Qwili, a startup that provides a hybrid sales product to micro and small traders in South Africa, raised $1.2m in seed funding a year after closing an undisclosed pre-seed round.
E4E Africa, a South African venture capital firm, led the round, which welcomed participation from other companies such as Strat-Tech, Next Chymia, Untapped Global and Codec Ventures and angels like Ashwin Ravichandran and Kanyi Maqubela .
In a statement shared with TechCrunch, Qwili said it will use the investment for app development, new hires (improved operations and development capabilities), and hardware production.
The company’s hardware is a low-cost NFC-enabled smartphone called Qwili Pula that allows merchants to send and receive payments. The platform’s software (which can be downloaded as an app on any smartphone or installed automatically on Qwili’s phones) turns these smartphones into point-of-sale devices allowing merchants to sell value-added services. added value such as data and pay-TV subscriptions, groceries and clothing to their customers. CEO Luyolo Sijake told TechCrunch on a call that Qwili’s phones cost between $60 and $70.
Qwili says its target audience is digitally excluded and unbanked customers. Its mobile app serves as a “digital sales portal” through which micro and small merchants (agents) can facilitate the sale of value-added goods and services, the company said in a statement.
At first, Sijake and his co-founders Thandwefika Radebe and Tapfuma Masunzambwa launched Qwili as a different idea. They used a business-to-customer model in which Qwili sold these devices to individual users who used the platform’s digital wallet to purchase value-added services. The plan was for users to mine the phone and Qwili would take a cut of each transaction, the phone would eventually come to market and users could buy them from Qwili. Turns out that didn’t work, hence the pivot to traders.
“During these early stages, the phone didn’t pay for itself quickly enough and the adoption of digital services wasn’t high enough. But what happened was that people started using the digital wallet to sell pay-TV, electricity and other value-added services to people around them,” said the general director. “They’ve started using the phone in ways we didn’t anticipate, which makes more business sense. That’s how we came up with this agent model: basically people using the device and the software to sell to others instead of buying services for themselves. »
Qwili sold over a thousand smartphones to end users before the pivot. Its business-to-business model has also gained momentum, as 500 micro and small merchants use the hybrid platform (about half use Qwili’s NFC-enabled smartphones). Its typical business customer is a storeless seller who sells digital products to immediate communities and networks informally. Purchasing a POS device with limited functionality does not make economic sense for this category; on the other hand, a smartphone on which they can collect payments and advertise products via WhatsApp is sufficient.
Sijake said Qwili does not profit from the sale of smartphones, as it is simply a tool for the company to impact merchants who use the platform for trading purposes. He takes a commission on each sale made on his application. “We all want to enable people who are currently digitally excluded to participate in the various forms of value that digital inclusion has to offer,” he said. “So the real barrier to that has been the hardware: a reliable quality smartphone being too expensive, which means mobile internet access is too expensive. So we hope to continue to offer smartphones at a lower price. at cost.”
Qwili, in a statement, says its impact is being felt in three areas: First, agents on the platform have access to an alternative and flexible source of income through the commission they earn on sales made through Qwili. Second, clients of these agents see the time, efficiency, and financial barriers between them and the services they need greatly reduced. And third, value-added service providers have facilitated access to a previously offline market. Qwili says the funding allows him to accelerate the pace at which he adapts his operations to see his effect increase in these three areas.
According to Sijake, Qwili currently processes a monthly GMV of $75,000 from its 500 merchants. However, the South African platform – which has seen strong revenue growth of more than 300% from the first to the second quarter of 2022 – expects to get those numbers up to $1 million from 3,000 merchants by the end of the year after expanding into neighboring Botswana.
“We believe Qwili is both highly scalable and high impact. Qwili agents love the entrepreneurial opportunity Qwili provides them while giving their community access to e-commerce and goods and services at fair prices” , says Bastiaan Hochstenbach, co-founder and managing partner at E4E Africa on investment, “Qwili’s founding team is exceptional and the business model fits perfectly with E4E Africa’s aspiration to support diverse founders in building ‘a prosperous, innovative and inclusive Africa.’