Traction’s $6m raise amidst decreasing funding in Africa

We hope this one finds you well, getting a good weekend rest. Today, we are sharing with you a very exciting development in the world of African startups and Venture Capital fundraising – the recent US$6 million capital raise of Traction, a groundbreaking Nigerian merchant solution startup.

Talk about a strong B2B business model, with innovative digital solutions for Africa’s business filled continent. Traction is a comprehensive one-stop platform for businesses, they offer a seamless way to accept payments, manage finances, and access essential operational tools. With Traction, business owners can accept payments through various methods, use point-of-sale software to record sales, track inventory, manage customers, and access a range of financial services. 

Founded by Mayowa Alli and Dolapo Adejuyigbe in 2020, Traction has quickly gained traction (pun intended), attracting the attention of both investors and industry participants by addressing crucial challenges and offering solutions that resonate with the African market.

In a bold testament to its potential and market relevance, Traction recently raised a US$6 million seed round to drive expansion, accelerate growth, and strengthen its team. The round was led by Multiply Partners and Ventures Platform, with participation from other investors. The company's founders have highlighted their plans to speed up growth as they explore expansion to other African countries outside Nigeria.

So what?

Now, you may be wondering, "What does this mean for the wider African startup ecosystem?” or if you weren’t wondering that, you were probably thinking, “why should I care?" 

The Sub-Saharan African market has over 44 million MSMEs (World Bank), and Nigeria alone has over 36 million of which about 87% operate outside the formal sector (NBS). What is this, if it isn’t a thriving market for a startup with Traction’s offerings? With this solution, business growth in Africa takes a leap and as startups like Traction secure funding, they can scale their operations, create job opportunities, and contribute to economic growth and development in the region.

More generally for VC fundraising in Africa, there has been a downward trend. African startups raised $1.43 billion in H1 2023, a 46% drop from H1 2022 which recorded $2.65 billion. With startups in Africa getting less funding from VC’s, Traction's seed round contributes to boosting and restoring investor confidence in the African startup ecosystem.