Cash flow is a big issue for African small enterprises. Long payment cycles, which can take 30-90 days after services or products are given, and a lack of capital, which 85 percent of African small and medium firms face, are the main causes of cash flow problems, according to study. Many firms are addressing these issues for African SMBs in some way, and the demand for their services has led to a substantial round of funding for Ghanaian startup Float. The fintech that provides corporate credit lines has secured $17 million in investment, which it will use to expand its capabilities and geographically.
The seed round consisted of a $7 million equity investment and a $10 million debt investment. While Cauris provided debt funding, Tiger Global and JAM Fund, Tinder co-founder Justin Mateen’s investment business, co-led the equity portion. Kinfolk, Soma Capital, Ingressive Capital, and Magic Fund are among the other VC firms investing in the equity round. Y Combinator CEO Michael Seibel, Sandy Kory of Horizon Partners, Ramp founders Karim Atiyeh and Eric Glyman, Gregory Rockson of mPharma, and Dutchie founders Zach Lipson and Ross Lipson were among the angel investors who attended.
CEO Jesse Ghansah founded Swipe alongside Barima Effah in 2020, and after a rebranding as Float, the firm went live with its product in June 2021. In 2016, the chief executive came up with the idea for the YC-backed Ghanaian fintech while working at OMG Digital, a media firm he created that also went into YC. “We needed financing, so we got an overdraft from a long-term partner bank where we’d done over $100,000 in business.” In a June interview with TechCrunch, the two-time YC founder said, “The bank required us to deposit 100% collateral in cash before they could give us the overdraft.”
“I also recall borrowing money from loan sharks at exorbitant interest rates, sometimes as high as 20% per month, to make ends meet.” That prompted me to use Float to solve such issues.” According to research, more than 51 percent of the 44 million formal SMBs in Sub-Saharan Africa believe they need more funding than they can get to expand their firms. Some of these enterprises cannot acquire loans from traditional banks, so they turn to float for help.
Float includes software solutions for businesses to manage accounts and wallets in one dashboard, as well as automate invoices, vendor or supplier payments, and invoice collections, in addition to flexible credit lines for businesses to bridge cash flow shortages.
The company aspires to be Africa’s “financial operating system” for small and medium-sized businesses. Invoice advance, opening a business account, payment linkages, budget management, and spend cards are among the platform’s other capabilities. Revenue advances and fast payouts are two new features that the company has lately launched. With the latter, float hopes that small firms can use its platform to rapidly access their profits rather than relying on gateways, which can take days to process. Its invoice factoring service enables firms with unpaid invoices to receive cash advances.
All of these elements, according to Ghansah, provide numerous types of credit for diverse industries and verticals across the continent. “The major difficulty is that corporate financing requirements are so diverse.”The credit needs of a retail firm are significantly different from the credit needs of a services business, or the credit needs of agriculture, business, pharmaceutical, or medical supply industries,” the CEO explained. “As a result, we’re attempting to figure out which credit products are best for various verticals.” So that’s what we’ve been working on up to this point.”