Uncap launches a $33 million fund to support the expansion of SME’s in Africa.
Unconventional Capital, a EUR30 million (US$33 million) fund, has been established by early-stage African investor Uncap with the goal of offering non-dilutive, revenue-based financing to early-stage small and medium-sized enterprises (SMEs) throughout Africa.
Through its unique, revenue-based financing model, Uncap has invested in early-stage African SMEs since its founding in 2019 and official launch in 2021.
Its new EUR30 million (US$33 million) fund Unconventional Capital will work with major partners such as O-Farms, a Bopinc-run circular agriculture program funded by the Ikea Foundation, and SAIS, an agri-tech initiative funded by the German Federal Ministry for Economic Cooperation & Development (BMZ) and implemented by GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH).
Through collaborating with its partners, the fund hopes to help companies expand and better support SMEs in high-impact industries by utilizing its networks and experience.
Global organizations like the Bill & Melinda Gates Foundation and the Bayer Foundation have backed the fund, demonstrating its legitimacy and the increasing trust that is placed in Unconventional Capital’s creative approach to alternative funding. For African enterprises overcoming early-stage obstacles, the financial model offers more flexible funding options because it is centered on revenue-based financing rather than stock dilution.
Furthermore, Uncap has divided its financial activities from its in-house developed technology platform, Level. Level is a stand-alone Software as a Service platform that makes investment management easier for funders and accelerators throughout Africa.
Through this calculated step, Uncap will be able to increase the scope of its tech-driven investment support services while concentrating on providing customized finance options.
Franziska Reh, the CEO of Uncap, and Esther Ndeti, the existing investment principal, will each act as a managing partner for the fund. According to Ndeti, Unconventional Capital aims to rethink SME finance by fostering an atmosphere that encourages more companies to prosper in underdeveloped sectors and support the continent’s sustained economic growth.
About 90% of enterprises in Africa are SMEs, although obtaining funding is a difficult task for them. Small and medium-sized businesses around the continent continue to have difficulty obtaining the vital money they need due to the ineffectiveness of African capital markets in assisting SMEs and their restricted visibility to a wide range of investors, the speaker stated.
We have supported creative, alternative funding options for African companies for the last three years. Our goal is to increase our impact by filling funding shortages that early-stage SMEs have as they grow. Ultimately, our goal is to not only assist more companies but also establish new benchmarks for inclusiveness and creativity within the sector.
