African startups have been representing the continent in good light. The African startup space witnessed tremendous growth in 2021; the space saw an increase in funding, interest and investment from investors across the globe. A good number of startups also emerged as unicorns. Collectively, African startups raised $4 billion in funding last year and the year 2021 was characterized by huge progress for startups in Africa.
OZÉ, a Ghanaian fintech startup has raised $3 million in a pre-Series A round led by Europe’s early-stage venture capital firm SpeedInvest. The financing round saw participation from Savannah Capital, Cathay AfricInvest Innovation Fund and other angel investors, and follows its seed funding round of last year that saw the startup raise $700,000.
OZÉ is an African fintech that offers digital record-keeping tools with embedded finance products to small and medium businesses (SMBs). The startup was founded in 2018 by Meghan McCormick and Dave Emnett after the startup’s CEO Meghan McCormick noticed the challenges small and medium businesses face during her travels to Africa. She noticed that these businesses were in severe need of financial and record-keeping tools to be able to operate smoothly.
According to her, “Working so closely with small business owners, I understood the problems they faced. And having seen how small businesses in the U.S. operated as a child, and seeing kind of the tech stack or the service stack that SMEs have over there, I had a good understanding of the solution set. And putting those two things together, we’ve been able to create a platform tailored to the realities of today. But also really pushing towards what’s possible for business owners in Ghana and Nigeria, who has a smartphone in their pocket”.
Basically, OZÉ’s platform assists small and medium with collating sales, expenses, payables, receivables and customer data. OZÉ uses this data to also provide these businesses with tailored recommendations, business tips, etc., after analysing them. Depending on how the platform is used by businesses, OZÉ generates performance and behavioural data, which it uses to predict their credit risks and create alternative credit scores. It also partners with financial institutions (banks and fintechs) to lend to businesses that need loans.
According to OZÉ’s CEO, credit options are essentially available to customers who have been active on the platform for at least a 30-day period. The longer these users use the platform, the more their credit score increases. She also mentioned that businesses on the platform take an average of $5,000 while paying up to 36 percent APR.
In a statement, the company said “OZÉ’s methods and relationship to business owners mean that loans made through the platform can be collateral-free, larger and paid back over a longer period without increasing risk”.
Speaking on what makes OZÉ stand out from a crowd of similar startups, CEO Meghan McCormick said “I think the tight integration between record keeping, credit and now payments is a real competitive factor in terms of the business model that we can run. And it sets off a flywheel in the way that just being a record keeper and company or just being a digital lender wouldn’t”.
“Most of the small businesses know that they should be keeping records. But keeping any records, digital or not, is a behavioural change. And so, we’ve built a strong foundation of behavioural science into our app so that OZÉ becomes habit-forming”, she added.
The startup has a client base of over 125,000 business owners across Ghana and Nigeria and wants to tap into the opportunities that the continent has to offer. The company said that in 2021, its active monthly users grew by 1,200 percent adding that the number of loans it offered increased by 200 percent from the third to the fourth quarter of the same year. As per the startup’s claims, 97 percent of business owners on its platform are running profitable and/or growing businesses.
Thanks to new funds, the startup will increase its team as well as its client base, strengthen its presence in Nigeria and Ghana and prepare to “conquer” the rest of Africa.