Brass, a Nigerian digital bank delivering easy access to affordable premium banking services for small and medium-sized businesses (SMEs), has secured $1.7 million in funding to address the heavily underserved banking needs of local entrepreneurs, traders, and fast-growing businesses in Africa.
The financing round saw 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 – just a year after launch. It will also help 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.
For decades, local businesses have supported Africa’s economies and have become the “backbone of Africa’s success to date, and now is the time to bet on them,” Sola Akindolu, Co-Founder and CEO of Brass comments on the fundraise.
“At Brass,” he continues, “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.”
Brass serving the underserved & underbanked
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 $2 million in credit, and recently launched Brass Capital – 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.
The state of banking in Africa
Currently, SMEs form 99% of all Nigerian businesses. However, many of them encounter the same major roadblock that has resulted in 55% – 68% of formal SMEs in emerging markets being underserved by financial institutions – 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 $5.1 trillion 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.
“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.
Also Read: Nigeria’s Sendbox Raises $1.8 Million to Digitize Deliveries for African SMEs
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.
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.
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.
