Tens of millions of small companies globally, particularly in rising markets, have stayed offline for the higher a part of the previous decade. Because of that, most of them nonetheless depend on scribbles utilizing pen and paper or ledgers for bookkeeping and storing essential info.
In Nigeria, some go to the extent of protecting info offhand. All these inefficiencies, asides from being time-consuming, result in errors and impacts money circulation and finance, which is why nearly 9 out of 10 small companies within the nation fizzle out within the first 5 years.
Nigerian startup Kippa, making an attempt to enhance the life cycle of those small companies with its finance administration app, has raised $3.2 million in pre-seed funding.
The startup’s new financing spherical was led by Berlin-based VC Goal International. Entrée Capital, Alter International and Rally Cap Ventures are the opposite taking part VCs.
A variety of angel buyers — Babs Ogundeyi, Kuda CEO; Sriram Krishnan, an investor in Khatabook; Raffael Johnen, Auxmoney CEO; Chris Bouwer; Kyane Kassiri; Edward Suh of Goodwater Capital; and Sajid Rahman — invested within the startup.
Kippa works as a easy app the place small enterprise homeowners can hold monitor of their each day revenue and expense transactions, create invoices and receipts, handle stock and usually monitor how their companies ebb and circulation over time.
One of many app’s most essential options, based on the corporate, is that it helps retailers hold monitor of debtors and ship automated reminders to them. The corporate claims that retailers who use Kippa this manner “get better money owed 3x quicker.”
Most of those options are geared at onboarding a variety of companies in Nigeria to the platform; nonetheless, the technique is to introduce credit score and different monetary providers to them.
There’s a cultural nuance to this, co-founder and CEO Kennedy Ekezie tells FiratNews. The vast majority of transactions carried out by small companies are cash-based, and greater than 30% of gross sales occur on credit score. So, at its core, the most important downside companies face just isn’t the absence of bookkeeping or instruments however the dearth of working capital or credit score.
“For us, what we do is we’ve such a novel alternative to supply monetary providers to customers. For many of them, Kippa is the primary B2B SaaS app that they’re utilizing,” mentioned the CEO, who began the corporate with Duke Ekezie and Jephthah Uche.
“And we do have a novel alternative to assist them settle for on-line digital funds, to supply them with working capital, digital financial savings and plug them into the monetary ecosystem.”
Many startups fixing numerous wants of small companies and startups have launched with daring guarantees this previous yr — all with totally different approaches; some wish to handle bookkeeping, some are eager on connecting small companies with suppliers, others present banking and software program providers.
However in actuality, all of them converge at one level, which is offering entry to credit score. CEO Ekezie says whereas this holds true, Kippa is “selecting to be digitally native, relatively than pursue the digitization of analogue processes that earlier gamers have achieved.” And that units the corporate aside, based on the founder.
As Kippa stays free for companies to make use of for the time being, the introduction of credit score and different monetary providers will see the corporate make income by taking fee charges or pursuits off lending or working capital.
The bookkeeping and finance app claims to have grown a median of 126% month-on-month since launching in June. With over 130,000 energetic companies, starting from small kiosks and road nook outlets to native meals distributors and high-end retailers utilizing the app, Kippa claims to have recorded greater than $300 million previously 5 months.
For lead investor Goal International, these metrics point out a powerful want for the product within the Nigerian market; consequently, that’s why it invested. In keeping with Lina Chong, the agency’s funding director, “Our funding in Kippa will allow it to develop and be the first-choice monetary administration answer for small companies in Africa.”
Ekezie and his co-founders began Kippa in February 2021. Earlier than Kippa, the trio based Africave, a software program expertise matching platform in 2019 that shuttered final yr.
In keeping with Ekezie, they moved on from Africave after recognizing imminent provide constraints that will put a cap on the corporate’s progress.
The CEO mentioned the founders sought to resolve one other downside they felt was excellent for his or her strengths. After embarking on a founder-market-fit tour and assembly a number of small enterprise homeowners throughout Nigeria to grasp their ache factors, Kippa was born.
“What we noticed was loads of them working very manually utilizing the ledgers, spending one hour or extra on the finish of the day balancing their books, making errors, cancelling out, complaining of their information being incomplete,” mentioned Ekezie.
“And we noticed an even bigger downside — which is the most important downside small companies face — the shortage of entry to credit score or financing to run correctly. So we thought that was an attention-grabbing sufficient downside to resolve.”
The staff additionally spoke with founders and a few founding staff members of comparable gamers in different rising markets akin to India’s Khatabook, Colombia’s Treinta, Indonesia’s BukuWarung and Bukukas to grasp how they scaled their companies.
And although there are some similarities, Ekezie believes he and his staff have rewired Kippa to adapt to the wants of companies in Nigeria. As an example, whereas Khatabook and different gamers are digitizing bookkeeping processes first earlier than the rest, Kippa is fixing broader entry to finance issues.
Kippa’s pre-seed spherical, one of many largest in Nigeria and sub-Saharan Africa, might be invested in rising its service provider base, enhancing its product, scaling the staff, and venturing into monetary providers.