Sava Africa, a spend management platform located in South Africa, has raised $2 million in pre-seed funding from numerous Africa-focused investors, including Quona Capital, Breega, CRE Ventures, Ingressive Capital, RaliCap, Unicorn Growth Capital, and Sherpa Ventures.
“During my time at Aspira, when I was working with about 100 retail partners, I noticed that a lot of them struggle to stay on top of the cash flows and then manage their finances,” founder Yoeal Haile said. “Most of them were shut out of access to the traditional credit market. Ultimately, with nobody serving them, we saw this as an opportunity to shift from doing consumer finance to doing more SME and business finance.”
The expenditure management platform will launch its beta in South Africa in Q3 of this year as a result of the funding. Sava also intends to start in Kenya in Q4 and, with time, expand into additional regions like as Nigeria and Egypt.
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Investors appeared to be pulled into this round due to the CEO Yoeal Haile’s previous experience running Aspira, a loan service, since 2017. Before the Sava business model was grafted upon it, Aspira had expanded to the point where it was offering over $1 million in loans to consumers weekly.
A Look At What The Startup Does
Sava, founded in 2021 by Yoeal Haile, Federico Von Bary Landesmann, and Kolawole Olajide, focuses on two distinct pain areas that organisations face: expenditure management and reconciliations. One, firms lack the tools necessary to manage their expenses. Two, business owners and their teams devote a significant amount of time to manual record-keeping and reconciliations, and they lack sufficient data to lend sensibly.
Sava is positioned itself to assist organisations in controlling expenditure through the use of spend management technologies, reconciling accounting records, digitising expense reimbursements, and integrating budgets and actual cash flows.
“The spend management model is a way not only to bring the tools that small, medium and large businesses need to run their financial operating system in the background. But also to be able to capture the data that gives you a full 360 picture of the true financial health of a business,” CEO Haile said. “This is a problem globally, but more so in African markets, given that the banks are hesitant to lend in general. When you don’t have a dataset to help support and underwrite these businesses, that combination leads to businesses being shut out and the credit gap continuing to grow yearly. So that’s what we’re trying to solve with what we’re building.”
In the future, the South African fintech intends to issue credit cards to clients’ staff as a means of providing liquidity to its business customers.
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“What we’re doing is converting these debit cards to credit cards, which banks do not offer to businesses,” the chief executive said. “We will give businesses access to 30 days of credit for free, and having access to a flexible, revolving overdraft facility or working capital loan is a huge gap for thousands of businesses on the continent.”
Sava plans to generate revenue from interchange fees on credit card transactions, subscription fees charged to businesses who access its platform, and interest income from provided loans. Additionally, it must upsell clients on third-party financial goods, such as insurance.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexperts.com/view_expert/charles-rapulu-udoh