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.
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. 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.