Small and medium enterprises make up more than 95% of all businesses in Nigeria. But despite their sheer size and importance, a majority of them are underserved by financial institutions and lack the full suite of financial services needed to scale their operations.
Aside from full-stack financial needs, including credit, small and medium businesses require other essential resources to understand their financial operations.
Brass is a Nigerian fintech tackling these challenges by providing banking services to small and medium businesses. The company has secured a $1.7 million funding round to scale its offerings for "local entrepreneurs, traders and fast-growing businesses."
Sola Akindolu and Emmanuel Okeke founded Brass in July 2020. Before Brass, CEO Akindolu was the head of product at YC-backed Kudi, while CTO Okeke was an engineering manager at Stripe subsidiary Paystack.
Akindolu's work at Kudi opened his eyes to the problems small and medium businesses face in Nigeria. He explained that he found out how hard it was for these businesses to have seamless financial operations and cash-flow support services integral to tracking vendor payments, money movement and overall business health.
But why start Brass when there are existing products in the Nigerian market that SMEs and entrepreneurs can use? Sparkle, for instance, offers both personal and business banking services (with more priority on the latter). Consumer neobanks Carbon and Kuda are in varying stages of offering business features to SMEs. Prospa, a YC-backed company that doesn't like to think of itself as a neobank, also provides software and banking services to microbusinesses and freelancers.
Akindolu believes that while these products have their entry points into the SME market, they do not capture the entire banking needs of businesses like Brass.
"There are many ways money can get out of the business, be it payroll, vendor payment, invoicing. We want to support businesses' cash flow; we want to support them in those areas to make sure that money keeps running and they can keep growing their business," Akindolu said, describing Brass' application. "So that's, for the most part, what we're doing with Brass today: financial operations and cash flow support."
Brass offers a suite of products -- credit and payment services, payroll and expense management, API support, cash-flow analytics, team and contact management, other core business services such as POS, debit and credit cards -- all wrapped around a business bank account.
Of all these features, Brass is betting big on credit with Brass Capital, a space already heating up with other platforms such as Float, which provides working capital and software services to businesses. That said, Brass Capital has done quite well in a short amount of time; the cash-flow financing service claims to have disbursed more than $2 million in credit after being used for six months by two dozen Brass customers in private beta.
Akindolu told TechCrunch that the company would make the service available to the public soon.
Brass says that many of its clients use the platform as their default money-operation service provider. The fintech makes money from providing credit and API calls on its regular product offering, said the CEO.
It has over 5,000 customers ranging from schools and malls to restaurants and fintechs such as Eden and Mono, which use its complete banking solution. And unlike other platforms, Brass is trying to optimize its platform for different levels of businesses with varying needs at the same time.
"What we've set out to do is to build stacks of financial operation services. We may be overkill for a micro business; they might not find us useful, so we're more concerned about small and medium-sized businesses."
The mission to make banking work for small businesses was one reason why pan-African VC firm Ventures Platform invested in the company, according to its founder and general partner, Kola Aina.
Previous backers include Olumide Soyombo of Voltron Capital, Leonard Stiegler and Fola Olatunji-David.
"We are excited to back Sola and the Brass team, who are providing critical financial technology to Africa's businesses, starting with Nigeria's approximately 41.5 million businesses," said Elizabeth Yin, the general partner at Hustle Fund.
It's not just in Nigeria that access to comprehensive banking solutions services continues to be one of the most significant constraints for SMEs -- it's most major economies in Africa. Indeed, the continent's formal SME sector has an annual financing gap of over $136 billion, although they account for over 80% of employed people.
For this reason, Akindolu affirmed that Brass would use part of the financing to take its business to Kenya and South Africa by next year (it has finalized incorporation in the former). Integral to driving its expansion plans across Africa is a partnership with Flutterwave, the one-year-old company said in a statement. Brass also plans to diversify its customer base by launching more product categories, especially around credit in its markets.