Most small and medium-sized enterprises (SMEs) in supply chains across various industries in Africa fulfill orders within days, but receive invoices after weeks and sometimes months. It’s such an inefficient way of doing business that it eventually leads to cash flow problems – plus there are fragmented processes for collecting and tracking payments.
Recently, startups have taken a top-down approach by choosing a particular sector and offering solutions to SMEs within it. One of those startups is Pivothat helps freight carriers get paid faster through a bank account, debit card, and digital billing tools that track payments.
The startup, founded by Nkiru Amadi-Emina and Ijeoma Akwiwu in July 2021, announces today that it has closed a $2 million seed round. Pivo said in a statement that it plans to use the funding to upgrade existing products, build new ones, hire talent and expand beyond Lagos, its prime market and other African countries, particularly in East Africa.
Pivo provides financial services – credit, payment and expense management – to SMB suppliers within major manufacturing supply chains, an industry Amadi-Emina, the chief executive officer, practiced her trade before launching the year-old startup, which earned $ raised 2.55 million. since launch.
In 2017, Amadi-Emina launched an on-demand delivery platform targeting e-commerce brands in North and Central Africa, which was subsequently acquired by Kobo360, one of Africa’s leading e-logistics players. It was during her time at Kobo360 – first as an enterprise account manager and until she left as head of port operations – that she witnessed the glaring liquidity problems that existed at both ends of the logistics supply chain. Truckers require cash advances from logistics companies such as Kobo360, Lori Systems, and MVX to move cargo; meanwhile, these companies also require manufacturers to pay on time for distributing cargo to truck drivers.
“In most cases, we found that cash flow management was the main issue for these companies — it either didn’t exist or was just paper based,” Amadi-Emina told businessroundups.org in an interview. “Many of the payments were made with cash and we thought to build a digital bank that provides financial services aimed at solving these various problems for SMB suppliers operating in large supply chains, starting with the logistics providers, and then gradually move to the supplier bags and at the end of the case.
Pivo leverages relationships in the manufacturing supply chain and provides financial services to the SMEs within it, in this case primarily truck drivers. Its platform’s credit game, Pivo Capital, serves as an early payment alternative for truck drivers and allows logistics companies to cover all upfront costs — such as diesel and driver’s allowance — typically incurred during operations. Pivo Business, the payments reconciliation division, helps these small businesses facilitate payments via peer-to-peer transfers and track debit card payments with spending controls. Amadi-Emina explained that all of these features will push Pivo to capitalize on a significant portion of a $4 billion addressable market opportunity.
It’s a huge market where Pivo has the first-mover advantage. And while it doesn’t seem to have any significant challengers in the freight sector, startups like Duplo, another YC alum, whose clients are SMEs in the fast-moving consumer goods (FMCG) space, pose serious competition in the long run if the platforms are looking to other sectors to replicate the growth. That said, there is also some concern within its industry that e-logistics companies could build a similar platform in-house (e.g. Kobo360’s Payfasta).
“As a plug-and-play and embedded solution, we’ve always been more complementary than competitive,” the CEO told businessroundups.org when asked about Pivo’s opportunities if e-logistics companies launch a competitive product. “If you look at e-logistics companies, the goal is for them to move to a platform approach and if at any point they want to unlock financial services, we say they should come to PIVO for that instead of the traditional banks.”
The Pivo team
The freight forwarder-focused digital bank currently serves about 500 SMBs as a direct customer and generates revenue by charging interest on capital and fees on processed payments. Amadi-Emina said Pivo Capital has paid out more than $3 million to SMBs and is currently recording a 98% repayment rate, while transaction volume on Pivo Business grew by more than 400% between April and September this year. The startup has registered a total volume of $4.7 million from July to date.
What’s next for the female-led startup? More growth, according to the CEO. The company is working on Pivo+, a suite of value-added services that will make Pivo a full-fledged financial services platform. Daniel Block, an investment director at Mercy Corps, one of the investors in this round, thinks Pivo is designed to become such a platform because the start-up’s “commitment to unmanaged supply chain SMBs would enable it to quickly become a deep ditch in the competitive struggle”. room for fintech lending.”
Other investors in the seed round include Precursor Ventures, Vested World, FoundersX and Y Combinator, where Amadi-Emina and Ijeoma Akwiwu delivered an impressive performance by becoming the first all-female team to own Nigeria’s famed accelerator backed – and the second in Africa after defunct Ghanaian startup Tress.
“It’s great that we were able to break through that barrier as a female-led start-up. When we joined YC, we got confirmation as founders and reaffirmed the fact that women can be at the helm of things in the tech space,” Amadi-Emina said of the achievement. “Tech is a male-dominated space and there are all these man made barriers that serve to keep women out coming into YC with the news being amplified not only locally but internationally means more people getting to see strong female representation from Nigeria we’re glad that somewhere a female founder looks at us and realizes it’s possible that if you keep working hard, keep putting yourself in and have the numbers to back it all up, you can achieve what you set out to do.”
