Lula celebrates a decade of powering South African SMEs
Lula’s 10th birthday in 2025 marks a significant milestone in its commitment to addressing the enduring SME credit gap in South Africa.
From its origins as Lulalend – a pioneering digital lender – the fintech founded by CEO Trevor Gosling and CTO Neil Welman has evolved into a comprehensive digital business banking platform, Lula.
Throughout its existence, Lula has consistently demonstrated innovation, agility, and a deep understanding of the unique challenges and opportunities faced by South African SMEs.
“We have evolved in leaps and bounds over the past ten years,” said Gosling.
“At the heart of it, though, our north star has remained constant – to connect small businesses with the financial support and resources they need to thrive.”
“SMEs drive our economy, but they have lacked proper servicing by traditional lenders – and this was the gap we identified when our company was first founded.”
Looking back
When Lulalend first began operating in 2015, it set about addressing the significant SME credit gap in South Africa – estimated by the International Finance Corporation (IFC) at the time to be over $20bn annually.
SMEs were underserved by traditional banks due to stringent criteria, lengthy approval processes, high hidden costs, and impersonal service.
“Our solution was a simplified and fully digital funding application process,” said Gosling.
“Our AI-driven credit scoring algorithm leveraged alternative data sources for quicker and more accurate assessments of a business’s health.”
“This gave us the ability to disburse funds in hours, which was a significant differentiator from traditional lenders.”
The Series A funding round in 2019 was a significant milestone and secured US$6.5 million from the IFC and Quona Capital.
This early investment enabled growth and customer base expansion.
Further scaling was made possible by a Series B funding round in early 2023, with US$35m to use towards addressing the SME credit gap and increasing the size of the loan book.
“The funding was a sign that investors had confidence in our model and our potential to make an impact on the SME sector in South Africa,” said Gosling.
“The capital helped us to invest in technology and talent, specifically to accelerate the rollout of our new digital business banking platform.”
Lula banking platform
In September 2023, the Lula banking platform was launched after the South African Reserve Bank (SARB) granted regulatory approval for Lula’s partnership with Access Bank.
This alliance was a strategic move, allowing Lula to evolve beyond just lending.
This was South Africa’s first all-in-one digital business banking solution dedicated to SMEs, and gave small businesses the ability to open a business account online in minutes.
Gosling says it is important to understand the role that small businesses play in the South African economy and to grasp the enormity of the financial support they need.
“SMEs employ up to 60% of the private sector workforce and generate approximately 40% of the country’s GDP,” said Gosling.
“Our services directly support this vital sector.”
Looking ahead
“South Africa’s economy is poised for significant growth, offering a crucial boost for SMEs,” said Gosling.
“However, to capitalize on this upturn, SMEs must adapt to emerging business trends, or risk reduced competitiveness, inefficient operations, and limited access to capital.”
“This is where we come in.”
Despite recent economic headwinds like high interest rates and inflation, projections indicate a potential doubling of economic growth for SMEs in 2025.
Gosling says that to thrive, businesses need to focus on five key trends:
1. Flexibility in financial services
Traditional banking is evolving.
New financial tools and AI-driven insights offer smarter cash flow management and flexible services that scale with business growth, such as adaptable office spaces and logistics.
SMEs should evaluate their processes to leverage these scalable solutions.
2. Personalized funding options
Increased access to data is enabling lenders, including alternative funders and embedded finance providers, to offer tailored financing.
This will make it easier for businesses, especially those historically underserved, to secure appropriate funding for growth and resilience.
Maintaining financial records is crucial for securing these options.
3. Mobile-first digital commerce
The digital economy is booming, projected to account for 15-20% of South Africa’s GDP by 2025, driven by increased internet and mobile penetration.
SMEs must invest in user-friendly, mobile-optimized e-commerce platforms to expand their reach nationally and internationally.
4. Smoother digital payments
South Africa is moving towards a cashless economy by 2035.
Adopting mobile wallets, QR code payments, EFT services, and contactless terminals is essential for SMEs to meet consumer demands and fully participate in the growing digital market.
5. Investment in digital infrastructure and tech
Digital transformation is set to significantly contribute to South Africa’s GDP – and job creation more generally.
Technologies like IoT, AI, and cloud computing offer SMEs opportunities to enhance efficiency and customer experience, and task automation – increasing competitiveness.
Assessing current digital capabilities and addressing skills gaps are vital steps, with cloud services offering a cost-effective entry point.
The future of SMEs
Ultimately, digitalization is the driving force behind these trends.
For SMEs to effectively capitalize on these opportunities, robust financial management and strategic investment in new technologies are paramount.
The future, said Gosling, will see an increased focus on more personalised funding options.
For him, this indicates the rise in demand for platforms such as Lula that leverage transaction and payment data to offer tailored financing solutions and move beyond rigid traditional banking criteria.
“Banks and fintechs will expand beyond conventional services to include digital tools for smart cash flow management, AI-driven insights, and flexible services,” said Gosling.
“While cash is still used, more SMEs are adopting digital financial services to simplify checkout processes in both e-commerce and brick-and-mortar settings.”
“The SARB’s roadmap towards a cashless economy by 2035 reinforces this,” he said.
“Traditional lenders have historically underserved the SME market, unfairly hindering the growth of companies that make up the backbone of South Africa’s economy.”
“They require proactive support now more than ever.”
The past ten years have seen major shifts in the needs and demands of small business owners, and Lula has grown to keep pace with the changes.
“When we started Lula ten years ago, funding for small businesses was slow and frustrating and mostly in the hands of traditional banks,” said Gosling.
“Everything was paper-based, and it often took weeks to get an answer. Today it is completely different – access is faster and digital first, and companies like ours make alternative lending no longer just an option but rather the norm.”
Gosling continued: “Technology, APIs, and smarter data have allowed for more accurate and fair credit decisions, and Lula has been at the forefront of that shift of using tech to open opportunities for businesses who were previously overlooked.”
Thank you from Lula
As Lula celebrates 10 years of purpose-driven impact, it wants to thank its customers and partners for being part of the Lula journey.
“Your trust has helped shape what Lula is today. Here’s to the next decade of impact together with you,” said Welman.
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