Access to credit is still one of the biggest challenges facing SMEs especially supply chain businesses. Most supply chain businesses usually have a short time to execute a contract and may require funds to do so. Acquiring credit from traditional banks takes time due to excessive red tape and numerous requirements. Therefore, supply chain businesses are automatically at a disadvantage. Pivo Africa was Launched in September 2021 by Nkiru Amadi-Emina and Ijeoma Akwiwu as a solution to this problem.
Product offerings
Pivo offers SME owners in the supply chain sector flexible and more efficient ways to access credits. Pivo is like a third-party partner in a contract between a vendor and his customer. Supply chain businesses like logistics service providers, clearing and forwarding businesses, FMCG distributors, etc all need Pivo. The company’s flagship product, Pivo Capital allows companies to access loans of up to US$5000 to help scale their businesses.
Similarly, It provides trade financing support, to help suppliers fulfil their customer orders even when they have not been paid by the buyer. To further expand its service offerings, it plans to launch its financial services in beta. This new feature will allow its users to open and operate a corporate bank account that is modified to suit their business.
Investments
The startup raised a 6-figure preseed from Microtraction, FirstCheck Africa, Ventures Platform, Mercy Corps Venture, Rally Cap Ventures, Metis Capital Partner, and Bold Angel Fund. Recently it also got into the ODX accelerator programme where it’s entitled to $125,000 for a 7% equity stake. Before these investments, Pivo had onboarded 100 active customers and processed more than US$100,000 in loan applications.
How Pivo Works
Supply chain finance is a type of cash advance vendors receive from credit facilities to fulfil a contract before the buyer pays them. For example, when a business wants to supply its customer with some products but needs capital to front the deal before the buyer pays for the goods. The vendor will look for a credit facility (pivo) to get a loan. The loan company collects the necessary information to check for the legitimacy of the contract claim with the buyer. Then gives the vendor loans once the buyer confirms that the contract is legitimate. This is what Pivo does. Pivo profiles the business seeking credit for worthiness runs a risk assessment on the transaction and then profiles the buyer they are doing the transaction with, to ascertain whether they are credible. Once everything adds up and the buyer agrees to pay into the supplier’s Pivo account, Pivo then gives the loan. Pivo partners with Providus Bank to provide its customers with a business account that facilitates the disbursement of money. After the buyer pays money into the supplier’s Pivo account, the startup takes its money and interest. According to Pivo’s CEO, the average capital requests they’ve received per customer is about $10,000. They only cater to loans up to $5,000. Any requests above $5,000 are passed to their credit partners.Growth and Success
Although the startup is still building in a stealth mode, Pivo currently has about 250 direct SME customers and 5 ecosystem leads, which are the larger corporations that Pivo serve the SMEs within their value chain through embedded finance. Each of the ecosystem leads is reported to have about 500 to 1,000 SMEs. On the side of providing credits, the total worth of loans disbursed is about $1 million. The company also makes money from the interest charged on disbursed loans, management fees, and one-off charges from account creation.What next?
For the startup’s co-founders, what they need to do is clear. They are already building new products that will help turn them into a full-fledged neobank. For example, products like Invoice Factoring and Pivo Plus, which include insurance and corporate compliance offerings, are already in their testing phase. The company plans to expand into Ghana before the end of 2022.
Pivo might face competition with other startups like Payhippo, Lendigo, Float, Brass, etc, and others that have successfully built a digital financial institution that provides credit for African SMEs. This might not be the case since Pivo plays strictly in the niche market of the supply chain sector.
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