IROKO co-founder Bastian Gotter raises $3.2M seed for new venture, Bamba
In 2010, Bastian Gotter invested up to $200,000 into IROKOtv, an African video-on-demand company Jason Njoku, his friend and co-founder, launched in Lagos, Nigeria.
For the next couple of years, Gotter, as CFO, was instrumental in turning IROKO — after raising over $30 million from VCs, including Tiger Global — into a household name in Nigeria’s entertainment and tech scenes.
Gotter left the media company in 2017, an exit that afforded him the chance to take up angel investing full-time and pursue new projects. Gotter has cut checks in Paystack, Flutterwave and betPawa and co-runs Spark, an investment vehicle he launched with Njoku.
In 2018, he started a pre-school chain based in the U.K. and South Africa. Two years later, he became part of the founding team of Kenyan-based fintech PawaPay, whose API connects up to 25 telecom operators’ mobile money systems and allows merchants from 10 countries to receive and send payments between mobile money accounts.
Gotter is an investor and board member in PawaPay, roles that can be active and passive depending on who’s involved. For Gotter, it was more of the latter, and so this January, he began to explore other opportunities in the mobile money payments space, specifically relating to small businesses. This led him to start Bamba, a mobile-based enterprise software for African micro-merchants, that has raised $3.2 million.
After spending some time in Kenya (where he was now used to paying via mobile money and rarely cash), he noticed that businesses relied heavily on manual bookkeeping and didn’t have software to record their cash and mobile money transactions.
“They also recorded stock components and had some form of customer relationship management on WhatsApp. It wasn’t a coherent picture and was just a big mess,” he said on a call to TechCrunch. “And that’s where we ultimately saw an opportunity to launch Bamba.”
Micro, small and medium-sized businesses make up 90% of all businesses in sub-Saharan Africa. And there are new upstarts that provide digital bookkeeping services for a minute number of them in West Africa, such as Sabi Cash, Bumpa, Kippa and OZÉ. Bamba is a matching solution for Kenya and surrounding East African markets, where these merchants accepted over $200 billion in mobile money payments last year.
The platform comprises an enterprise management software and an Android application that provides tools for micro-merchants to run their businesses. Its features include managing customers, recording stock levels and receiving and making payments.
“Merchants can record what cash and mobile money transactions they collect and their cash and mobile money payouts. And through that initial record keeping, we have an entry point into the business,” said Gotter, who also mentioned that Bamba wants to improve cash collection for merchants primarily done via USSD and M-Pesa pay bill numbers at point-of-sale.
“We have the inventory management components that tie in with how many and which goods are sold. Then the payments bit ultimately resulting in a point of sale type devices like Square or Yoco that lets you get a clearer picture of your business and your activities.”
Lack of credit is a thorn in merchants’ flesh globally; this holds more true in sub-Sahara Africa, where the credit gap for small businesses stands at over $300 billion. This is one prominent area bookkeeping digitization proves its utmost importance for merchants. And despite launching with various entry points into the market, startups in this space converge at that singular point. For Bamba, its solution, intersecting inventory, CRM and payments will allow it to provide merchants with cash advances against their future cash flow.
“These are businesses that have previously not been lent to as their credit score was insufficient to get the appropriate loans. But since we have a pretty accurate picture of our customers in terms of its cash and mobile money receivables, we can make accurate lending decisions to them in a way not done before,” the CEO stated.
Bamba is currently in stealth mode and is yet to launch. Gotter said the five-month-old startup is testing its platform with 30 merchants. Its revenue will come from two streams: a small payment fee paid by merchants and interests from its lending/cash advance product.
“We’re very deep in the research phase and quick iteration cycle to figure out the initial product we want to launch at a greater scale in 12 markets,” said the CEO who founded Bamba with Martin Schramm in January.
This seed funding is integral to speeding up this process of acquiring more users and scaling the engineering team behind the product. Berlin and San Francisco-based 468 Capital led the round, while Presight Ventures and Jigsaw VC participated alongside angel investors such as Laurin Hainy of FairMoney and Leonard Stiegeler of Pulse.
Ludwig Ensthaler, a partner at 468 Capital, in a statement, highlighted why his firm backed the Kenyan-based startup. He said the investment opportunities in enterprise software focused on African small businesses are largely untapped, and Bamba “is well placed with a great product and a solid founder to build a category-defining company.”