Duplo, a Lagos-based fintech, has raised $1.3 million in a pre-seed round led by early-stage pan-African venture capital firm, Oui Capital to tackle the challenges faced around cash over-dependency in Africa’s business-to-business (B2B) by digitizing payment flows for B2B companies, starting with those in this industry.
A mix of local and international investors such as MyAsia VC, Y Combinator, Flutterwave CEO, Olugbenga Agboola and Mono CEO Abdul Hassan also participated in the funding.
“We are trying to make cash obsolete in Africa where lots of businesses in the distribution space heavily transact in cash for obvious reasons. We are focused on distributors, merchants and aggregators to stop the use of cash in this value chain because everyone knows how expensive cash is and how difficult it is to move with issues around theft and fraud,” Yele Oyekola, CEO Duplo said.
When traditional distributors move goods from manufacturers and suppliers to retailers, they collect cash through a network of agents. These agents, from different parts, then proceed to make lump-sum payments into a central bank account.
With Duplo, distributors can create unique virtual accounts for retailers and agents to make real-time payments or bank transfers, while the platform helps to reconcile their books automatically.
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In the fast moving consumer goods (FMCG) industry, there isn’t a straightforward approach. Making bank transfers can be expensive for some retailers and agents, instead, they visit mobile money agents to perform transactions. While this may pose a fraud channel, Duplo is on a mission to make cash flow less.
Duplo charges one percent fee for every transaction performed on its platform. And depending on their size, businesses also pay between N100 to N1,000 to create virtual accounts.
Besides providing tools that enable B2B companies to digitize their payment flows, there’s a no-code tool for them to optimize trade with their business customers, vendors and suppliers. The platform also helps these companies to generate or pay invoices, offer credit to their business customers and a dashboard to attribute payment flows to a particular customer, retailer or location.
“The way we see our value prop is we help businesses automate, embed and launch payment products. So basically, inflows or outflows, automatic reconciliations for businesses and embedding payments into marketplaces. And then we also have businesses that want to provide buy now, pay later (BNPL) services to smaller businesses,” Oyekola said.
The startup which launched its pilot three months ago, said customers reported cost savings of more than 12 percent within that period. Duplo has also grown 60 percent month-month to serve over 20 enterprise businesses. Currently, it has processed over $380,000.
However, according to the company, it has plans to reach $40 million in annualized TPV by the end of Q2 2022.
Duplo will spend most of this investment on improving its product, technology and sales as well as move into other sectors aside from FMCG retail to businesses in travel, farming, B2B marketplaces, alcohol and beverages.
“There’s just a tonne of potential opportunity for us as a business that we can tap into very soon, and while we’re currently focusing on the retail space over the next three months, we’re speaking to businesses in other sectors also to help them automate their entire payments through our APIs,” Oyekola said.
