Due to a lack of digitization and sub-optimal business practices, 80% of Nigeria’s 40 million micro, small, and medium enterprises (MSMEs) do not survive beyond their fifth year. Three Stanford University graduate students, Abuzar Royesh, Olamide Oladeji, and Izunna Okonkwo, have raised $5.5 million to solve this problem through their startup, Pastel.
Global Founders Capital (GFC), DFS Labs, Ulu Ventures, Plug and Play, Golden Palm Investments, and Soma Cap participated in Pastel’s $5.5 million seed round led by pan-African VC firm TLcom Capital. This round follows a $620,000 pre-seed round raised by the startup in 2021.
Pastel describes itself as a provider of business management solutions. Its founders met in high school and realized they all shared a desire to alleviate the pain points of small businesses in emerging markets. MSMEs in Nigeria, for example, are worth more than $200 billion, so the trio concentrated on the country’s expanding MSME market. They began as SabiCash in Lagos, where they launched their flagship product, the Sabi bookkeeping app.
SabiCash, now Pastel, enables small businesses to closely monitor transactions, manage customers, evaluate cash flow, and manage debt. Pastel hopes to eliminate the barriers associated with time-consuming and outdated bookkeeping practices by bringing small businesses online and digitizing their practices. According to Okonkwo, by the end of 2021, the Sabi bookkeeping app had over 100,000 merchant sign-ups and over 45,000 active merchant users.
Quick Receipt, a simple invoicing and receipt tool with over 60,000 current users, is part of Pastel’s suite of products, as is Pastel Financing, an arm of Pastel that focuses on providing digital financial solutions for MSMEs. One such solution is the Swift Money app, which is currently in development by the company. The Swift Money app, when it is released, will focus on digitizing the Ajo system, a popular traditional savings scheme in Nigeria.
Okonkwo explained to TechCrunch why the company chose a multi-app strategy over building a super app, as is more common among competitors, saying, “Our thought process was to get traction quickly by solving a merchant’s pain point with a free and easy solution. The next step was to capture value. So we added value capture features to the Sabi app that our customers love. Now we are building a lot more.
“The way we’ve thought about it is: as opposed to creating a super app that a lot of other fintechs have or are in pursuit of, we are taking a more platform approach, meaning that any Pastel user can create an account with any of our apps. With the same login they can access all the other solutions that we’re providing.”
The funds raised by Pastel will be used to expand its product offerings for African SMEs by developing new features and tools for group savings, loans, and payments.
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