Nigerian merchant solution startup, Traction, has raised $6 million in seed round funding led by Multiply Partners and Ventures Platform.
The seed round funding also had participation from P1 Ventures amongst other investors. The capital infusion aims to drive expansion, accelerate growth, and strengthen the company’s team.
Traction is a one-stop platform to address challenges faced by merchants in the continent. It 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.
The startup also offers a range of financial services, Including merchant wallets, cash advance loans, savings, and bill payments.
Co-founder Mayowa Alli explains that Traction’s goal is to be the digital operating system for businessin Africa.
“We want to help them digitize their operations, efficiently manage finances, and make better-informed decisions,” Mayowa explains.
Traction uses payments as an entry product to offer a wider range of services to merchants. The company sets itself apart in the competitive merchant acquiring space by maintaining a dedicated focus on businesses, unlike many agent-led models attempting to pivot towards business services.
Co-founder, Dolapo Adejuyigbe emphasized that from the outset, Traction has been centered on serving retail business owners, avoiding agency banking. Its products and interfaces are tailored to meet the specific needs of business owners and managers. The deep support model was designed based on feedback from business owners, who value having a dedicated relationship manager to guide them through their digitization journey.
Furthermore, Traction has forged partnerships with other ecosystem players, allowing them to offer vertical-specific propositions to customers. For instance, businesses in the food and hotel sectors, can access their menus and reservation management systems, respectively, seamlessly integrating them with their payments .In 2022, Traction achieved remarkable growth with a 7x increase in revenue and an 8x surge in transactions while serving over 70,000 businesses in Nigeria.
The company remains committed to sustaining this upward trajectory in Nigeria in 2023, as more businesses actively seek to digitize their payment processes and enhance overall operations, driven by valuable insights from the cash crunch and their aspirations for business expansion. While the seed funding has been focused on scaling operations in Nigeria, Traction plans over the next 18 months to explore growth outside Nigeria either organically or through M&A
Traction also obtained its payments solution services license from the Central Bank of Nigeria, a 3-in-1 license in 2022, allowing it to operate as a payment solution provider across various payment categories. This license marks a significant milestone for Traction, making it one of the pioneering Fintech companies to receive such recognition from the regulatory authority.
“Traction stands out as more than a payment processor, it is an indispensable growth partner to 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,” Dotun Olowoporoku, General Partner, Ventures Platform reiterated.
The milestone seed funding empowers Traction to extend its operations throughout the African continent, driving significant impact on SMEs and reinforcing its status as a transformative player in the tech ecosystem.