Sava, a South African spend management platform, raises USD 2 mln

The pre-seed funding round included several Africa-focused investors including Quona Capital, Breega, CRE Ventures, Ingressive Capital, RaliCap, Unicorn Growth Capital, and Sherpa Ventures.

The opportunity

In African markets, given that the banks are hesitant to lend in general, it’s difficult to sustain a business. When there is no dataset to help support and underwrite these businesses, that combination leads to businesses being shut out and the credit gap continuing to grow yearly.

Retailers struggle with cash flow problems and lack access to affordable credit to grow their businesses. While banks use rigorous credit policies and don’t care much about small businesses, particularly those without any local credit history or track record, informal lenders act as loan sharks to the detriment of these businesses.

The solution

As the co-founders of Sava also encountered spend management issues while running their past ventures, they settled on using a spend management model like Brex, Ramp, and Jeeves to launch Sava.

The spend management model is a way to bring the tools that small, medium, and large businesses need to run their financial operating system in the background. It can also capture the data that gives a full 360 picture of the true financial health of a business, as per the CEO of Sava.

Besides, in addition to the credit bureaus, spend management platforms such as Sava are required to use other mediums to evaluate consumer and business credit viability. Africa is home to some of the highest mobile money penetration and has decent bank account usage. As such, Sava, which is yet to launch, says it combines bank accounts, mobile wallets, payment, and accounting integrations all in one platform.

With this, Sava says it will help businesses control spending using spend management tools, reconcile accounting records, digitise expense reimbursements, and integrate budgets and actual cash flows.

However, the Sava still plans to provide credit cards to clients’ employees as it will form the basis on which the company provides liquidity to its business customers. They will give businesses access to 30 days of credit for free, and having access to a flexible, revolving overdraft facility or working capital loan may be a huge gap for thousands of businesses on the continent.

Sava intends to make money on interchange fees on credit card transactions, subscription fees when businesses access its platform and interest income from loans issued. It also has to upsell clients on some third-party financial products like insurance. Sava plans to launch its beta in South Africa in Q3 of 2022. Sava also plans to launch in Kenya in Q4, and with time, it’ll look to expand into other markets like Nigeria and Egypt.