Kippathe Nigerian startup improving the lifecycle of small businesses across the country with its financial management and payments platform has raised $8.4 million in an oversubscribed seed round.
The startup – launched last June by Kennedy Ekezie-Joseph, Duke Ekezie and Jephthah Uche — received investments from lenders such as Goodwater Capital, TEN13 VC, Rocketship VC, Saison Capital, Crestone VC, VentureSouq, Horizon Partners and Vibe Capital. Kippa said the investment will enable the company 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 several accounting platforms for small and medium-sized businesses in sub-Saharan Africa. Similar providers in the sub-Saharan region include Pastel, Bamba, OZÉ and bumpa.
Before such solutions, many of these companies performed activities such as managing money, tracking inventories, and keeping employee and supplier records offline, mainly with pen and paper or ledgers. All these inefficiencies are not only time-consuming, but also lead to errors and affect cash flow and finances. That’s why nearly nine out of ten small businesses fail in the first five years.
As such, startups have launched several accounting solutions to digitize the operations of these small businesses in a traditional retail sector worth more than $200 billion in Nigeria alone. Kippa allows small business owners to track their daily income and expense transactions, create invoices and receipts, manage inventory, and generally track how their business ebbs and flows over time. In an interview with CEO Ekezie-Joseph last November, he said Kippa had more than 130,000 active businesses, ranging from small newsagents and corner stores to local food vendors and luxury merchants. While the platform has grown to more than 500,000 small businesses, Ekezie-Joseph didn’t say how many were active.
Any company that provides services to thousands of small and medium-sized businesses in different cities in Nigeria has an extensive distribution network to build new products on. And in the case of Kippa – the company’s merchants are spread across all 774 local governments in Nigeria – it has made significant strides in the offerings it provides to merchants.
Most small businesses in Nigeria are not formally registered due to the cost and complexity of navigating the entire process. For example, a few months ago Kippa launched what Ekezie-Joseph described as one of the fastest integration products for small businesses. “We have built a product on top of the current Kippa product that allows companies to register for N15,000 in 3 days,” said Ekezie-Kennedy, pointing to the alternative of his platform to help these companies integrate legally. This feature is the foundation for Kippa’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 been licensed by Nigeria’s top bank, the Central Bank of Nigeria (CBN), to operate as a Super Agent, along with bankers OPay and TeamApt. In turn, the license allows merchants on the Kippa platform to act as agents and provide financial services such as cash withdrawals and deposits, opening bank accounts, accounts and utilities, and insurance to individual customers who regularly come to their small stores to make daily purchases. to do.
“We have over 500,000 merchants on our app and there are many opportunities for us to do more for them and provide more financial services,” says Ekezie-Joseph. “The super agent license empowers merchants and typical convenience stores who already use our accounting app into a one-stop shop for essential financial services for their customers.”
For a young company growing so rapidly, getting the best hands to drive its blitzscaling efforts is critical. Kippa claims that the annual transaction registered on the platform has reached more than $3 billion, ten times more than in November last year. To that end, the financial management platform has recruited ex-regulators and senior executives at startups such as OPay, BharatPe, Khatabook, TeamApt, OKCredit, NIBSS and Unified Payments. Some of them include Toyin Albert as executive director of payment services, Osagie Alonge as director of marketing and Niyi Ajao, the ex-deputy director of Nigeria Inter-Bank Settlement System (NIBSS) as chairman.
Kippa has raised more than $11 million in a full year of operation. The company and its competitors have convinced investors that the market they serve is huge for any player to coexist. Reports support that point as an estimated 49.3 million business owners run SMEs in the country. But since these platforms have different approaches to business – accounting, connection with suppliers, banking and software services – credit is the glue that keeps everything sticking. Kippa’s credit and lending arm, which the CEO predicted last year as a revenue generator for the company, has been shelved for now, hopefully not for too long that it tarnishes the startup’s ambition to be the go-to of small businesses. financial service provider.
“Credit remains an insanely great opportunity for us. And while we have a loan license in Lagos and Abuja, we spend our time building out the branches of the company that provide and continue to expand the transaction data we have on companies. This allows us to build up a healthier loan book when we start lending.”
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