Sava Raises $2 Million in Pre-seed Funding to Develop a Spend Management Platform for African Entrepreneurs

A spend management software will assist African firms to control their spending and cut down on the time spent on recordkeeping and reconciliations thanks to funding raised by the South African fintech startup Sava, which has raised $2 million.

Crunchbase lists Breega, Quona Capital, Ingressive Capital, CRE Venture Capital, RaiCap, Sherpa Africa Partners, and Unicorn Growth Capital as the investors who participated in the pre-seed investment round.

The platform, which has not yet been launched, will not only assist African businesses in managing their financial operating systems but will also enable them to collect data that will enable them to maintain awareness of the true financial health of their company, according to Sava CEO Yoeal Haile, who spoke with TechCrunch.

According to Statista statistics, South Africa, where Sava will roll out its beta version in Q3, has a 9 percent credit card penetration rate. It will be interesting to see how the fintech startup’s business model will be impacted by the low credit card penetration rate in the nation given that it plans to generate some of its revenue from interchange fees on credit card transactions and also use credit cards issued to clients’ employees to form the basis on which the company provides liquidity to its business customers.

Sava does not simply intend to profit on credit card transaction commissions. Additionally, the fintech startup would charge subscription fees to companies using its platform, levy interest on loans made, and upsell customers on additional financial services.

Spend management systems find it challenging to assess consumer and company credit sustainability due to Africa’s broken credit system and poor credit card penetration system, which, according to a report by Banking Payments Context, was at 4% as of 2017. Haile claims that Sava will get around this problem by evaluating customers’ credit viability using alternative data sources, including bank accounts, mobile money accounts, payroll, and invoices, all of which will be stored on the platform.

Baile, along with co-founders Federico Von Bary Landesmann and Kolawole Olajide, created Sava this year. Sava hopes to debut its platform in Kenya in Q4 and subsequently extend to other significant addressable markets like Nigeria and Kenya.