A year after concluding an undisclosed pre-seed round, Qwili, a startup that offers a hybrid sales platform to micro and small merchants in South Africa, has raised $1.2 million in seed funding.
The round, which included participation from companies including Strat-Tech, Next Chymia, Untapped Global, Codec Ventures, and angel investors like Ashwin Ravichandran and Kanyi Maqubela, was led by the South African venture capital firm E4E Africa.
“We’re all about enabling people who are currently digitally excluded, to participate in the various forms of value that being digitally included has to offer,” CEO Luyolo Sijake said. “So the real barrier to that has been hardware: a reliable quality smartphone being too expensive, which means access to the mobile internet being too expensive. So we hope to continue making smartphones available at below cost.”
Qwili said in a statement that company will use the money for producing hardware, hiring new people to improve operations, and developing apps. According to Qwili, the money will also enable it to accelerate the rate at which it scales its business in order to see its impact expand across all three of these sectors.
Why The Investor Invested
The startup has acquired considerable traction since it was founded. According to Sijake, Qwili currently handles $75,000 in GMV each month from its 500 merchants. The South African platform, which experienced a high increase in turnover of over 300 percent between Q1 and Q2 of 2022, intends to increase those figures to $1 million from 3,000 merchants by the end of the year after it enters Botswana, a nearby country.
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“We believe that Qwili is both highly scalable and high impact. Qwili agents love the entrepreneurial opportunity that Qwili provides them while giving their community access to e-commerce and to fairly priced goods and services,” says Bastiaan Hochstenbach, co-founder and managing partner at E4E Africa on the investment. “Qwili’s founding team is exceptional, and the business model is a strong fit with E4E Africa’s aspiration to support diverse founders in creating a thriving, innovative, and inclusive Africa.”
A Look At What The Startup Does
The company’s hardware consists of the inexpensive NFC-capable Qwili Pula smartphone, which enables retailers to make and receive payments. The platform’s software transforms these smartphones into point-of-sale devices, enabling merchants to sell value-added services to their customers like data and pay-TV subscriptions, groceries, and clothing. This software can be downloaded as an app on any smartphone or is installed automatically on Qwili’s phones. Qwili’s phones, according to CEO Luyolo Sijake, cost between $60 and $70.
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Customers who are unbanked and digitally excluded are said to be Qwili’s target market. According to a statement from the company, its mobile app acts as a “digital sales platform” that enables micro and small merchants (agents) to simplify the sale of goods and value-added services.
Sijake claimed that Qwili doesn’t make money by selling cellphones because doing so merely allows the company to have an impact on merchants that utilise the network for commercial purposes. Each sale that is made through its application is subject to a commission.
In a statement, Qwili claims that its impact is felt in three different ways. First, agents on the platform have access to a different, more flexible source of revenue because they may earn commission on sales that are done via Qwili. Customers of these agents observe considerable reductions in the time, efficiency, and price hurdles standing in their way of receiving the services they require. Third, access to a market that was previously offline has been eased by value-added service providers.
The current Qwili resulted from a major pivot from the founders after a significant discovery.
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Sijake and his co-founders Thandwefika Radebe and Tapfuma Masunzambwa first founded Qwili as a different concept. They used a business-to-customer model in which Qwili offered these devices to individual customers who paid for value-added services using the platform’s digital wallet. The aim was that when customers used the phone and Qwili took a cut of each transaction, the phone would eventually commercialise itself and consumers would be able to buy them from Qwili. That didn’t work out, so the focus shifted to merchants.
“During those early stages, the phone wasn’t paying back quickly enough, and there wasn’t high enough adoption of the digital services. But what happened was that people started using the digital wallet to sell pay TV, electricity and other value-added services to people around them,” said the chief executive. “They started using the phone in a way we hadn’t intended, making more sense commercially. That’s how we ended up with this agent model: essentially people using the device and the software to sell to others instead of buying services for themselves.”
Before the shift, Qwili sold over a thousand cellphones to end users. Its business-to-business strategy has also gained traction, with 500 micro and small merchants using the hybrid platform (about half of whom use Qwili’s NFC-enabled cellphones). Its typical business customer is a merchant without a storefront who sells digital products informally to local communities and networks. Purchasing a point-of-sale system with restricted capability makes little economic sense for this category; instead, a smartphone with the ability to accept payments and market products via WhatsApp suffices.
Qwili NFC Smartphone Qwili NFC Smartphone
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