Cash flow is a major pain point for small businesses in Africa. Long payment cycles, which can take 30-90 days after services or products have been rendered, and little or no capital, of which research says 85% of African small and medium businesses are subject to, are the main culprits of cash flow issues.
Many startups are solving these problems for African SMBs in one form or another, and the demand for their services has seen Ghanaian startup Float pick up a significant round of funding. The fintech which provides credit lines for businesses has raised $17 million, funding that it will be using to bolster its offerings and expand geographically.
The seed round was a mix of $7 million equity and $10 million debt. While Cauris provided debt financing, Tiger Global and JAM Fund, the investment firm of Tinder co-founder Justin Mateen co-led the equity bit. Other VC firms involved in the equity round include Kinfolk, Soma Capital, Ingressive Capital and Magic Fund.
A couple of angel investors also took part: 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.
Float, present in Ghana and Nigeria, intends to use this new capital to set up entities in Kenya and South Africa by Q2 as soon as it gets licenses to operate, Ghansah said on the call.
The company will also use the investment to improve its cash management platform and launch new credit products tailored to specific business verticals and industries.
“Float set out on a mission to provide more cash flow and liquidity for millions of businesses across the continent to help them grow and reach their true potential,” said the chief executive in a statement.
“With this new funding, we will continue to refine both our credit and software products to deliver the best experiences for our fast-growing customer base. We are excited to be the growth partner of choice for businesses in Africa.”