Qwili, a startup providing a hybrid sales product to micro and small traders in South Africa, has raised $1.2 million in seed funding for a year after the close of an undisclosed pre-seed round.
E4E Africa, a South African venture capital firm, led the round, welcoming the participation of other companies such as Strat-Tech, Next Chymia, Untapped Global and Codec Ventures and angels such as Ashwin Ravichandran and Kanyi Maqubela.
In a statement shared with MovieUpdates, Qwili said it would use the investment for app development, hiring (improving operations and development capabilities) and hardware manufacturing.
The company’s hardware is a low-cost NFC-enabled smartphone called Qwili Pula, which allows merchants to send and receive payments. The platform’s software (which can be downloaded as an app on any smartphone or automatically installed on Qwili’s phones) turns these smartphones into point-of-sale devices that allow merchants to sell value-added services such as data and pay TV subscriptions, groceries and clothing to their customers. CEO Luyolo Sijake told MovieUpdates during a call that Qwili’s phones cost between $60 and $70.
Qwili says its target audience is digitally excluded and non-banked customers. The mobile app serves as a “digital sales portal” that allows micro and small merchants (agents) to facilitate the sale of value-added goods and services, the company said in a statement.
Initially, Sijake and his co-founders Thandwefika Radebe and Tapfuma Masunzambwa Qwili launched as another idea. They used a business-to-customer model where Qwili sold these devices to individual users who used the platform’s digital wallet to purchase value-added services. The plan was that if users operated the phone and Qwili took a portion of each transaction, the phone would eventually commercialize itself and users could buy them from Qwili. That turned out not to work, hence the pivot to traders.
“In those early stages, the phone didn’t pay back fast enough and there wasn’t enough adoption of the digital services. But what happened was that people started using the digital wallet to sell pay TV, electricity and other value-added services to those around them,” the CEO said. “They started using the phone in a way we didn’t intend, which made more sense commercially. That’s how we arrived at this agent model: essentially people use the device and software to sell to others instead of buying services for themselves.”
Qwili sold more than a thousand smartphones to end users before the pivot. The business-to-business model has also picked up steam as 500 micro and small merchants use the hybrid platform (about half use Qwili’s NFC-enabled smartphones). The typical business customer is a storefront salesperson who informally sells digital products to immediate communities and networks. Buying a point-of-sale device with limited functionality makes no economic sense for this category; on the other hand, a smartphone where they can collect payments and advertise products via WhatsApp is sufficient.
Sijake said Qwili does not benefit from smartphone sales, as it is just a means for the company to influence merchants who use the platform for commercial purposes. It costs a commission on every sale made on the application. “It’s about empowering people who are currently digitally excluded to participate in the different forms of value digital integration has to offer,” he said. “So the real barrier to that was hardware: a reliable quality smartphone is too expensive, meaning access to mobile internet is too expensive. So we hope to continue to make smartphones available below cost.”
Qwili said in a statement that the impact is felt in three areas: First, agents on the platform have access to an alternative, flexible source of income through the commission they earn on sales through Qwili. Second, customers of these agents see time, efficiency and financial barriers between them and the services they need are significantly minimized. And third, the value-added service providers have facilitated access to a previously offline market. Qwili says the funding will allow it to accelerate the pace at which it scales its operations to see the impact grow in all three of these areas.
According to Sijake, Qwili currently processes $75,000 monthly GMV from its 500 traders. However, the South African platform — which saw strong revenue growth of more than 300% from Q1 to Q2 of 2022 — plans to get those numbers to $1 million from 3,000 merchants by the end of the year after expanding. to neighboring Botswana.
“We believe that Qwili is both highly scalable and high-impact. Qwili agents love the entrepreneurial opportunity Qwili offers them, while giving their community access to e-commerce and access to reasonably priced goods and services,” said Bastiaan Hochstenbach, co-founder and managing partner at E4E Africa about the investment. “Qwili’s founding team is exceptional and its business model fits well with E4E Africa’s ambition to support diverse founders in creating a thriving, innovative and inclusive Africa.”