The B2B digital marketplace is one of the fastest-growing industries in sub-Saharan Africa, and Pastel, Nigerian bookkeeping and digital platform isn’t left out.
Pastel, which has been operating under the radar for more than a year, has announced a $5.5 million seed raise sponsored by TLcom Capital, a pan-African venture capital firm. Other VC firms that took part in the seed round include Global Founders Capital (GFC), Golden Palm Investments, DFS Labs, Ulu Ventures, Plug and Play, and Soma Cap. Last year, the business raised a pre-seed funding of $620,000 from several of its current investors.
Pastel, formerly known as Sabi Cash, was created by Stanford graduate students Abuzar Royesh, Olamide Oladeji, and Izunna Okonkwo. In an interview, co-founder and Chief Growth Officer (CGO), Okonkwo explained that they had a similar interest in developing solutions for micro and SMBs in emerging markets, particularly in their own countries.
The Nigerian tech startup, like its counterparts, TradeDepot, Sabi, and Omnibiz, has raised millions of dollars to help retail businesses. These startups have helped thousands of these businesses to keep track of their purchases, cash flow, payments, and access capital. Other startups are dedicated to creating software and apps to aid the bookkeeping and tracking process.
The digitization of the operations of small and medium businesses (SMBs) offering retail services in Africa is gradually on the rise. According to reports, the industry comprises about 40 businesses of varying sizes collectively worth over $200 billion. Establishments offering retail services range from small kiosks and open-air markets to larger stores and supermarkets. These businesses sell varying goods and services including stationery, food, groceries, household items, and appliances.
Pastel and its Services
The company’s flagship product, Sabi (different from another B2B e-commerce company), is a digital bookkeeping app that enables small businesses to track and manage their transactions and customers, gain insights into their cash flows, issue receipts, and manage debited customers.
Small businesses in Nigeria have remained offline for years, keeping important information and data on paper or ledgers offhand. Nine out of ten small businesses in the nation fail within the first five years due to all these inefficiencies, which take up time, result in mistakes, and affect cash flow and finances. These companies can save money and digitally streamline their processes with the aid of bookkeeping systems like Pastel’s.
Pastel stands out because, unlike other platforms that have bundled several features into one app, they chose to build standalones: Quick Receipt and Pastel Financing.
“Our thought process was as soon as we got traction, the next step was to capture some value. So we added features to the Sabi app and what we’re building now is a little bit more,” Okonkwo said, explaining the company’s decision to create three stand-alone platforms instead of merging them all into one app.
“The way we’ve thought about it is, as opposed to creating a super app that a lot of other fintech have or are in pursuit of, we are taking a more platform approach, meaning that any Pastel user can sign up with any of our apps with the same login and access all of the other solutions that we’re providing,” he added.
The Quick Receipt app provides over 60,000 active merchant users with simple invoicing and receipts solutions to scale their businesses. The SwiftMoney app, on the other hand, uses regional saving organizations known as ajo in Nigeria to finance enterprises. Both standalone have been covertly developed by Pastel Financing for the past three months.
Ajo or esusu is a well-known financial arrangement in Nigeria where a group of individuals gives money to a leader who then stores the money on their behalf at regular intervals. They might do this to access a huge pool of credit or to save money toward a certain objective, among other motives.
Okonkwo believes that Pastel stands out from the competition because of its product-centric strategy. “As a team, we are taking a product-led growth approach where we iterate after doing massive amounts of research into how users are using the solutions and what they are asking for,” the co-founder said. The new capital will assist Pastel in increasing its efforts in this area as it looks to expand its product offerings and develop more productivity and finance management features and tools around group savings, loans, and payments for small businesses.
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