Float, a Ghanaian startup providing credit lines for business has raised $17 million in a seed funding round. The startup received $7 million in equity and $10 million in debt from its investors. Tiger Global and JAM Fund co-led the $10 million equity round, and other venture capital firms that participated includeKinfolk, Soma Capital, Ingressive Capital and Magic Fund. Angel investors that participated include Michael Seibel of Y Combinator, Horizon Partners Sandy Kory, Founders of Ramp Karim Atiyeh and Eric Glyman, mPharma’s Gregory Rockson and Zach and Ross Lipson of Dutchie. Cauris Finance provided the $7 million debt financing.
Float, formerly known as Swipe, was started by Jesse Ghansah (the company’s CEO) with Barima Effah in 2020. The startup rebranded to Float and took its product live in June 2021. According to Jesse Ghansah, the idea for float started when he was at OMG Digital, another company he co-founded. According to him, “We needed credit and proceeded to get an overdraft from a long-term partner bank where we had transacted more than $100,000. But the bank wanted us to deposit 100% collateral in cash before they could give the overdraft. I also remember taking money from loan sharks with ridiculous interest rates, sometimes as high as 20% a month, to meet payroll. That threw me into solving those problems with Float”.
The problem that Jesse Ghansah faced which made him start Float, is faced by a handful of small and medium businesses. There are many businesses that need finance to scale their operations and unfortunately, financing is limited. For those that may have access, they face the problems of collateral, interest rates, etc., which could be very detrimental to their businesses.
Float also provides other features in addition to credit lines for businesses that include software tools to manage accounts, automate bills, make payments to suppliers and collect invoices, invoice advance, business account opening, payment links, etc.
All these features work together to provide various forms of credit across industries in Africa but “The big challenge is that credit needs of businesses are very different. The credit needs of retail are very different from the credit needs of a services business, or the credit needs of agriculture, business or pharmaceutical or medical supplies businesses”, Float’s CEO said.
“So we are trying to dig deep into which credit products work for certain verticals. And so that’s what we’ve been working on so far”, he added.
The startup is present in Nigeria and Ghana and plans on entering Kenya and South Africa by the second quarter of 2022. It has hit $10 million in credit spending and cash advances to business since it started and says that its payment transaction volume has increased by 26 times.
The recently-acquired funds will also be targeted at improving its cash management platform and launching new credit products. A statement by Float’s CEO reads “Float set out on a mission to provide more cash flow and liquidity for millions of businesses across the continent to help them grow and reach their true potential. With this new funding, we will continue to refine both our credit and software products to deliver the best experiences for our fast-growing customer base. We are excited to be the growth partner of choice for businesses in Africa”.
Float’s goal remains to serve as the “financial operating system” for businesses in Africa and although other startups in the same field have begun to appear, Float believes that it’ll thrive as a market leader. “I think that a part of how we differentiate ourselves is just how flexible our credit is, in terms of the speed of access, how quickly you can draw down on credit”, the startup’s CEO said.