Pastel, a Nigerian bookkeeping and digital platform for retailers, raises $5.5M led by TLcom – TechCrunch

There’s no finish to digitizing the operations of small and medium companies (SMBs) within the conventional retail sector throughout sub-Saharan Africa. In Nigeria alone, this trade, value greater than $200 billion, consists of over 40 million companies of various sizes, in accordance with reports.

Conventional retail within the nation includes small kiosks and open-air markets promoting varied merchandise from meals and drinks and groceries to non-public care merchandise and stationery. B2B digital market upstarts corresponding to TradeDepot, Sabi, and Omnibiz have raised tens of millions of {dollars} to assist 1000’s of those companies to buy stock from producers whereas offering options to trace money stream, funds, and entry capital. In the meantime, one other group of startups offers software program and apps to help these retailers with their bookkeeping and gross sales monitoring processes, amongst different options.

Pastel, a startup within the second class which has been underneath the radar for greater than a 12 months, is asserting a seed increase of $5.5 million led by pan-African enterprise capital agency TLcom Capital. Different VC corporations corresponding to International Founders Capital (GFC), Golden Palm Investments, DFS Labs, Ulu Ventures, Plug and Play, and Soma Cap additionally participated within the seed spherical. The startup raised a $620,000 pre-seed final 12 months from a few of its current traders.

Previously Sabi Money, Pastel was based by Abuzar Royesh, Olamide Oladeji and Izunna Okonkwo, Stanford graduate college students who, in accordance with co-founder and chief progress officer (CGO) Okonkwo, in an interview with TechCrunch, shared comparable pursuits in constructing options for micro and SMBs in rising markets, significantly from their nations of origin: Afghanistan (Royesh) and Nigeria (Oladeji and Okonkwo).

The corporate’s flagship product, Sabi (to not be confused with a B2B e-commerce market with the identical identify), is a digital bookkeeping app that enables small companies to observe and handle their transactions and clients, get insights into their cashflows, situation receipts, and successfully handle clients who owe them.

Small companies in Nigeria have stayed offline for years storing data and important knowledge offhand, on paper or ledgers. All these inefficiencies, asides from being time-consuming, result in errors and impacts money stream and finance, which is why 9 out of 10 small companies within the nation fizzle out within the first 5 years. Bookkeeping options corresponding to Pastel’s assist these companies streamline processes digitally and get monetary savings.

L-R: Izunna Okonkwo (CGO), Olamide Oladeji (CPO) and Abuzar Royesh (CEO)

The bookkeeping and buyer relationship administration Pastel launched final 12 months recorded over 100,000 service provider sign-ups by December 2021, mentioned Okonkwo. The free app at the moment has greater than 45,000 lively service provider customers. Pastel has lately added extra options for retailers to seize extra worth on this chain. Nevertheless, not like different platforms which have bundled a number of options into one app, Pastel selected a distinct technique and made every product standalone: Quick Receipt and Pastel Financing.

“Our thought course of was as quickly as we bought traction, the following step was to seize some worth. So we added options to the Sabi app and what we’re constructing now could be a little bit bit extra,” Okonkwo mentioned concerning the firm’s resolution to construct three standalone platforms as a substitute of coupling all of them into one app. “The best way we’ve considered it’s, versus creating an excellent app that numerous different fintechs have or are in pursuit of, we’re taking a extra platform strategy, which means that any Pastel consumer can enroll with any of our apps with the identical login and entry all the different options that we’re offering.”

The Fast Receipt app offers companies with easy invoicing and receipts instruments and over 60,000 lively service provider customers. Alternatively, the SwiftMoney app, which leverages native saving teams known as ajo in Nigeria to supply financing for companies, has been stealthily constructed for the final three months by means of Pastel Financing.

Ajo or esusu is a well-liked monetary scheme in Nigeria the place a bunch of individuals contributes cash in various intervals to a pacesetter who shops the money on their behalf. They’ll have completely different functions for participating on this exercise, corresponding to saving in the direction of a selected objective or accessing a big pool of credit score.

The ajo teams on Pastel have a pacesetter who, along with participating with the formalities of money assortment and depositing money in a [Pastel] checking account, downloads the app to arrange profiles for members. So when any of the members (which on this case are retailers) need to entry loans, the chief requests on the app after which sends the cash to them earlier than amassing repayments when due.

Pastel solely began making income lately and does so by charging curiosity and a small price on these loans; it additionally has entry to financial savings to make use of as a float for mortgage financing. The one-year-old firm plans to boost debt capital by January to enrich this course of, Okonkwo mentioned. “We’ve not raised now as a result of we’ve not scaled out our mortgage product. However the plan is by January, as soon as we’ve expanded a lot sooner, we’ll increase debt or associate with an current debt participant, after which grow to be the origination device.”

The U.S.-headquartered and Lagos-based Pastel isn’t the one startup working on this line of enterprise. Within the final 24 months, a number of startups throughout West Africa, together with Kippa, Bumpa (which lately launched a social commerce integration with Meta), OZÉ, and Bamba, have ventured to serve small and medium companies with bookkeeping instruments and credit score. Whereas they provide nearly similar options corresponding to dealing with bookkeeping, managing stock and monitoring gross sales, Okonkwo argues that Pastel’s product-centric strategy distinguishes the corporate from others.

“As a staff, we’re taking a product-led progress strategy the place we iterate after doing large quantities of analysis into how customers are utilizing the options and what they’re asking for,” mentioned the co-founder. The brand new capital will help Pastel in rising its efforts on this space because it seems to increase its product choices and develop extra productiveness and finance administration options and instruments round group financial savings, loans and funds for small companies.