Most small and medium-sized enterprises (SMEs) in supply chains across different sectors in Africa fulfill orders within days but receive invoices after several weeks or even months. It’s such an inefficient way of doing business that it ends up causing cash flow problems, coupled with fragmented processes for collecting and tracking payments.
Recently, startups have taken a top-down approach by singling out a particular industry and offering solutions to SMEs within it. One such startup is Pivo, which helps freight carriers get paid faster by providing bank account, debit card, and digital invoicing tools that track payments.
The startup, founded by Nkiru Amadi-Emina and Ijeoma Akwiwu in July 2021, announces today that it has closed a $2 million funding round. Pivo, in a statement, said it intended to use the funding to upgrade existing products, build new ones, hire talent and expand outside of Lagos, its first market and other African countries, particularly in East Africa.
Pivo provides financial services – credit, payments and expense management – to SME suppliers within large manufacturing supply chains, an industry Amadi-Emina, the chief executive, plied her trade before starting the startup from a year, which has raised $2.55 million since launch.
In 2017, Amadi-Emina launched an on-demand delivery platform for e-commerce brands in North and Central Africa, which was later acquired by Kobo360, one of the largest e-logistics players in Africa. It was during her time at Kobo360 – first as a corporate account manager and until her departure as head of port operations – that she witnessed the glaring liquidity issues that existed at both ends of the logistics supply chain. Truckers need cash advances from logistics companies such as Kobo360, Lori Systems, and MVX to move goods; meanwhile, these companies also require manufacturers to pay on time for the distribution of goods to truckers.
“In most cases, we found that cash flow management was the biggest pain point for these companies — it was either non-existent or only on paper,” Amadi-Emina told TechCrunch in an interview. “Much of the payments made were made in cash and we thought about building a digital bank that provides financial services aimed at solving these different problems for SME sellers who operate within large manufacturing supply chains, in starting first with the logistics providers, and then gradually moving into the pockets of the providers and at the end of things.
Pivo leverages manufacturing supply chain relationships and deploys financial services to the SMEs within them, primarily truckers in this case. Its platform’s credit game, Pivo Capital, serves as an advance payment alternative for truckers and allows logistics companies to meet all upfront costs – such as diesel and driver’s allowance – typically incurred during operations. Pivo Business, its payment reconciliation arm, helps these small businesses facilitate payments through peer-to-peer transfers and track payments with debit cards with spending controls. Amadi-Emina explained that all of these features will drive Pivo to capture a significant chunk of a $4 billion addressable market opportunity.
It’s a huge market where Pivo has the first-mover advantage. And while there doesn’t appear to be any notable challengers in the freight sector, startups such as Duplo, another YC alumnus, whose clients are fast-moving consumer goods (FMCG) SMEs, make up serious long-term competition as platforms look to other sectors to replicate growth. That said, there are also concerns in his industry that e-logistics companies could build a similar platform in-house (eg Kobo360’s Payfasta).
“As a plug-and-play, integrated solution, we’ve always been more complementary than competitive,” the general manager told TechCrunch when asked about Pivo’s chances if e-logistics companies launch a product. competitor. “If you look at e-logistics companies, the goal for them is to move towards a platform approach and if at some point they want to unlock financial services, we tell them to come to PIVO for that at instead of going to the traditional banks.”
The freight carrier-focused digital bank currently serves around 500 SMEs as direct customers and generates revenue by charging interest on capital and fees on payments processed. Amadi-Emina said that Pivo Capital has disbursed more than $3 million to SMEs and is currently seeing a 98% repayment rate while trading volume on Pivo Business has increased by more than 400% between April and September this year. year. The startup has recorded a total volume of $4.7 million from July to date.
What’s next for the female-led startup? More growth, according to its CEO. The company is working on Pivo+, a set of value-added services that will transform Pivo into a full-fledged financial services platform. Daniel Block, an investment director at Mercy Corps, one of the investors in this round, thinks Pivo is designed to become such a platform because the startup’s “commitment to blockchain SMEs Unattended supply would allow it to quickly carve out a deep moat in the competition. fintech lending space.
Other investors in the round include Precursor Ventures, Vested World, FoundersX and Y Combinator, where Amadi-Emina and Ijeoma Akwiwu have accomplished an impressive feat of being the first all-female team the famed accelerator has backed in Nigeria – and the second in Africa after the defunct Ghanaian startup Tress.
“It’s a good thing we were able to break through that barrier as a female-led start-up. Entering YC gave us validation as founders and cemented the fact that women can be at the helm. business in the tech space,” Amadi-Emina said of the achievement. “Tech is a male-dominated space and there are all these man-made barriers that serve to keep women out. Coming into YC, with the news amplified not only locally but internationally, means more people can see strong female representation coming from Nigeria We are happy that a female founder somewhere is looking at us and realizing that it is possible that if you keep working hard, applying yourself and having the numbers to back it all up, you can achieve what you set out to do.”