When it comes to digital bookkeeping, Nigeria and the whole of Sub-Saharan Africa remains an untapped market dripping with growth opportunities for startups. The Nigerian bookkeeping market alone is worth $200 billion. This is because the majority of small businesses still depend much on paper and pen in keeping their transactional records.
For many startups like Kippa, Pastel, Bamba, OZÉ and Bumpa that have taken up the job to provide digitized records for Small, Medium Enterprises (SMEs), Sub-Saharan Africa has provided huge markets that keep investors running after these startups.
Thus, Kippa, a Nigerian fintech startup serving small businesses, announced that it has raised $8.4 million in a seed round.
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The investment, which the startup said will allow it to develop financial products that help SMEs grow their businesses and expand its operation in Nigeria, was backed by Goodwater Capital, TEN13 VC, Rocketship VC, Saison Capital, Crestone VC, VentureSouq, Horizon Partners and Vibe Capital.
“We expect the number of digitally active small businesses to grow exponentially over the next three to five years. As more small businesses come online, Kippa will own the money button on the devices of these merchants,” Kippa CEO Kennedy Ekezie-Joseph said.
Kippa offers financial management services that include payments and bookkeeping to SMEs in sub-Saharan Africa. The fintech which was launched in June 2021 by Kennedy Ekezie-Joseph, Duke Ekezie and Jephtha Uche, saw the seed round oversubscribed. It had earlier in November last year, announced its $3.2 million in a pre-seed round led by Target Global.
Digital documentation offered by startups like Kippa is helping small businesses to make a shift to digital life by moving their inventory tracking, staff and sales records from offline to online. This means that their records are protected from unforeseen events like fire, and they can be accessed from anywhere in the world. This minimizes risks for small businesses and helps them to keep track of their financial flow.
Lack of proper record-keeping is said to be responsible for almost nine out of 10 small businesses fizzling out in the first five years.
Startups like Kippa, through their digital bookkeeping services, now offer small businesses the opportunity to change their story. Kippa’s CEO told TechCrunch in an interview last November that the startup had more than 130,000 active businesses consisting of kiosks, street corner shops, local food vendors and high-end merchants in its customer-base.
The customer-base has since then grown to have over 500,000 small businesses, signifying a massive growth within a short period.
Kippa said its services are available across Nigeria with its merchants scattered across the country’s 774 Local Government Areas. But there is a huge challenge that it has found a way to overcome to clear the path for growth. Kippa said the majority of small businesses in Nigeria are not formally registered. This is due to cost and the complex process of registering businesses with the Corporate Affairs Commission, Nigeria’s business registration agency.
The company said to beat the challenge; it has to make registration cheaper and the process easier for small businesses.
“We’ve built a product on top of the current Kippa product that allows businesses to register in 3 days for N15,000,” said Ekezie-Kennedy indicating his platform’s alternative to help these businesses incorporate legally. This feature forms the basis for Kippa’s plans to stack financial products besides getting significant traction and driving more revenue, the CEO added.
Besides its core bookkeeping business, Kippa is planning to establish itself on other financial services fronts. The company announced last week that it has secured a license from Nigeria’s central bank to operate as a Super Agent, which means, merchants on Kippa’s platform can offer some financial services such as cash withdrawals and deposits, bank account opening, bills and utility payments, and insurance to their individual customers.
“We have over 500,000 merchants on our app and there’s a lot of opportunities for us to do more for them and provide more financial services,” said Ekezie-Joseph. “The super agent license allows merchants and typical neighborhood shops who already use our bookkeeping app into a one-stop-shop for essential financial services for their customers.”
Kippa said annualized transactions on its platform have already exceeded $3 billion, a milestone for a company of its age that has raised $11 million in a full year of operation.
In anticipation of a future boom, the startup has embarked on a hiring spree. Kippa said it has recruited ex-regulators and senior executives at startups like OPay, BharatPe, Khatabook, TeamApt, OKCredit, NIBSS, and Unified Payments, amongst others. Some of them include Toyin Albert as executive director of payments services, Osagie Alonge as director of marketing and Niyi Ajao, the ex-deputy managing director at Nigeria Inter-Bank Settlement System (NIBSS) as chairman.
“Our mission is to make it easy for anyone to start and run profitable small businesses in Africa. It is why we are building a full suite of software and financial services that enables this ambition, thereby empowering African business owners. We say this because we’ve spent time understanding their most significant needs,” said Ekezie-Joseph.