Lending Startup Lidya Shuts Down Due to Severe Financial Distress

Lending startup Lidya, a Nigerian fintech company, has shut down because of serious money problems. The company raised about $16.45 million from 2017 to 2021, including $8.3 million in a pre-Series B funding round.

In an email to its customers, Lidya said it had to stop all operations due to its financial distress. This is the end of a startup that once showed a lot of promise by offering collateral-free loans to small businesses.

The email said, “Despite our best efforts to restructure and keep running, we have run into severe financial issues and can no longer continue business. So, we have ceased all operations.”

Lidya had big plans and even expanded to Europe, but problems with running the business and leadership changes hurt its chances. Some customers still have money stuck with the company, and small businesses that worked with Lidya have not been able to access funds for over a year. The email clearly said they can’t pay those claims now due to their financial status.

The company was founded in 2016 by Ercin Eksin and Tunde Kehinde, who previously worked at Jumia. Lidya’s goal was to give small business owners quick access to working capital to help grow their businesses. Like other online lenders, Lidya used smart technology to predict who could repay loans without needing collateral.

Besides lending, Lidya also acted like a digital partner for small businesses. It offered users a digital account where they could store customer information, create and send invoices, and manage cash flow, customer data, and payments all in one place.

Lidya’s shutdown highlights how important it is to have stable growth in Africa’s fintech world.

Here’s a quick look at Lidya’s journey:

– Started in 2016, the company raised millions and moved into Poland and the Czech Republic.

– It became known for giving small businesses loans without collateral, promising fast service with loans approved and given within 48 hours.

– May 2018: Raised $6.9 million in Series A led by Omidyar Network.

– 2020: Expanded into Europe, aiming to lend $1.1 billion over five years to small businesses rejected by banks.

– July 2021: Raised $8.3 million to scale operations, led by Alitheia Capital’s uMunthu Fund.

– 2023: Closed European operations due to difficulties.

– May 2024: Reports surfaced that salaries for the tech team in Portugal were not paid.

– September 2024: CTO Cristiano Machado left the company.

– October 2024: CEO Tunde Kehinde stepped down.

– 2024–2025: Faced ongoing financial struggles, unable to pay customers or attract new investors.

– October 2025: Official shutdown.

At its height, Lidya reviewed over $50 billion in credit requests and handed out more than $150 million to 32,000 small businesses.

Lidya’s shutdown is a tough reminder of the challenges fintech startups face and how crucial financial health and leadership stability are to long-term success.

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