Nigerian fintech startup Prospa has reportedly closed a $3.8 million pre-seed round with a strong determination to change the way micro-businesses are being served by the banks. If sources are to be believed, over 40 million micro-businesses in Nigeria are underserved in banking services in some form.
In the case of large businesses with sizeable cash influx, assigning staff or buying software to perform operations is easy. However, smaller businesses struggle with this due to affordability issues.
Seeing this as an opportunity, Frederik Obasi, Rodney Jackson-Cole, and Chioma Ugo founded Prospa to fulfill the needs of small businesses related to banking and software with minimum cost.
Obasi and his team developed the product between June and September 2019 and went live in October. Since then, Prospa acquired customers in secrecy even when it participated in Y Combinator’s winter batch. Obasi explains that he wanted the company to have organic traction without any hype and media noise.
He further stated that the company likes to think long-term. The team intended to test the hypotheses, build a real business with revenue and understand what they were doing. With the emergence of the COVID pandemic, the company started gaining enough traction, Obasi added.
When Prospa started becoming popular, people reportedly described the company as a neobank for small businesses. Dismissing the notion, Obasi said that besides providing banking services, the company provides inventory management, invoicing tools, payroll features, e-commerce store as well as employee and vendor management tools.
Obasi mentioned that banking is just a little part of their operations. Although the Prospa is categorized as a neobank, the company sees its product as 10% banking and 90% software. This gives an experience different from what a neobank offers.
Speaking about the traction, he stated that Prospa has thousands of enterprises onboard and is recording 35% growth month-on-month. With regards to the non-banking services, it has handled around 150,000 product categories while the small businesses have delivered 360,000 invoices on the platform.