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.
CEO Jesse Ghansah started the company, formerly known as Swipe, with Barima Effah in 2020, and following its rebrand as Float, went live with its product in June 2021. The idea for the YC-backed Ghanaian fintech came during the chief executive’s time at OMG Digital, a media company he founded that also got into YC, in 2016.
“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,” the two-time YC founder told TechCrunch in a June interview.
“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.”
It’s an identical problem for more than 51% of 44 million formal SMBs in sub-Saharan Africa who say they need more finance than they can access to grow their businesses, per research. Float provides credit to some of these businesses that find it challenging to get from traditional banks.
In addition to flexible credit lines for businesses to cover cash flow gaps, Float also has software tools for businesses to manage accounts and wallets in one dashboard, as well as automate bills, vendor or supplier payments and invoice collections. The company aims to serve as the “financial operating system” for Africa’s small and medium businesses.
Other features on the platform include invoice advance, opening a business account, payment links, managing budgets and spend cards.
The company has also introduced some more features recently: revenue advances and instant payouts. With the latter, Float wants small businesses to use its platform to tap into their revenues instantly instead of using gateways, which take days to settle. Its invoice factoring helps businesses with outstanding invoices get cash advances.
Ghansah stated 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.”
In the seven months since Float’s launch, the cash flow management and spend platform has onboarded hundreds of businesses in a wide range of industries — retail and manufacturing, fintech, e-commerce, media and health.
Float has also hit $10 million in credit spend and cash advances to businesses in that time. The company claims to have seen its payment transaction (invoicing and vendor payments) volume, in eight figures, increase 26x.
Float isn’t the only African fintech newcomer with plans to be the “operating system” for small and medium businesses in the region. Prospa, Brass and Sparkle are a few of these startups that provide financial and cash flow support and software services to businesses.
Each company claims not to see the others as competition; first, they believe the market is big enough for all parties to coexist. Second, there’s a feeling of superiority in their products — though they won’t say this publicly.
For Float, it prides itself on giving businesses access to financial and software services simultaneously. And then in providing readily available flexible and short duration working capital instead of outright expensive loans.
“I think that a part of how we differentiate ourselves is just how flexible our credit is, in terms of the speed of access, how quickly you can draw down on credit,” said Ghansah. “And then, like it’s flexible in terms of how you can just take it out for a day and then repay the next day, for example.”
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.”
Culled from TechCrunch
Is a Free VPN Safe to Use? Exploring the Risks and Benefits
In our current digital age, online privacy and security have become an importantt concerns for internet users around the world. With the increasing prevalence of cyber threats and data breaches, people are actively seeking ways to protect their online activities. Virtual Private Networks, or VPNs, have gained popularity as tools that promise safeguarding your digital footprint. While there are many VPN options available, free VPNs, in particular, have garnered significant attention due to their accessibility. In this article, we will explore the risks and benefits of using a free VPN, with a focus on free VPN for Windows.
Understanding VPNs: What Are They?
Before delving into the world of free VPNs, let’s understand what a VPN is and how it works. A VPN is essentially a service that establishes a secure, encrypted connection between your device (in this case, your Windows PC) and a remote server. This connection masks your IP address and encrypts your internet traffic, making it difficult for third parties, such as hackers or government agencies, to monitor your online activities.
The Benefits of Using a Free VPN
Enhanced Privacy: One of the primary advantages of using a free VPN is the boost in online privacy. Your internet service provider (ISP), websites, and even potential cybercriminals won’t be able to track your online behavior when you’re connected to a VPN.
Bypassing Geo-Restrictions: Free VPNs often allow users to access geo-restricted content. For example, if a streaming platform or website is only accessible in certain regions, a VPN can make it appear as though you’re browsing from an eligible location.
Protection on Public Wi-Fi: When you connect to public Wi-Fi networks, your data becomes vulnerable to interception. A free VPN can add an extra layer of security when you’re using unsecured public Wi-Fi at cafes, airports, or hotels.
The Risks Associated with Free VPNs
Data Logging: Many free VPN providers track and log user data. This can include your online activities, websites visited, and even personal information. This data may then be sold to third parties or used for targeted advertising.
Inadequate Security Measures: Some free VPNs might not implement robust encryption protocols, leaving your data vulnerable to breaches or leaks.
Limited Features: Free VPNs often come with limitations, such as slower connection speeds, data caps, and fewer server locations. These restrictions can hinder your online experience.
Malware and Adware: Some free VPN services have been found to include malware or adware in their software, potentially infecting your device.
Uncertain Jurisdiction: Free VPN providers can be based in countries with lax data privacy laws, which means they may not be obligated to protect your data.