Less than a week after Kippa obtained a Payment Solutions Services Licence to operate as a Super Agent in Nigeria, the startup has raised an $8.4 million seed fund.
Global investors, including Goodwater Capital, TEN13 VC, Rocketship VC, Saison Capital (the venture arm of Credit Saison), Crestone VC (led by Inanc Balci, Co-founder and former CEO at Lazada), VentureSouq, Horizon Partners and Vibe Capital participated in the seed round.
Founded in June 2021, the platform has grown to accommodate over 500,000 small businesses, Kippa claims its annualised transaction recorded on the platform has exceeded $3 billion, ten times what it had last November. The company also said that its active across all 774 local governments in Nigeria.
Even as tens of millions of Africans have come online in the past decade, most merchants in Nigeria still run their businesses offline. Running a small business is chaotic, from managing money to keeping track of inventory, business records, staff, and suppliers. Shopkeepers are confronted with manual processes or expensive technology that are time-consuming and prone to errors and wall them off from access to finance to run their businesses.
Kippa raised pre-seed funding of $3.2 million in November 2021 with the idea of onboarding merchants to a simple-to-use mobile bookkeeping app to help them digitise bookkeeping and recover customer debt. The company has since expanded its offerings. It provides a suite of financial services that enable small-sized business owners to incorporate their businesses legally, open bank accounts, receives and send payments, build online web stores, and manage their entire business from one platform.
In Nigeria, 96% of the nation's total businesses are micro, small and medium-scale enterprises (MSMEs), they accounted for over half of the GDP in 2020. Meanwhile, in Africa, MSMEs make more than $3.5 trillion in transactions.
According to a report by Kippa on the State of MSMEs in Nigeria, cash is used in 73% of all transactions with MSMEs. This is not unique to Nigeria; the same behaviour can be seen across Africa. Cash was the most popular payment option in online retail in Morocco, Egypt, and Kenya in 2021, accounting for 74%, 60%, and 40% of the total, according to Statista.
"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's CEO Kennedy Ekezie-Joseph said. The EFInA "Access to Financial Services in Nigeria 2020 Survey" estimates that about 49.3 million business owners are running SMEs in the country.
Since the pre-seed announcement in November 2021, the company has recruited ex-regulators and former senior executives at top startups, including OPay, BharatPe, Khatabook, TeamApt, OKCredit, NIBSS, and Unified Payments, amongst others. Some key appointments include hiring immediate past Deputy Managing Director at the Nigeria Inter-Bank Settlement System (NIBSS), Niyi Ajao as Chairman; Toyin Albert as Executive Director of Payments Services; and Osagie Alonge as Director of Marketing.
"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," Ekezie-Joseph added.