Pastel, a Nigerian book and digital platform for sellers, raises $5.5 million led by TLcom – TechCrunch

There is no end to digitizing the operations of small and medium-sized businesses (SMBs) in the brick-and-mortar sector across sub-Saharan Africa. In Nigeria alone, this industry, worth more than $200 billion, includes more than 40 million different businesses large and small, according to report.

Traditional retail in the country consists of small kiosks and open-air markets selling a variety of products from food and beverages and groceries to personal care products and stationery. Emerging B2B Digital Markets Like TradeDepot, Sabiand Omnibiz has raised millions of dollars to help thousands of these businesses purchase inventory from manufacturers while providing solutions for cash flow tracking, payments, and access to capital. Meanwhile, another group of startups offers software and apps to assist these retailers with their sales tracking and bookkeeping processes, among other features.

Pastela startup in the second category that has been on the radar for over a year, is announcing a $5.5 million seed round led by an all-Africa venture capital firm TLcom Capital. Other VC firms such as Global Founders Capital (GFC), Golden Palm Investments, DFS Labs, Ulu Ventures, Plug and Play and Soma Cap also participated in the seed round. The startup raised $620,000 in reservations last year from some of its existing investors.

Formerly Sabi Cash, Pastel was founded by Abuzar Royesh, Olamide Oladeji and Izunna OkonkwoStanford graduates, according to co-founder and Chief Growth Officer (CGO) Okonkwo, in an interview with TechCrunch, shared similar concerns in building solutions for micro and SMB in emerging markets, especially from their countries of origin: Afghanistan (Royesh) and Nigeria (Oladeji and Okonkwo).

The company’s flagship product, Sabi (not to be confused with the B2B e-commerce marketplace of the same name), is a digital accounting application that allows small businesses to track and manage transactions and their customers, better understand their cash flow, issue receipts. and effectively manage the customers who owe them.

Small businesses in Nigeria have been going offline for years to store essential information and data, either on paper or a ledger. All of these inefficiencies, in addition to being time-consuming, lead to errors and affect cash flow and finances, which is why nine out of 10 small businesses in the country fail in the first place. the first five years. Bookkeeping solutions like Pastel’s help these businesses streamline digital processes and save money.

LR: Izunna Okonkwo (CGO), Olamide Oladeji (CPO) and Abuzar Royesh (CEO)

Okonkwo says the bookkeeping and customer relationship management tool Pastel launched last year recorded more than 100,000 merchant sign-ups by December 2021. The free app now has more than 45,000 users. commercial is active. Pastel recently added more features for merchants to capture more value in this chain. However, unlike other platforms that have bundled multiple features into one app, Pastel chose a different strategy and made each product stand-alone: Get it fast and Sponsored Pastel.

“Our thought process happens as soon as we get traction, the next step is to capture some value. So we’ve added features to the Sabi app and what we’re building now is a bit more,” Okonkwo said of the company’s decision to build three independent platforms instead of three platforms. combine them all into one application. “The way we think about it is that, as opposed to creating a super app that a lot of other fintechs have or are pursuing, we are taking a more platform approach, which means that any user Any Pastel can register with any of our applications with the same login and access to all the other solutions we are offering. “

The Quick Receipt app provides businesses with simple invoicing and receipt tools and over 60,000 active merchant users. On the other hand, the SwiftMoney app, which leverages local savings groups called ajo in Nigeria to finance businesses, has been surreptitiously built over the past three months through Pastel Finance.

Ajo or esusu is a popular financial scheme in Nigeria where a group of people contribute money at different intervals to a leader, who stores cash on their behalf. They may have different purposes for engaging in this activity, such as saving for a specific goal or accessing a large source of credit.

Pastel ajo groups have a leader who, in addition to participating in the collection and cashing procedures, [Pastel] bank accounts, download the app to set up profiles for members. So when any member (in this case merchants) wants to access the loans, the leader requests on the app and then sends them money before receiving the repayment when due .

Pastel has only recently started generating revenue and does so by charging interest and a small fee on these loans; it also has access to savings to use as a floating loan for loans. The more than one-year-old company plans to raise debt capital in January to supplement the process, Okonkwo said. “We are currently unable to raise funds because we have not expanded our lending product. But the plan is that in January, when we’ve expanded much faster, we’ll either raise debt or partner with an existing debtor, and then become the starter. “

US-based and Lagos-based Pastel aren’t the only startups in this business. Over the past 24 months, several startups across West Africa, including Kippa, Bumpa (which recently launched social commerce integration with Meta), OZÉand Bamba, has ventured into serving small and medium-sized businesses with its bookkeeping and credit tools. While they offer nearly identical features such as bookkeeping, inventory management, and sales tracking, Okonkwo argues that Pastel’s product-centric approach distinguishes company with other companies.

“As a team, we are taking a product-driven growth approach where we iterate after doing a great deal of research on how users are using the solutions and what they are doing. what they’re asking for,” said the co-founder. The new funding will assist Pastel in ramping up their efforts in this area as they look to expand their product offering and develop more productivity and financial management features and tools around team savings, loans and payments for small businesses.

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