Zuvy, a Nigeria-based invoice financing company, is changing the vendor-buyer relationship by offering cash upfront to vendors to meet their business needs and invoice management software for buyers to eliminate inefficiencies tied to traditional pen-and-paper.
Small businesses, particularly in the FMCGs who service large business chains are often strewn with a lack of capital to service their contract agreement as their capital is often tied up in receivables which are often paid back in a 30–60-day window. These small businesses often have to find an alternative to getting capital to service their agreement which can be an arduous task. However, Zuvy, a Nigeria-based invoice financing company, is changing that by giving cash upfront to retailers to meet their business needs.
“Millions of small businesses on the African continent are hindered by their capital being tied up in receivables. Our primary goal is to empower these businesses with the liquidity that they need, when they need it. This flexibility ensures that these SMEs can better manage cash flow, expand their customer base, and take on new contracts”,” Angel Onuoha, Zuvy’s CEO and co-founder, told TechCabal on a call.
The invoicing company has raised $4.5 million in funding—a mix of debt and equity—from TLG Capital and a host of other investors, including Dunbar Capital; David Mussafer, chairman of Advent International; Next Chymia Consulting HK; Khalil Osman from Vicus Ventures; and several others. Zuvy’s CEO has stated that the funds secured are to be used to expand Zuvy’s reach and meet up with the growing demand from Nigerian vendors.
Founded in 2021 by Harvard College alumnus Angel Onuoha and Ahmad Shehu, who is CTO and a former senior engineer at Mono, Zuvy, in addition to financing, offers free invoice and purchase order management software that enables large businesses to streamline their procurement processes.
Zuvy financing is different from the bank’s
For a small business in Nigeria, getting a loan from the bank is like picking a needle from a haystack. While there are over 41.5 million SMEs in the country—95% of these do not have access to formal financing—less than 1% of the total banking credit is given to small businesses.
Furthermore, Nigeria’s interest rate sits at 18.5%—which is too high for a vendor. Nigerian banks offer loans to small businesses after conducting their due diligence, which might take several days and is often riddled with collateral requirements, minimum operating balances and burdensome paperwork—a luxury which a vendor is not granted, given that they have to service their agreements with their clients in a shorter period of time.
While these constraints might prevent vendors from obtaining loans from banks to cover their business needs, Zuvy offers more convenient access to funds by giving advance payments to vendors in a 24-48 hrs time frame.
“In Nigeria, small businesses receive only 0.3% of total commercial banking credit. This transmission failure is a key part of Africa’s $300 billion SME financing gap. Factoring invoices represents a massive opportunity to bring capital to these small businesses, but only if you can build the tech stack to make it scalable,” said Isaac Marshall, an investment professional at TLG Capital.
Ease of access for loans
Zuvy’s user-friendly platform helps vendors and their buyers to formulate, administer, and settle their outstanding invoices. Through an integration with WhatsApp, vendors can generate and dispatch invoices directly to their buyers without the need to interface with any online application.
For the buyers, this software eliminates the inefficiencies and expensive errors tied to traditional pen-and-paper invoice management, creating significant operational benefits.
While Zuvy joins a growing queue of digital lenders across Africa, the startup’s CEO says they are working on expanding their reach in Nigeria first and will expand into other African countries in the near future.