Float, an African startup in Ghana, just received a major amount in funding. With a $17 million in investment, the fintech startup that supplies SMEs with credit facilities wants to expand its services and geographic reach.
For the seed round’s financing, $7 million in equity and $10 million in debt were used for the financing. In addition to Cauris providing debt financing, Tiger Global and JAM Fund, the investment firm founded by Tinder co-founder Justin Mateen, co-led the equity portion of the transaction. Kinfolk, Soma Capital, Ingressive Capital, and Magic Fund are among the venture capital companies that participated in the equity round.
Also present were CEOs of Y Combinator and Horizon Partners as well as Ramp founders Karim Atiyeh and Eric Glyman, mPharma founder Gregory Rockson, and founders of Dutchie LLCs Zach Lipson and Ross Lipson.
Float was started by CEO Jesse Ghansah in 2020, with help from Barima Effah. It changed its name to Float in June 2021, and the company went live with its product in June of that year. The “YC-backed” Ghanaian fintech was born during Ghansah’s stint at OMG Digital, a media firm that also received funding from YC in 2016.
According to a study, over 51% of 44 million formal SMBs in Sub-Saharan Africa need more capital than they can obtain to build their firms. Float gives money to some businesses that can’t get it from traditional banks.
Float also has software tools that businesses can use to manage their accounts and wallets in one place, as well as automate bills, vendor or supplier payments, and invoice collections. This way, businesses can keep track of their cash flow and avoid cash flow gaps. Small and medium-sized businesses in Africa will be helped by this company.
On the platform, there are other things you can do, like get an invoice advance and open a business account. You can also manage budgets and spend cards on the platform.
A lot of new things have been added to the company recently, like revenue advances and instant payouts. It wants small businesses to use its platform instead of gateways, which take a long time to get money from small businesses. Its invoice factoring helps businesses that haven’t paid their bills get cash loans.
These features, according to Ghansah, provide credit to a wide range of African sectors and verticals. More than a hundred companies from various sectors, including retail and manufacturing, finance, e-commerce, media, and health care, have engaged Float since its start seven months ago.
Credit and cash advances to enterprises have also surpassed the $10 million mark. There has been a 26-fold increase in the volume of invoices and vendor payments that the company claims.
Ghanaian fintech, Float, isn’t the only startup aiming to be the “operating system” for small and medium enterprises in the region. Companies like Brass, Prospa, and Sparkle help businesses with their finances and cash flow as well as with software.
Because they believe the market is big enough, none of the parties regards the others as competition. A sense of superiority pervades their products, yet they’re reluctant to admit it publicly.
For Float, it takes great pride in giving businesses access to both financial and software services at the same time. And then, instead of taking out costly loans, businesses can get working capital that is flexible and short-term instead.
With this seed funding, Float, which already operates in Ghana and Nigeria, plans to expand into Kenya and South Africa by Q2 after it receives the necessary operating licences.
Besides that, the company will also use the capital to make its cash management system better and create new credit offerings for different business verticals and industries.
