There's never been an easier time to start a business. Want a website to advertise your services? There's WordPress. Need a professional looking email? There's Google Workspace. Want eye-catching designs for your social media? Canva can help.
As easy as starting a business has become, managing and scaling your operations remains a challenge.
There are more than 40 million micro, small, and medium enterprises in Africa and about 600,000 formal MSMEs representing 90% of all businesses on the continent and 80% of employment.
However, 80% of them will fail within the first five years and fail to grow beyond their founders.
Scratching an entrepreneurial itch
As a young boy, Haneef Abbas dreamt of starting a business even though he was not sure when that would happen.
“Right from a very early age, since I was about 15, I have had a passion for entrepreneurship and investment. I had always known that I would start a business immediately after school, buy a company, or rise through the ranks to become an MD and run a financial services company.”
After graduating from the University of Lagos with a bachelor's degree in finance, he joined FSDH Merchant Bank as an intern. Over the next few years, he gained experience in the financial services industry at Access Bank, PwC, and ARM.
In 2018, he founded Leonine Investment Services to help businesses maximise value. The firm was set up to provide financial advisory for businesses looking to raise money, train business owners on finance fundamentals, and provide tech-enabled services.
He could only provide the first two due to his financial services background but struggled to find a reliable partner for the tech side of things.
Join over 3,000 founders and investors
Give it a try, you can unsubscribe anytime. Privacy Policy.
Meanwhile, he was experiencing some of the challenges that small business owners have to deal with. He couldn't find a tool to help him manage the financial aspect of his business, and even when he did, they were priced in dollars, a problem for someone doing business in a country that frequently experienced volatile currency movements.
When he couldn’t find a tool to solve that problem, he drew on his more than ten years of finance experience and put together some financial models and sheets to help the business issue invoices, track records, get reports, and do taxes.
But, while this solved his problem temporarily, many other business owners with the same issue had no solution and no financial skills to build financial models as he had done.
Enter Jalil Ogunniyi, Co-founder and CTO at Aster. Coming from a hardware engineering background, he developed an interest in software engineering seven years ago and has worked as a software engineer in companies like Andela and Branch, primarily in financial services.
Shortly after Abbas conceived the idea for Aster, they both reconnected and, with their combined experiences in finance and software development, decided to launch Aster.
“I have known Jalil for over 20 years. Our mothers are best friends and have known each other since university, but we reconnected about two years ago. We discussed this project and connected with the idea. I had the business and finance skills; Jalil had the software and some finance skills. And we felt that this was something we needed to do.”
Every startup needs someone with expertise in raising funds, and Habeeb Olusanya is that guy for Aster. The last member of the trio comes from a mechanical engineering background and has over four years of experience in financial advisory and investment banking.
With his expertise, he has supported Aster with financial advisory, preparing pitch decks, business plans, and other supporting documents for seed funding rounds. He was also pivotal in bringing in Aster’s initial customers for test running and gathering opinions to improve the product.
The mission
Although Africa's SME market is large, Aster doesn't plan to go after the entire market segment just yet. According to Abbas, it continues to refine its target market but would begin with owner-managed businesses in the services sector, including businesses in the professional, creative, and consulting services sectors
"The core belief we have at Aster is that when businesses prosper, societies prosper. The way we're thinking about it is that we want to empower individuals to start and grow businesses. So that person who has worked for five years in the banking industry or accounting space has some knowledge or expertise, but they don't have the right tools to support them," Abbas shares.
In 2022, work began on the MVP which was completed in June 2023. Abbas' business, Leonine Investment Services, was the first client but it has grown rapidly and now has more than 700 businesses on its roster, 20% of which are active.
Signing up on Aster provides businesses with access to a comprehensive suite of financial management tools. There's an invoicing tool, an expense management tool, and a services page. But that's not all. Aster customers can also access detailed reports in addition to a dashboard to manage clients.
Using the platform was free until Q4 2023, but it has since begun charging users. After completing a 14-day free trial, businesses must pay for a subscription to access a wider range of services.
On average, small businesses spend between $10 and $20 monthly on accounting software. For a small business in Nigeria that has to deal with the constantly fluctuating exchange rate, this could cost upwards of ₦15,000. Abbass notes that these considerations influence Aster’s pricing structure.
On the free plan, businesses can only have one user, send 100 invoices, and track expenses. In addition, they do not get tax reports or a financial statement. However, a monthly subscription for the basic plan goes for ₦10,000 while a premium subscription costs ₦20,000. Getting an annual plan unlocks a 10% discount.
It takes between six and 12 months for the average Aster customer to get on board the premium plan, and Abbass notes that new businesses are more likely to take their time as they are pre-revenue.
In response, it is tweaking its customer acquisition strategy to go after revenue-generating businesses in addition to adding tools that aid with customer outreach for businesses.
"We want owner-managers to still have access to some of the most fundamental things they need at the start without squeezing them for subscription at the early stages.
"One of the key parts of our mission is to empower people to start businesses, and part of empowering them to start is making sure that we're not squeezing them too early for revenue, and that's the sacrifice that we're happy to make," he says.
Market expansion over competition
Managing a business’ finances is crucial, hence the increase in the number of businesses serving that segment. Zoho Books, QuickBooks, and Sage are just a few options that businesses can use.
While acknowledging the presence of much larger competitors, Abbass argues that the market is still nascent without any clear winners.
“Rather than think of competitors, I think the real question for us is how do we expand the market? Because clearly, there is a market to be created, not necessarily stealing from competition, and I think anybody that wins that is going to be the leader.
Leveraging on its understanding of the local market, it is building tools to help businesses file their tax returns using Aster and is working on partnerships to aid this integration.
In light of the knowledge gap that many new entrepreneurs experience, Aster is committed to educational initiatives. The startup plans to roll out an academy-like platform to provide courses on essential business skills, from pricing strategies to tax responsibilities.
As the company forecasts growth, targeting approximately 50,000 registered users and about 10% as paid subscribers within the next 18 months, it continuously seeks to ensure product-market fit before scaling further.
