Float, a Ghanaian Fintech platform that provides corporate credit lines, has received $17 million to expand its product offerings as well as geographical reach. Techcrunch reported that the seed round included a $7 million equity and $10 million debt investments.
According to the company the new funding will be used for improving the company’s cash management platform as well as launching credit solutions targeted at specific industries and business verticals.
Cauris, a debt finance company, provided the debt financing, while Tiger Global, JAM Fund and JAM Fund led the equity portion. Kinfolk and Ingressive Capital were also among the other VC firms that participated in the equity round.
Angel investors were Y Combinator’s CEO Michael Seibel and Sandy Kory from Horizon Partners. They also participated in funding rounds for Ramp founders Karim Ayeh, Eric Glyman, Gregory Rockson, mPharma founder, and Dutchie founders Zach Lipson, and Ross Lipson.
Solutions for cash flow problems in SMBs
Float is just one of many startups that help African SMBs solve cash flow issues.
The company was formerly called Swipe. It was founded by Jesse Ghansah, CEO, and Barima Effah in 2020. Float launched its product offerings in June 2020.
According to the company’s website, the CEO of the YC-backed Ghanaian fintech came up with the idea in 2016 while working at OMG Digital (a media firm he founded that later became YC).
This company has provided credit facilities for a number of SMBs in Sub-Saharan Africa who can’t obtain the necessary funding from traditional banks.
Float offers flexible credit lines to businesses to help them bridge cash flow shortfalls. It also provides software solutions to businesses that allow them to manage their accounts and wallets from one dashboard.
The company claims it wants to be Africa’s financial operating system for small and medium-sized enterprises. Other capabilities include invoice advance, opening business accounts, payment linkages and budget management.
The company recently launched two new features: revenue advances and fast payments. Float hopes to make it easier for small businesses to access their profits through its platform, rather than relying upon gateways that can take days.
Its invoice factoring service allows firms with unpaid invoices receive cash advances. All of these services offer a variety of credit options for different industries and verticals throughout the continent.
The biggest challenge is the fact that credit needs for businesses can be very different. Retail credit requirements are different than those of service businesses or businesses. Credit needs for agriculture, business, pharmaceuticals or medical supply companies are also very different. We are currently trying to find out which credit products are best suited for specific verticals. Jesse Ghansah, CEO of Float said that this is what they’ve been doing so far.
In the seven months since its inception, hundreds of companies from a wide range of industries have signed up to Float’s cashflow management and expenditure platform. This includes retail, manufacturing, fintech and media.
Float spent $10 million in credit over that time and provided financial loans to businesses. According to Float, the company claims that 26 times more payment transactions (invoices, vendor payments) have been made.
Float is not the only fintech startup in Africa that aims to be the “operating system” of the region for small and medium-sized businesses. Businesses have also received financial and cash flow support from companies like Prospa, Brass and Sparkle.
Each company claims that they are not competitors. First, they believe that there is enough market for everyone to coexist. They won’t admit that their products are superior, but they do believe it.
Ghansah said, “I believe that one way we differentiate ourselves is by credit flexibility in terms speed of access and how quickly you can draw on credit.” It’s also flexible in terms how you can take it out and pay it back the next day.
Ghansah stated that Float, already in Ghana and Nigeria and planning to use the funds to create organizations in Kenya, South Africa, and the United States by the end of the year.
The company will use the money to improve its cash management platform, and launch new credit solutions that are targeted at specific industries and business verticals.