Churpy, a fintech startup based in Kenya, is looking to expand across Africa by setting up hubs in Egypt, Nigeria and South Africa for a planned continent-wide growth, driven by the $1 million in seed funding it has just raised.
The account receivables automation startup is out to change how businesses manage the debt owed to them by their customers through its SaaS product, which automates the processes of reconciling incoming payments and invoices, a labor-intensive process that is still predominantly manual for most local companies.
The startup is connected with some of the largest banks in the region–including Citibank, Sidian, Stanbic and NCBA – through its API, which gives businesses using its SaaS product access to real-time statements and transaction data that can be used to reconcile pending invoices from enterprise resource planning systems (ERPs) — used to tract daily company activities like accounting and supply chain operations.
“We are hiring more people as we plan to enter Egypt, Nigeria, South Africa, which are the hubs into their [respective] regions. We are also putting finances into product development as we plan to scale our offering,” Churpy co-founder, Kennedy Mukuna told TechCrunch.
Churpy’s partner banks have a presence across Africa, which Mukuna said, will make it easier for the startup to scale its operations.
Mukuna co-founded Churpy last year, together with John Kiptum, whom he had met a year earlier at an accelerator program by Antler East Africa. Both Mukuna and Kiptum have extensive experience in data analytics, banking and risk management having worked for organizations such as the World Bank and Citibank. Their experience in the banking sector, they said, made them familiar with the pain-points for customers in the sector. The founding team has since been joined by James Kanyangi, who has vast experience in payment operations, AI and robotics.
“It was really not hard for us to unlock a lot of ideas, products, innovation and tech around the financial industry space. We’ve been there, we’ve seen how it works or why it doesn’t work, why it’s slow, why it is ineffective, and why customers are not happy. And so, what we are building is inspired by real experiences,” said Kiptum.
The startup is conducting a pilot programme with some of the major manufacturing and service enterprises in Kenya, including Unga Limited and Chandaria Industries.
“On the dashboard, these companies are able to see who owes them money, how efficient they are at collecting and how liquid they are, and other operational metrics. This allows the chief financial officers and their teams of accountants to get into more strategic roles of the business and follow up on those that haven’t paid,” said Mukuna.
Embedded finance product for SMEs
Churpy is also set to roll out a working capital financing product targeting small medium enterprises supplying to the enterprise customers signed up to the startup’s SaaS product.
The SMEs benefit from immediate payment for goods delivered to these enterprises, instead of waiting the usual period – of up to two months – to receive their money.
“SMEs have a huge financing gap. They are the suppliers to these big companies and need capital to keep taking raw materials to their other clients. Usually, they need collateral to access loans from banks and wait for approval to access capital to keep their business going. What we are doing is ensuring that they get paid not long after they deliver goods to partner enterprises for a 0.5% origination fee. Once their invoice matures, we get paid,” said Mukuna.
The startup has partnered with a number of banks to roll out the service as part of its strategy of unlocking other services around accounts reconciliation. To begin extending financing to SMEs, Trade Development Bank has made available $15 million to Churpy (to be disbursed through its banking partners) for onward lending.
Its recent seed round was led by Unicorn Growth Capital with participation from Antler East Africa (following on after a $100,000 pre-seed), Nairobi business angel network and some Rally Cap’s LPs including senior executives from Stripe.
Unicorn Growth Capital founding partner and CEO Barbara Iyayi said, “It is clear that B2B payment operations are significantly under-penetrated and ripe for modernization and disruption globally. We are excited to partner with the Churpy team as the first mover in the market.
“Churpy is the only available end-to-end platform that provides accounts receivable automation, an invoice marketplace and reconciliation with integrated B2B payments specific to its markets. They are well positioned to be a critical partner to businesses and lenders in Africa, and can effectively address the significant credit gap faced by SMEs for supplier finance and working capital.”