In Nigeria, there are over 40 million micro-businesses in connection with banking services in some form or the other. Although some of these businesses Lodged bank accounts, gaps exist in how banks use the data available to meet the needs of each business.
Presenting a series of transactions, with banks All of these businesses are required in the form of statements. They care less about providing them with insights and growth opportunities about their customers and products.
A fintech startup, Prospa wants to change that and has started tapping into this market. In March, the company was one of 10 African startups participating Y Combinator’s Winter Batch. a fA few months before graduation, the startup, combining both the worlds of banking and business management tools for micro and small businesses, has closed a $3.8 million pre-seed round.
prospa was established by Frederick Obasi, Chioma Ugo and Rodney Jackson-Cole. As a serial entrepreneur running businesses in tech and media, Obasi experienced how difficult it was to simultaneously operate and banking in Nigeria.
Banks were only concerned with providing certain financial services, so people like Obasi had to look for software or personnel to carry out the operational parts of their business.
For For someone who runs a large business with plenty of cash, it’s easy to hire employees or buy software. Representative Work. But this can be an expensive and difficult task for small businesses; That’s why most of them struggle.
Sensing an opportunity, Obasi and his team launched ProSpa on the premise that they would cheaply Solve the needs of these small business owners in banking and software.
“When I left my previous business, I wanted to do something Really Big and something that I knew the problem from inside. So I started ProSpa,” Obasi told over a call.
the founders Product built between June and September 2019 and went live in October. Since then, the company has sold YC . Secretly acquired customers even when they came in. Obasi explains he wanted ProSpa to have zero biological traction Development driven by publicity and media noise.
“We like to think a Really long game. we Really Wanted to have Really Test hypotheses, build a real business with revenue and understand what we were doing. Then came the COVID period and we started seeing enough traction,” he said.
But when the company started to get some buzz, people had specific details about ProSpa as “a neobank for small businesses.” On the call, CEO Obasi looks forward to dispelling that notion. Along with providing banking services, he says, ProSpa offers invoicing tools, inventory management, employee and vendor management, an e-commerce store, and payroll features..
“Banking is a small part of what we do. We know was kept In the Neobank category, but we see our product as 10% banking and 90% software. So the experience is very different from what you would get from a Neobank and the use case for ProSpa users is quite different,” he said.
ProSpa focuses on freelancers and entrepreneurs, acting as the “operating system” for their businesses.
Registered Bon utilities The platform gets an account number and access to other features that Prospa offers. For unregistered business, ProSpa takes them through the process of formalizing their business and providing bank accounts. However, in the grand scheme of things, this section is more to enter an upsell..
Speaking of traction, Obasi says the company has thousands of businesses and is growing 35% month-on-month. And from a non-banking standpoint, ProSpa has managed more than 150,000 product catalogs, while small businesses have sent 360,000 invoices to the platform.
Again the pricing depends on the turnover of the business. For example, a business with a turnover of 100,000 (~$200) is not expected to pay any membership fees to Prospa. but Businesses with more than 100,000 turnover pay fees between 3,000 (~$6) and 5,000 (~$10) monthly.
Over the past year, African VCs have seen incredible numbers from all corners of the continent in various stages of investment. Prospa’s pre-seed investment, for example, is currently the largest of its kind in Nigeria and sub-Saharan Africa. In Africa, only Egyptian fintech Telda has raised a big round.
Obasi believes that the company’s understanding of the market and what it wants to achieve was the main reason why it could command such a price, which, according to him, was almost four times oversubscribed..
Investors in the round include VCs such as Global Founders Capital and Liquid2 Ventures. Global fintech founders such as Imam Akhund of Mercury, Karim Attiyeh of Ramp and executives from Teachable, Square, Facebook and NuBank also participated in the round..
Seeing the likes of Akhund and Atiyah on Prospa’s cap table might lead some to suggest that Prospa was favored because the company is building a replica of those businesses in Nigeria.. HoweverDespite the similarities, says Obasi, Prospa isn’t making products for startups.
“The US doesn’t have a huge startup ecosystem where you can basically Grow a Billion Dollar Company right now Service of YC Companies. We don’t have that here. Were Really Manufacturing for the backbone of the economy, which are small and micro businesses. By being able to talk to investors and build relationships with them, we made it clear that we are not an American imitator,” he said, asking whether ProSpa can be compared with Mercury and other US startup-focused financial products.
Prospa plans to use its new capital to double and expand with acquisition strategies to acquire more customers. In addition, the company plans to hire more talent, particularly in product and engineering.