Sava, an expense management platform for African businesses, gets $2 million in pre-seed support – TechCrunch


When Yoeal Haile launched Aspira, a loan service, in 2017, he wanted to give Kenyans more choice to buy things on credit. The business eventually grew to the point where it offered over $1 million in loans to customers per month. Yet Haile noticed a bigger underserved opportunity on the other side of the spectrum: small and medium-sized enterprises (SMEs).

The retailers on the Aspira platform, like most African businesses, struggled with cash flow issues and lacked access to affordable credit to grow their businesses. While banks have strict credit policies and don’t care much about small businesses, especially those without a credit history or local track record, informal lenders act like loan sharks to the detriment of these companies.

That said, there are still many loan services that SMEs can access in the market. Earlier this year, Haile and his co-founders Federico Von Bary Landesmann and Kolawole Olajide decided to add to this list starting Save, the South African fintech that raised $2m in pre-seed funding. The pre-seed round included several Africa-focused investors: Quona Capital, Breega, CRE Ventures, Ingressive Capital, RaliCap, Unicorn Growth Capital and Sherpa Ventures.

“During my time at Aspira, when I worked with about 100 retail partners, I noticed that many of them struggled to stay on top of cash flow and then manage their finances,” said Haile to TechCrunch on a call. “Most of them have not had access to the traditional credit market. In the end, since no one was serving them, we saw an opportunity to move from consumer credit to SME and corporate financing. »

Sava highlights two specific issues businesses face regarding expense management and reconciliations. First, companies lack the tools to control their spending. Second, business owners and their teams spend many hours maintaining records and performing manual reconciliations and lack sufficient data to lend prudently.

Haile said his co-founders have also faced similar issues while running their past businesses. And after thinking about possible solutions, they decided to use the expense management model pioneered by Brex, Ramp, and Jeeves to launch Sava.

“The Expense Management model is not only a way to provide the tools that small, medium and large businesses need to manage their financial operating system behind the scenes. But also to be able to capture the data that give you a complete 360 ​​degree picture of a company’s true financial health,” commented CEO Haile. “This is a problem globally, but more so in African markets, given that banks are hesitant to lend in general.When you don’t have a set of data to help support and secure these businesses, that combination leads to businesses closing and the credit gap continuing to grow every year. so what we try to solve with what we build.

A functional credit system and high credit card penetration form the backbone of business spend and expense management platforms. This is why the most important players operate in the United States, Canada and Europe, and even in Latin America. Africa, oOn the other hand, has low credit card penetration, which could be one of the reasons why the continent’s expense management platforms are lagging behind their global counterparts. In 2017, the continent had a credit card penetration rate of 4%.

So, in addition to credit bureaus, spend management platforms like Sava are required to use other mediums to assess consumer and business credit viability. Africa is home to one of the highest mobile money penetrations and has decent usage of bank accounts. As such, Sava, which has yet to launch, claims that it combines bank accounts, mobile wallets, payment and accounting integrations into a single platform.

“If you look at it from a business perspective, you have bank accounts, mobile money accounts, salaries, bills – those are a variety of data points that most financial institutions don’t have. access. And what’s special about our expense management platform is that it brings these different elements together in one software,” commented Haile.

With this, Sava says it will help businesses control expenses using expense management tools, reconcile accounting records, digitize expense reimbursements, and integrate actual budgets and cash flows.

However, the South African fintech still plans to provide credit cards to its customers’ employees as they will form the basis on which the company will provide liquidity to its business customers. “What we’re doing is converting those debit cards into credit cards, which banks don’t offer to businesses,” the chief executive said. “We will give businesses free access to 30 days of credit, and access to a flexible, revolving overdraft facility or working capital loan is a huge gap for thousands of businesses on the continent.”

Sava intends to earn money from interchange fees on credit card transactions, subscription fees when businesses access its platform, and interest income from loans issued. It must also sell certain third-party financial products such as insurance to its customers.

Haile said the expense management platform will launch its beta version in South Africa in the third quarter. South Africa is the largest total addressable market on the continent, where formal businesses have large distributed sales teams and have a more functional credit system to manage spend management solutions. Sava also plans to launch in Kenya in Q4 and over time it will look to expand into other markets like Nigeria and Egypt. Across the continent, Sava faces competition from newcomers offering comparable and vertical services such as Tiger-backed Float, Y Combinator-backed Lenco and Boya, Prospa and Brass.


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