Lipa Later sought $5 million from UK lender two weeks after entering administration

Two weeks after entering administration in March, Kenyan buy-now-pay-later (BNPL) startup Lipa Later co-founder, Eric Muli, tried to raise $5 million to salvage its business, despite losing control of its operations to a court-appointed administrator.

A term sheet seen by TechCabal shows the company sought a $5 million facility from UK-based Advanced Global Capital (AGC) in April to support its invoice factoring business. The proposal outlined a 36-month term loan with a steep annual interest rate of 14% on funds drawn—interest-only for the first 24 months, with quarterly repayments kicking in from the 27th month.

By the date of the request, Lipa Later’s board had already ceded control of the firm’s assets and management to Joy Vipinchandra Bhatt of Moore JVB Consulting LLP, who was appointed administrator on March 24 following months of unpaid salaries, missed supplier payments, and failed fundraising attempts.

It is unclear whether the administrator, Joy Vipinchandra Bhatt of Moore JVB Consulting, authorised or was aware of the request. Under Kenyan insolvency law, directors cede control to administrators once a company enters administration.

Bhatt did not respond to requests for comment.

Muli confirmed the deal to TechCabal but declined to provide further details, citing the ongoing court process.

According to the terms, the initial limit was set at $3 million and is likely to increase to $5 million after one year, subject to AGC’s approval. The proposed facility was to be governed under English law, and a “clear repayment plan” was to be a condition of the final agreement.

Invoice factoring—where a company advances cash against future receivables—is less risky than consumer lending and offers faster turnaround. Lipa Later was pitching it as a leaner, more bankable product. AGC seemed willing to consider it, but under stringent security and cashflow management provisions.

All loan disbursements, repayments, and unused funds were managed through dedicated collection bank accounts acceptable to AGC. These accounts were to be internet-banking-enabled, and AGC would be a co-signatory, with full rights to instruct the bank holding them.

The startup would also be restricted from incurring other debts without AGC’s approval.

Investors’ darling

Founded in 2018 by Muli and Michael Maina, Lipa Later had strong investor backing, raising $16.6 million across 10 rounds, including $12 million in seed funding in January 2022 from Cauris and Lateral Frontiers. Earlier rounds saw pre-seed investments from Orbit Startups in 2021 and Founders Factory Africa in 2019.

In December 2023, it announced a surprise KES 250 million ($1.9 million) acquisition of Sky.Garden, a struggling e-commerce platform. The move raised eyebrows because the company was already struggling to pay salaries and had begun defaulting on supplier obligations.

By March 2024, Lipa Later had run out of road. Staff were unpaid, creditors were circling, and fundraising efforts had stalled.