Nigerian startup Kippa, has raised $3.2 million in pre-seed funding round led by Berlin-based VC Target Global. Entrée Capital, Alter Global and Rally Cap Ventures are the other participating VCs.
The new financing round was also supported by a number of angel investors — 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 — all invested in the startup.
Having found a friction in Nigerian small business space that has lasted for years – the inability of business owners to keep track of their everyday happenings – the startup developed the Kippa app to help them keep business records.
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Kippa works as a simple app where small business owners can keep track of their daily income and expense transactions, create invoices and receipts, manage inventory and generally monitor how their businesses ebb and flow over time.
The company said it also helps merchants to keep track of debtors and send automated reminders, and it’s the most important feature of the app as merchants who use it recover debts 3x faster.
The company, which was founded in February by Kennedy Ekezie, Duke Ekezie and Jephthah Uche, said it has grown an average of 126% month-on-month since it was launched in June. Its growing customer-base with over 130,000 active businesses, is made up of small kiosks, street corner shops, local food vendors and high-end merchants, who according to Kippa, have brought in more than $300 million in the past five months.
Kippa said it has two areas of interest; bookkeeping and financial services that will fill the vacuums plaguing small businesses in Nigeria.
CEO Kennedy Ekezie told TechCrunch that the majority of transactions carried out by small businesses are cash-based, and more than 30% of sales happen on credit. This makes their lack of working capital the biggest challenge of these businesses.
“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,” he said.
“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.”
Kippa is counting on credit and other financial services to make revenue since the record-keeping aspect is generally free. The startup is charging commission or interests credits or loans issued to customers.
Lina Chong, investment director for the lead investor, Target Global, said the firm’s investment interest in Kippa was buoyed by these metrics, which indicate a strong need for the product in the Nigerian market.
“Our investment in Kippa will enable it to grow and be the first-choice financial management solution for small businesses in Africa.”
Kippa’s pre-seed round is one of the largest in Nigeria and sub-Saharan Africa. The startup said it will be invested in growing its merchant base, improving its product, scaling the team, and venturing into financial services.
However, Kippa is up to compete with other players such as Khatabook in the bookkeeping market. But it is counting on the finance feature of its services to stay ahead.