Watu, a Kenyan buy-now-pay-later startup, is targeting revenues of KES 44 billion ($340 million) in 2025 as it pivots towards smartphone lending, which has overtaken motorbike financing as its fastest-growing product.
The company reported gross revenues of KES 29.9 billion ($231.4 million) in 2024, up from KES 17.9 billion ($138.5 million) the previous year, driven by a rapid uptake of phone financing, which now accounts for the bulk of new loans.
While gross revenues surged 67% in 2024, net profit slumped 85% to $1.2 million. The drop signals default and repayment pressure in the company’s core markets like Kenya and Uganda, and higher operational costs, revealing the risks of scaling microlending targeting low-income borrowers.
“We’re targeting the financing of 5,000 electric vehicles, expanding our smartphone financing to over two million devices, and continuing our geographic expansion while deepening our impact in existing markets,” Watu said in its 2024 sustainability report.
If the startup achieves its $340 million revenue target, Watu will have nearly tripled in size in two years, which could test whether the bet on smartphones can deliver scale.
Expanding its loan book
The company’s loan book has expanded following its handset push. Active loans tripled in 2024 to 1.9 million, and Watu is aiming for 2.3 million in 2025. Nearly 900,000 loans are expected to go to women, a demographic largely excluded from motorbike financing.
Watu has built its model around lending to informal operators and low-income earners without access to formal credit. While the model has enabled scale, it has exposed the company to income shocks and competition from rivals such as M-KOPA, Aspira, and Ampersand.
Despite its expansion, Watu has cut its headcount. Employee numbers fell 3.6% last year to 2,465, suggesting heavier use of digital channels to manage millions of small-ticket loans.
Founded in 2015 by Andris Kaneps, a Latvian national, Watu has raised over $20 million across five rounds led by FMO, Gateway Partners, Verdant Capital, and AHL Venture Partners. Its latest funding round was a Series B round in February 2024. It is one of the few Kenyan startups that have achieved consistent profitability.
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