Ghanaian fintech startup OZÉ has raised a $3 million pre-Series A funding round. The new funding will fuel the SaaS startup’s efforts to convince Africa’s micro and small enterprises to ditch pen and paper and use OZÉ’s digital recordkeeping and embedded finance tools.
Since launching its beta product in 2018, OZÉ has grown its customer base to 125,000 MSMEs. It has also expanded from its home market Ghana into Nigeria.
The pre-Series A round comes almost exactly one year after OZÉ announced a $700,000 seed round designed to help OZÉ expand its team, promote its product, and expand into Nigeria.
The seed round was supported by Anorak Ventures, Matuca Sarl, and Rising Tide Africa (a Nigerian angle investing group). These players joined existing OZÉ investors Ingressive Capital and MEST.
The new $3 million round is led by Speedinvest, with Cathay AfricInvest Innovation Fund, Savannah Fund, and several Angels experienced in operating and investing in global fintech also participating. OZÉ says the pre-Series A round was oversubscribed.
In its announcement, OZÉ said it will use the funds “to expand the capabilities of its platform and increase access to affordable finance in Ghana and Nigeria through its partnerships with well-known commercial banks.”
The company believes that trends in the African SMME Tech market offer a strong tailwind for solutions like OZÉ.
“The last decade has seen a huge transformation in the digitization of business,” said OZÉ Co-founder Dave Emnett. “Accelerated by the pandemic, we are now seeing an even greater demand for solutions to financial challenges like accepting payments, understanding cash positions, and securing loans to increase stock for busy periods.”
The OZÉ platform offers a comprehensive suite of tools to help small businesses manage their finances.
It allows business owners to understand and improve their performance as well as access to capital. Business owners use OZÉ to record transactions, manage receivables, and collect payments. The platform also offers access to business coaching. Small businesses can apply for loans within the app as well.
OZÉ says it grew the number of monthly active users on its platform last year by 1200%. It also saw a 200% increase quarter-on-quarter in the number of loans granted from Q3 to Q4 of 2021.
One of the keys to OZÉ’s growth has been the relationships it has formed with banks, which have traditionally been wary of extending financing to Africa’s very small businesses. Using technology like OZÉ helps MSMEs operate more efficiently, making them better credit risks for lenders.
“The synergy OZÉ creates between business owners and banks creates real confidence in the West African economy; business owners are able to access the finance they need,” OZÉ said in the funding announcement. “And banks have seen stability in repayment rates thanks to more accurate digital recordkeeping.”
We asked OZÉ CEO and co-founder Meghan McCormick via email and asked her if OZÉ’s growth is exclusively from businesses that do not use any digital tools to run their businesses. And we wanted to know how challenging it is to get MSMEs to dump pen and paper in favor of a SaaS tool like OZÉ.
“I would say the majority of our users are transitioning from pen-and-paper or no records at all. If they are using a digital solution, it's typically something like Excel,” Meghan told us.
“We get MSMEs to start recordkeeping through OZÉ with a blend of information and incentives. Most entrepreneurs know that they should be using a tool like OZÉ to manage their business. But like any good habit, it can take time for it to become second nature. We educate the entrepreneur on why they should keep records, how to do so using OZÉ, and provide small rewards along each step of the way.”
One new feature added this month allows its customers in Ghana and Nigeria to accept payments from their customers on OZÉ. This automates recordkeeping and helps businesses build up their credit scores, Meghan said.
We see OZÉ’s opportunity as becoming a full-service solution for MSMEs to transition from analog to digital operations. Use whatever grandiose business cliche you want to use to describe the opportunity. Maybe it’s an operating system for MSMEs? Or a financial super app? Whichever it is, OZÉ is going to need a lot more funding to realize the vision, in particular, if its vision is to move beyond West Africa and serve MSMEs across the continent.