Nigerian fintech Brass raises 17mn to expand SME banking

Brass, a Nigerian fintech delivering easy access to affordable premium banking services for small and medium-sized businesses (SMEs), has today secured $1.7mn in funding to address the heavily underserved banking needs of local entrepreneurs, traders and fast-growing businesses.

The financing round sees participation from Olugbenga ‘GB’ Agboola (Co-Founder of Flutterwave), Ezra Olubi (Co-Founder of Paystack, acquired by Stripe), Hustle Fund, Acuity Ventures, Uncovered Fund and Ventures Platform. The new funding will play a key role in accelerating Brass’ expansion into South Africa and Kenya â€" just a year after launch, and will kickstart a range of new product categories, including an expansion of the startup’s footprint in the credit market as it bids to diversify its customer range.

Launched in July 2020 by Sola Akindolu (previously Head of Product at Kudi) and Emmanuel Okeke (a former Engineering Manager at Paystack), Brass equips SMEs with a full-stack, commercial-grade banking service across various business classes, enabling them to gain greater clarity and control over their money operations and the power to scale their enterprises. The platform currently boasts a comprehensive suite of products tailored to a wide spectrum of business banking needs, including credit & payment services, payroll and expense management, API support and a host of additional core business services.

To date, Brass has served thousands of businesses, disbursed over $2mn in credit and recently launched Brass Capital â€" a cash-flow financing service to support even more fast-growing businesses. Many of Brass’ clients use the platform as their default money operation service provider and its current customer base includes the likes of Send.ng, Mono and Eden as well as restaurants, schools and malls. The platform has also partnered with Flutterwave to drive its expansion plans across Africa.

Commenting on the fundraise, Sola Akindolu, Co-Founder and CEO of Brass, says, “The basic needs of Africa’s SMEs are just as significant and unique as those of the customers they serve each day and now more than ever, we need innovative and world-class financial services solutions that meet their expectations. These local businesses have supported our economies for decades, forming the backbone of Africa’s success to date and now is the time to bet on them.”

“At Brass, we’ve made some great strides over the last year in tackling one of Africa’s most critically underserved customer bases but with an estimated $5.1tn credit gap globally, our work is far from over. This is why we’re delighted to welcome on board a number of vastly experienced and strategic investors, whose expertise will not only play a vital role ahead of our expansion into South Africa and Kenya but also in our future ambitions outside of the continent.”

Currently, SMEs form 99% of all Nigerian businesses however, many of them encounter the same major roadblock that has resulted in 55% â€" 68% of formal SMEs in emerging markets being underserved by financial institutions â€" a severe lack of access to affordable, high-quality and uniquely tailored financial services. As a result, these businesses are mainly limited to expensive and often ineffectual traditional banking services or they simply remain unbanked due to access and cost. This has not only led to an estimated $5.1tn credit gap for SMEs in Nigeria and other emerging economies but also a huge lack of resources for these companies to fully understand their financial operations and make critical business decisions.

Kola Aina, Founder and General Partner at Ventures Platform, says “We were immediately sold on Brass’s mission to make banking work for small businesses. For far too long banks have not worked for their customers. This challenge is even more chronic for small businesses, hence we are excited to be a Brass partner as they advance the mission to make banking work for African businesses â€" via their suite of products designed to help businesses succeed.”

Elizabeth Yin, General Partner at Hustle Fund adds “We are excited to back Sola, and the Brass team who are providing critical financial technology to Africa’s businesses, starting with Nigeria’s ~41.5 million businesses. We believe Africa’s entrepreneurial ecosystem, and fintech sector is witnessing an unprecedented shift, and Brass is at the forefront of that supporting local businesses and professionals with banking technology to supercharge their growth. We are excited by their vision, and honoured to be joining them on their journey.”

Brass’ previous investment to date has featured a number of seasoned angel investors in the African tech space including Olumide Soyombo of Voltron Capital, Leonard Stiegeler, Fola Olatunji-David, Yemi Lawani and two senior executives from top Nigerian banks.

Currently, access to comprehensive banking solutions services remains one of the most significant constraints for SMEs in Africa as it is estimated that the continent’s formal SME sector has an annual financing gap of over US $136 billion. According to the World Bank, these businesses employ 80% of Africa’s population, highlighting their importance to the local economy and further underlining their need for additional support.

Lexi Novitske, the Managing Partner at Acuity Ventures, closes “The real market opportunity in digital banking in Africa is enabling small businesses. These businesses are looking for tools to responsibly scale; with a Brass partnership, they’re able to grow alongside a committed partner for the long term. Meanwhile, data sources in Africa are still nascent. Brass’s suite of products including payments and dashboard services not only give small local businesses transparency and efficiency over their operations, but enable Brass to provide banking products that meet the needs of these customers at lower risk.”

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