In Nigeria’s bustling traditional retail sector, a vast ecosystem worth over $200 billion, digitization is steadily transforming how small and medium businesses (SMBs) operate. With over 40 million businesses driving this sector, many are now embracing technology to streamline their processes.
One company leading this shift is Pastel, a Nigerian startup offering digital tools to empower small businesses. Recently, the company secured $5.5 million in seed funding, led by TLcom Capital, with participation from Global Founders Capital, Golden Palm Investments, DFS Labs, Ulu Ventures, Plug and Play, and Soma Cap. This round builds on an earlier pre-seed investment of $620,000.
Streamlining Business Operations for Small Retailers
Founded by Abuzar Royesh, Olamide Oladeji, and Izunna Okonkwo, Pastel aims to address critical challenges faced by small businesses in Nigeria, including inefficiencies in managing transactions, inventory, and customer relationships. The company’s flagship product, Sabi, is a bookkeeping app that helps merchants track transactions, issue receipts, manage cash flow, and handle customer credit.
Small businesses in Nigeria have traditionally relied on manual methods like ledgers and paper notes, which are prone to errors and inefficiencies. By offering a free and user-friendly solution, Pastel has managed to attract over 100,000 merchants since its launch, with more than 45,000 actively using the app.
Expanding Beyond Bookkeeping
Recognizing the diverse needs of its users, Pastel has expanded its product suite, choosing a modular approach instead of bundling all features into a single app. These additional offerings include:
Quick Receipt: A tool for generating invoices and receipts, already adopted by over 60,000 merchants.
Swift Money: A financing solution leveraging traditional Nigerian savings groups, locally known as Ajo, to provide loans and savings tools.
The Swift Money app collaborates with ajo leaders to facilitate savings and credit access for small businesses. Leaders use the app to manage their groups, track savings, and request loans for members based on their saving history.
Revenue and Growth Strategy
Pastel recently began generating revenue through interest and fees on loans provided via Swift Money. The company plans to secure additional debt financing to scale its lending operations further.Unlike competitors, Pastel prides itself on a product-led growth strategy, iterating its offerings based on in-depth user feedback. This focus on usability and customer satisfaction has enabled it to stand out in a crowded market that includes players like Kippa, OZÉ, and Bumpa.
What’s Next for Pastel?
With fresh funding in hand, Pastel plans to enhance its current products and develop new tools for productivity and financial management. The company’s ultimate goal is to empower small businesses to thrive in an increasingly digital economy.
By addressing key pain points and providing practical solutions, Pastel is positioning itself as a vital partner for Nigeria’s SMBs, contributing to their long-term growth and sustainability.
