Millions of small businesses, especially in developing countries, have gone offline for most of the past decade. As a result, the majority of them continue to use scribbles with pen and paper or ledgers for bookkeeping and keeping vital data.
Some people in Nigeria go to the extreme of not having anything on hand. Besides being time consuming, these inefficiencies lead to errors and impact cash flow and finances, which is why nearly nine in ten small businesses fail in their first five years in Nigeria.
Nigerian Kippah, which tries to improve the life cycle of these small businesses using its financial management software, has secured $ 3.2 million in pre-seed investment.
Target Global, a Berlin-based VC, led the company’s latest funding round. Other participating venture capital firms include EntrÃ©e Capital, Alter Global and Rally Cap Ventures.
Babs Ogundeyi, CEO of Kuda; Sriram Krishnan, an investor in Khatabook; Raffael Johnen, CEO of Auxmoney; Chris Bouwer; Kyane Kassiri; Edward Suh of Goodwater Capital; and Sajid Rahman were among the angel investors who backed the company.
Kippa is a simple app that small business owners can use to track their daily income and expense transactions, produce invoices and receipts, manage inventory, and generally monitor their business’s fluctuations over time.
According to the company, one of the most essential functions of Kippah is to help businesses track their invoices and send them automated reminders. The company claims that companies that use Kippah in this way “collect their debts 3 times faster.”
The majority of these features are intended to integrate a wide range of businesses in Nigeria on the platform, with the aim of providing them with credit and other financial services.
The majority of customer relationships are in cash, and more than 30% of sales are on credit, according to co-founder and CEO Kennedy Ekezie. At its core, the biggest problem businesses face is not a lack of accounting or tools; it is a shortage of operating cash or credit.
âFor us, what we do is we have a unique opportunity to provide financial services to users. For most of them, Kippa is the first B2B SaaS application they use, âsaid the CEO, who started the company with Duke Ekezie and Jephthah Uche.
âAnd we have a unique opportunity to help them accept digital payments online, provide them with working capital, digital economies and connect them to the financial ecosystem. “
This year, several companies have launched with big claims aimed at small businesses and startups – each with their own method; some want to take care of accounting, others want to connect small businesses with suppliers, and so on. But in reality, they all come together in one place: to give people access to credit. Kippa CEO Ekezie told Business Insider that while this is true, he “chooses to be digitally native rather than digitizing the analog processes that previous players have done.” And according to the creator, that sets the company apart.
Kippah is currently free for businesses, which means it will make money by taking commission charges or interest on loans or working capital once credit and other financial services are introduced.
Kippa, an accounting and finance program, has seen average monthly growth of 126% since June. Kippah says it has raised more than $ 300 million in the past five months, with more than 130,000 active businesses ranging from small kiosks and street corner stores to local food vendors and upscale merchants using the application.
According to the company, the results reveal a strong demand for the product in the Nigerian market, which is why it invested. âOur investment in Kippa will allow it to grow and become the preferred financial management solution for small businesses in Africa,â said Lina Chong, one of Target Global’s investment directors.
Kippa was founded in February 2021 by Ekezie and its associates. The three-person team previously launched Africave, a software talent search platform, in 2019, but closed last year. According to Ekezie, they abandoned Africave after determining that there would be significant supply constraints that would restrict the company’s expansion.
The company founder said the team was looking to solve another problem that they believed was perfect for their abilities. Kippa was born after traveling through Nigeria and meeting several small business owners to learn more about their issues.
“What we saw was that a lot of them were operating very manually using ledgers, spending an hour or more at the end of the day balancing their books, making mistakes, undoing, complaining that their records were incomplete, “Ekezie said.
âAnd we saw a bigger problem – which is the biggest problem small businesses face – lack of access to credit or finance to function properly. So we thought it was a pretty interesting problem to solve.
The company also spoke with other entrepreneurs in emerging markets who were building similar businesses and learned how they run their operations.
Ekezie believes Kippa has reconfigured itself to meet the demands of Nigerian businesses, despite some parallels. For example, while other platforms focus primarily on digitizing accounting processes, Kippa tackles issues of broader access to finance.
Kippa has raised a $ 1.6 million pre-seed round, one of the largest in Nigeria and sub-Saharan Africa. The amount will be invested in increasing the trader base, improving the product, scaling the team and entering financial services.
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