to early backers while continuing to build their businesses.
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