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 rely on paper and pen to keep their transaction records.
For many startups like Kippa, Pastel, Bamba, OZÉ and Bumpa that have taken up the job of providing digitized records for small, medium-sized 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 operations 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,” said Kippa CEO Kennedy Ekezie-Joseph.
Kippa provides financial management services including payments and bookkeeping to SMEs in sub-Saharan Africa. The fintech launched in June 2021 by Kennedy Ekezie-Joseph, Duke Ekezie and Jephtha Uche saw its seed round oversubscribed. It had earlier last November announced its $3.2 million in a pre-seed round led by Target Global.
Digital documentation offered by startups like Kippa helps small businesses make a shift to digital life by moving inventory tracking, employees and sales records from offline to online. This means your records are protected against unforeseen events such as fire and can be accessed from anywhere in the world. This minimizes risk for small businesses and helps them keep track of their financial flow.
Lack of proper record-keeping is said to be responsible for nearly nine out of 10 small businesses going out of business within the first five years.
Startups like Kippa, through their digital bookkeeping services, are now offering small businesses the opportunity to change their history. 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 stores, local food vendors and advanced merchants in its customer base.
The customer base has since grown to over 500,000 small businesses, which means massive growth in a short space of time.
Kippa said their services are available across Nigeria with the merchants spread across the country’s 774 local government areas. But it is a huge challenge that it has found a way to overcome to clear the way for growth. Kippa said the majority of small businesses in Nigeria are not formally registered. This is due to the cost and complex process of registering businesses with the Corporate Affairs Commission, Nigeria’s corporate registration agency.
The company said to beat the challenge; it must make registration cheaper and the process easier for small businesses.
“We have built a product on top of the current Kippa product that allows businesses to register in 3 days for N15,000,” Ekezie-Kennedy said, indicating the platform’s option to help these businesses incorporate legally. This feature forms the basis of Kippa’s plans to stack financial products as well as gain significant traction and generate more revenue, the CEO added.
In addition to the core bookkeeping business, Kippa plans to establish itself in other financial services. The company announced last week that it has secured a license from the Central Bank of Nigeria to operate as a super agent, meaning 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 are many opportunities for us to do more for them and offer more financial services,” Ekezie-Joseph said. “The super agent license allows merchants and typical neighborhood stores that already use our bookkeeping app to become a one-stop shop for essential financial services for their customers.”
Kippa said annual 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 operations.
In anticipation of a future boom, the start-up has embarked on a hiring round. Kippa said they have recruited former regulators and top executives at startups such as OPay, BharatPe, Khatabook, TeamApt, OKCredit, NIBSS and Unified Payments, among others. Some of them include Toyin Albert as the Managing Director of Payment Services, Osagie Alonge as the Director of Marketing and Niyi Ajao, the former Deputy Managing Director of the Nigeria Inter-Bank Settlement System (NIBSS) as the Chairman.
“Our mission is to make it easy for anyone to start and run profitable small businesses in Africa. That’s why we’re building a complete suite of software and financial services that enable this ambition, thereby empowering African business owners. We say this because we have spent time understanding their most important needs,” said Ekezie-Joseph.
