South African start-up Qwili, which offers a hybrid product for small and medium businesses, has raised $1.2 million in annual seed funding after closing an undisclosed pre-seed round.
E4E Africa, a South African venture capital firm, led the round, which welcomed participation from Strat-Tech, Nect Chemia, Incomplete Global and Codec Ventures, and angels such as Ashwin Ravichandran and Kani Maqubela.
In a statement shared with TechCrunch, Quilly said it will use the investment for app development, new hires (to improve operational and development capabilities) and hardware production.
The company’s hardware is an NFC-enabled low-cost smartphone called Qwili Pula that allows merchants to send and receive payments. The platform’s software (which can be downloaded as an app on any smartphone or installed automatically on Qwili phones) turns these smartphones into point-of-sale devices, allowing merchants to sell value-added services such as data and pay TV subscriptions, groceries and more. clothes for their customers. CEO Luyolo Cijake told TechCrunch on a call that Qwili phones will sell for $60 to $70.
Qwili says its target audience is digitally isolated and unbanked customers. The mobile application serves as a “digital sales portal” for small and medium-sized traders (agents) to facilitate the sale of goods and value-added services, the company said in a statement.
Initially, Sijake and his collaborators Thandewefika Radebe and Tapfuma Masunzambwa started Quilini as a separate idea. Employing a business-to-consumer model, Qwili sells these devices to users who use the platform’s digital wallet to purchase value-added services. The plan is that as users move the phone and Qwili takes a portion of each transaction, the phone will eventually market itself and users can buy from Qwili. Turns out it didn’t work, hence the traders pole.
“In those early stages, the phone wasn’t answering fast enough, and there wasn’t enough acceptance of digital services. But what has happened is that people have started using the digital wallet to sell pay-TV, electricity and other valuable services to people in their neighbourhood, the CEO said. “They’re starting to use the phone in ways we didn’t think of, and it’s making more business sense. That’s how we arrived at this agent model: essentially, people use the equipment and software to sell services to others rather than buying them for themselves.
Image Credits: Willy
Qwili sold more than a thousand smartphones to end users before the pivot. The business-to-business model has also picked up steam, with 500 micro and small merchants using the hybrid platform (about half of which use Qwili’s NFC-enabled smartphones). A typical business customer is a faceless seller who sells digital products informally to close communities and networks. Buying a point of sale with limited functionality does not make economic sense for this category; On the other hand, a smartphone is enough to collect payments and promote products through WhatsApp.
According to Cijake, Quilly does not make a profit from selling smartphones, as the company only wants to influence merchants who use the platform for business purposes. He takes a commission on every sale made on the application. “It’s about empowering people who are currently digitally excluded to participate in the different kinds of value that digital inclusion can bring,” he said. “So the real barrier to that was the hardware: a reliable quality smartphone is very expensive, which means mobile internet access is very expensive. So we hope to continue to offer smartphones at a lower price.”
Kwily said in a statement that the impact will be felt in three areas: First, agents on the platform will receive an alternative, flexible source of income through commissions earned on sales made through Kwily. Second, the clients of these agents have greatly reduced the time, efficiency and financial barriers between them and the services they need. Third, value-added service providers have previously facilitated offline market access. Qwili says the funding has allowed it to scale up its work to see a growing impact in all three areas.
According to Cijake, Quilly currently makes $75,000 a month in GMV from its 500 merchants. However, the South African platform – which saw strong transaction growth of more than 300% from Q1 to Q2 2022 – plans to take those numbers from 3,000 merchants to $1 million after expanding into neighboring Botswana.
“We believe Qwili is both highly scalable and highly impactful. Qwili agents love the entrepreneurial opportunity Qwili provides while providing e-commerce and affordable goods and services to their communities,” said Bastian Hochstenbach, Founder and Managing Partner of E4E Africa. “Qwili’s founding team is exceptional. , and its business model is well-suited to E4E Africa’s need to support diverse founders in a rich, innovative and inclusive Africa.”
