Access to credit facilities, business tools, and payment options is a problem for many SMEs in Nigeria, particularly those operating in the unorganised sector. Traction, a Nigerian-based startup, is addressing the challenge.
For a small business in Nigeria, getting a loan from the bank is like finding a diamond in the rough. While there are over 41.5 million SMEs in the country—95% of these do not have access to formal financing—less than 1%
The startup has raised $6 million in seed round. The funding round was led by Multiply Partners and Ventures Platform with participation from P1 Ventures and other investors. According to Traction, the new funding will be used to drive expansion, accelerate the company’s growth, and strengthen the company’s team.
Another challenge faced by small businesses is their inability to manage their operations properly due to their heavy reliance on paper. Despite owning smartphones, most business owners continue to manage their operations on paper, thereby missing out on the opportunity to access formal financial services solutions. As a result, many businesses struggle to expand and capitalise on economies of scale, with some even facing liquidation despite having profitable business models.
Traction is providing business tools and payment solutions for this small businesses to enable them to scale and avoid the risk of liquidation. Through its one-stop platform, the startup enables businesses to accept payments, manage finances, and access essential operational tools. With Traction, business owners can accept payments via POS terminals or virtual accounts, use point-of-sale software to record their sales, track inventory, and manage customers through CRM & loyalty solutions.
Speaking on the raise, Dotun Olowoporoku, General Partner, Ventures Platform, said, “Traction stands out as more than a payment processor. It is an indispensable growth partner for Nigerian SMEs. The company’s industry-specific software, including its financial services marketplace, offers relevant business solutions, affordable capital, and insurance. We’re excited about the team’s ability to continue delivering product innovation and Traction’s potential to unlock immense value for SMEs, which are the bedrock of Africa’s economy.”
According to a statement seen by TechCabal, Traction claims to serve over 70,000 businesses in Nigeria. While the seed funding has been focused on scaling operations in Nigeria, Traction plans to explore growth outside Nigeria in the next 18 months.