Ghanaian startup, Float has raised a $17 million funding in a seed round mixed with $7 million equity and $10 million debt.
The company took advantage of the issues in African Businesses, such as cash flow constraint, occasioned by long payment circles, inadequate capital and became a problem solver, and this is evident in the rising patronization and demand for the fintech company known for provision of credit lines for businesses. The new funding is expected to bolster Float;s offerings while expanding geographically.
The seed round had private equity fund management firm, Cauris providing debt financing, with Tiger Global and JAM Fund, the investment firm of Tinder co-founder Justin Mateen co-leading the equity bit. Kinfolk, Soma Capital, Ingressive Capital and Magic Fund are other VC firms involved in the equity round.
Angel investors like 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, also took part in the funding.
Jesse Ghansah had in an interview with TechCrunch in June posited:
“We needed credit and proceeded to get an overdraft from a long-term partner bank where we had transacted more than $100,000. But the bank wanted us to deposit 100% collateral in cash before they could give the overdraft. I also remember taking money from loan sharks with ridiculous interest rates, sometimes as high as 20% a month, to meet payroll. That threw me into solving those problems with Float.”
With a research pointing out that 51 percent of the over 44 million SMBs in sub-Saharan Africa needing more finance and capital to grow their business, the Fintech startup provides credit to some of these businesses that find it challenging to get from traditional banks.
Apart from the provision of flexible credit lines for businesses to cover cash flow gaps, the company also has a software tool that allows businesses to manage accounts and wallets in one dashboard, as well as automate bills, vendor or supplier payments and invoice collections. Float hopes to serve as the “financial operating system” for Africa’s small and medium businesses, with other features of the platform including invoice advance, opening a business account, payment links, managing budgets and spend cards.
More features like revenue advances and instant payouts were recently introduced by the company with the ‘instant payout’ feature part of Float’s move to allow small businesses to use its platform to tap into their revenues instantly instead of using gateways, which take days to settle. Its invoice factoring also helps businesses with outstanding invoices get cash advances.
The CEO further noted that all these features provide different forms of credit for various industries and verticals across the continent.
“The big challenge is that credit needs of businesses are very different. The credit needs of retail are very different from the credit needs of a services business, or the credit needs of agriculture, business or pharmaceutical or medical supplies businesses,” said the chief executive.
“So we are trying to dig deep into which credit products work for certain verticals. And so that’s what we’ve been working on so far.”