Kippa, the Nigerian startup improving the lifecycle of small businesses across the country through its financial management and payments platform, has raised $8.4m in an oversubscribed funding round.
The startup — launched last June by Kennedy Ekezie-Joseph, Duke Ekezie and Jephthah Uche – has received investments from backers such as Goodwater Capital, TEN13 VC, Rocketship VC, Saison Capital, Crestone VC, VentureSouq, Horizon Partners and Vibe Capital. Kippa said the investment will enable it to develop financial products that help SMEs grow their businesses and grow their team in Nigeria.
The company announced its $3.2 million pre-seed from Target Global and other investors last November.
Kippa is one of many accounting platforms for small and medium enterprises in Sub-Saharan Africa. Similar providers in the sub-Saharan region include Pastel, Bamba, OZÉ and Bumpa.
Prior to such solutions, many of these businesses performed operations such as money management, inventory tracking, and personnel and vendor records offline, primarily with pen and paper or ledgers. All of these inefficiencies, besides taking time, lead to errors and affect cash flow and finances, which is why nearly nine out of 10 small businesses fail within the first five years.
As such, the startups have launched various accounting solutions to digitize the operations of these small businesses in a traditional retail sector worth over $200 billion in Nigeria. With Kippa, small business owners can track their daily income and expense transactions, create invoices and receipts, manage inventory, and generally monitor the ebbs and flows of their business over time. In the interview with CEO Ekezie-Joseph last November, he said Kippa had more than 130,000 active businesses, ranging from small kiosks and street corner stores to local food vendors and high-end merchants. . Although the platform has grown to accommodate more than 500,000 small businesses, Ekezie-Joseph did not specify how many were active.
Any company providing services to thousands of small and medium enterprises in different cities in Nigeria has a large distribution network to create new products. And in the case of Kippa – the company’s traders are spread across Nigeria’s 774 local governments – it has made significant progress in the offerings it offers to traders.
The majority of small businesses in Nigeria are not officially registered due to the cost and complexity of navigating the whole process. So, First, Kippa launched what Ekezie-Joseph described as one of the fastest incorporation products for small businesses a few months ago. “We have built a product on top of the current Kippah product which allows businesses to register in 3 days for N15,000,” said Ekezie-Kennedy indicating the alternative of his platform to help such businesses build legally. This feature forms the basis of Kippah’s plans to stack financial products in addition to gaining significant traction and generating more revenue, the CEO added.
Last week, the company announced that it had obtained a license from Nigeria’s apex bank, the Central Bank of Nigeria (CBN), to operate as a Super Agent, just like agent banking players OPay and TeamApt. With the license, merchants on the Kippa platform can, in turn, act as agents and offer financial services such as cash withdrawals and deposits, bank account opening, bill payments and utilities, and insurance to individual customers who regularly visit their small shops for daily purchases.
“We have over 500,000 merchants on our app and we have plenty of opportunities to do more for them and provide more financial services,” Ekezie-Joseph said. “The super agent license enables merchants and typical neighborhood stores that already use our accounting app to become a one-stop-shop for essential financial services for their customers.”
Getting the best hands to lead its lightning scaling efforts is essential for such a fast-growing young company – Kippa says its annualized transaction recorded on the platform exceeded $3 billion, ten times what she had last November. To this end, the financial management platform has recruited former regulators and senior executives from startups like OPay, BharatPe, Khatabook, TeamApt, OKCredit, NIBSS, and Unified Payments, among others. Among them are Toyin Albert as executive director of payment services, Osagie Alonge as marketing director and Niyi Ajao, the ex-deputy managing director of Nigeria Inter-Bank Settlement System (NIBSS) as chairman.
Kippa raised over $11 million in a full year of operation. The company and its competitors have convinced investors that the market they serve is huge for every player to co-exist. Reports back up this point, as an estimated 49.3 million business owners run SMEs in the country. But since these platforms offer different approaches to businesses – bookkeeping, connecting with suppliers, banking services and software – credit is the glue that holds everything together. However, Kippah’s credit and loan arm, which the CEO predicted last year as a revenue generator for the company, has been put on hold for the time being, hopefully not too long for it to affect the business. ambition of the startup to be the benchmark for small businesses. financial service provider.
“Credit remains an incredibly huge opportunity for us. And although we have a lending license in Lagos and Abuja, we are spending our time developing the arms of the business that provide and continue to develop the transactional data that we have. on businesses. This allows us to build a healthier loan portfolio when we start lending.”