Over the years, millions of small businesses around the globe, precisely in emerging markets, have stayed offline while documenting and running their cash flow, in addition, to finance traditionally, and this often leads to errors and is also time-consuming. However, startup Kippa which focuses on a finance management app in its attempt to improve the life cycle of these small businesses has reportedly scored $3.2 million in pre-seed funding.
It’s been observed that the use of pen and paper or ledgers for bookkeeping and documenting information has seen 9 out of 10 businesses in emerging markets fizzle out in their first five years.
Also, in addition, a number of angel investors equally took part – Sriram Krishnan, an investor in Khatabook; Babs Ogundeyi, Kuda CEO; Raffael Johnen, Auxmoney CEO; Chris Bouwer; Edward Suh of Goodwater Capital; Kyane Kassiri; and Sajid Rahman.
Meanwhile, it’s worth noting that the subject app works as a simple app where small business owners can confidently keep track of their daily income and expense transactions, create invoices and payment receipts, manage inventory while monitoring the state and flow of their businesses.
Since these categories of business are often patronized by low-income earners, one would expect debts, hence, the need to keep track of debtors and send automated reminders to them should be viewed as paramount. And so, the subject app’s most vital feature, according to the company, is the fact that it helps merchants keep track of debtors and send automated reminders. As a result, it claims that merchants who use Kippa in this order “recover debts 3x faster”.
Moreover, the app’s features are believed to be geared towards introducing a wide range of businesses in Nigeria to the subject platform, which is also a strategy to introduce credit and other financial services to these merchants.
On the other hand, there are issues to this, and this is as a result of the fact that the majority of transactions carried out by small businesses are practically cash-based, and over 30% of sales happen on credit. And so, it’s evident, the greatest problem businesses face isn’t the absence of bookkeeping or tools but the consequence of working capital and credit, a source familiar with the matter has confirmed.
“For us, what we do is we have such a unique opportunity to provide financial services to users. For most of them, Kippa is the first B2B SaaS app that they’re using”, the company CEO ‘Kennedy Ekezie’ said. Adding that, “And we do have a unique opportunity to help them accept online digital payments, to provide them with working capital, digital savings and plug them into the financial ecosystem”.
In a bid to set startup Kippa apart from other players, the founder says it’s giving this a different approach, and so, Kippa is “choosing to be digitally native, rather than going after the digitization of analog processes that previous players have done”. ClinchBase has also learned.
In the meantime, the subject startup has reportedly grown an average of 126% on every passing month notably since its launch in June. With over 130,000 active businesses which cut across a number of small businesses, however, the company claim it has recorded over $300 million in the past five months.
Meanwhile, lead investor Target Global believes these metrics indicate a strong need for the product in the Nigerian market, as such, core reason why it invested. According to the firm’s investment director ‘Lina Chong’, “Our investment in Kippa will enable it to grow and be the first-choice financial management solution for small businesses in Africa”.
It should also be borne in mind that the subject company evolved in order to solve the problems of small business owners. The CEO said:
“What we saw was a lot of them operating very manually using the ledgers, spending one hour or more at the end of the day balancing their books, making mistakes, canceling out, complaining of their records being incomplete”.
“And we saw a bigger problem – which is the biggest problem small businesses face – the lack of access to credit or financing to run properly. So we thought that was an interesting enough problem to solve”.
Lastly, while there are other players offering a similar product, Ekezie believes he and his team have structured Kippa to adapt to the needs of businesses in the subject market. Equally, Kippa’s latest fundraise will be used to grow the company’s merchant base, scale the team, improve its product, and venture into financial services.
- Tell us your view?