Float, a Ghanaian fintech startup that provides corporate credit lines has secured $17 million in funding, which it will use to expand its capabilities geographically.
The seed round consisted of a $7 million equity investment and a $10 million debt investment.
Cauris provided the debt financing.
Tiger Global and JAM Fund, the investment firm of Tinder co-founder Justin Mateen co-led the equity bit.
Kinfolk, Soma Capital, Ingressive Capital, and Magic Fund are among the other VC firms investing in the equity round.
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 were among the angel investors who attended.
Jesse Ghansah the CEO, started the company, formerly known as Swipe, with Barima Effah in 2020. After that, they rebranded the company to Float.
In June 2021, they launched their product.
In 2016, the chief executive came up with the idea for the YC-backed Ghanaian fintech while working at OMG Digital, a media firm he created that also went into YC.
“We needed financing, so we got an overdraft from a long-term partner bank where we’d done over $100,000 in business.”
In an interview with TechCrunch, the two-time YC founder said, “The bank required us to deposit 100% collateral in cash before they could give us the overdraft.”
“To make ends meet, I also recall borrowing money from loan sharks at astronomical interest rates, sometimes as high as 20% each month.”
“As a result, I decided to use Float to tackle similar problems.”
According to research, more than 51 percent of the 44 million formal SMBs in Sub-Saharan Africa believe they need more funding than they can get to expand their firms.
Some of these enterprises can’t acquire loans from traditional banks, so they turn to Float for help.
Float includes software solutions for businesses to manage accounts and wallets in one dashboard, as well as automate invoices, vendor or supplier payments, and invoice collections, in addition to flexible credit lines for businesses to bridge cash flow shortages.
The company aspires to be Africa’s “financial operating system” for small and medium-sized businesses.
Invoice advance, opening a business account, payment linkages, budget management, and spend cards are among the platform’s other capabilities.
Revenue advances and fast payouts are two new features that the company has lately launched.
With the latter, Float hopes that small firms can use its platform to rapidly access their profits rather than relying on gateways, which can take days to process.
Its invoice factoring service assists firms with outstanding invoices in receiving payment.
All of these elements, according to Ghansah, provide numerous types of credit for diverse industries and verticals across the continent.
“The major difficulty is that corporate financing requirements are so diverse.”
“The credit needs of a retail firm are significantly different from the credit needs of a services business, or the credit needs of agriculture, business, pharmaceutical, or medical supply industries,” the CEO explained.
“As a result, we’re attempting to figure out which credit products are best for various verticals. So that’s what we’ve been working on up to this point.”
Hundreds of organisations from a variety of industries have signed up for Float’s cash flow management and expenditure platform in the 7 months since its introduction, including retail and manufacturing, fintech, e-commerce, media, and health.
In that period, Float has spent $10 million on credit and made financial advances to enterprises.
The corporation says that the volume of payment transactions (invoicing and vendor payments) has increased 26 times.
Float isn’t the only African finance startup aiming to become the region’s “operating system” for small and medium businesses.
Other firms include Prospa, Brass, and Sparkle, which provide financial and cash flow support as well as software services to businesses.
Each firm asserts that the others are not competitors.
First, they believe the market is large enough for everyone to coexist.
Second, their products have a superiority complex – but they won’t admit it publicly.
Float takes pride in providing organisations with both financial and software services at the same time.
Then, instead of outright pricey loans, provide conveniently available flexible and short-term working capital.
“I believe that one of the ways we differentiate ourselves is in terms of credit flexibility, in terms of speed of access, and how soon you can draw down on credit,” Ghansah added.
“And then, for example, it’s flexible in terms of how you may take it out for a day and then pay it back the next day.”
Ghansah added on the call that Float, which is already present in Ghana and Nigeria, plans to utilize the fresh money to establish organisations in Kenya and South Africa by the second quarter of this year, as soon as it obtains operating licenses.
The money will also be put towards improving the company’s cash management platform and launching new credit solutions targeted at specific business verticals and industries.
In a statement, the CEO said, “Float set out on a mission to deliver increased cash flow and liquidity for millions of businesses throughout the continent to help them expand and fulfill their true potential.”
“With this additional capital, we will continue to improve both our credit and software solutions in order to provide the best possible service to our rapidly expanding customer base.”
“We’re thrilled to be Africa’s preferred growth partner.”