Safaricom will start offering loans to start-ups via its venture fund Spark Accelerator that has been buying stakes in young firms.
Safaricom in partnership with M-Pesa Africa and Sumitomo Corporation has announced a cohort of nine start-ups to benefit from the capital injection that also comes with access to market, technology and product development services.
The switch from equity-only investment is geared at opening up the programme to promising start-ups who don’t wish to offer equity.
“The investment will take a combination of equity and debt. The amount will be determined by the need assessment for each company. We will also take any other form of instrument deemed appropriate,” Safaricom told the Business Daily.
The nine start-ups selected for the Spark Accelerator Program have been placed into categories, including embedded finance which has Chumz, a start-up leveraging mobile money to create a community of savers and Nobuk that seeks to ease payment collection and reconciliation.
Chpter which empowers businesses to sell via social platforms, Faidi HR, a cloud payroll and human resources platform, Churpy and automating platform and Twiva, a social-commerce platform have been shortlisted under the SME productivity tools category.
Others forming the first cohort are HealthX Africa and BlackRhino VR both in the content category and Vuna Pay, a platform for agricultural cooperatives shortlisted in the future fintech category.
Safaricom chief executive Peter Ndegwa says the telco’s continued investment in start-ups mirrors its goal of impacting society and the economy. “Leveraging technology to drive meaningful innovation is a strong premise under which the Spark Accelerator programme was founded. “By supporting and investing in these tech-enabled start-ups, we aim to drive significant societal change and economic growth,” he said.
The Spark accelerator program was born from the restructure of the Spark Fund after the nod of Safaricom shareholders last year.
The restructure and transition was prompted by a need to ease the administration of the fund while strengthening on governance processes.
The former Spark Fund was launched in 2014 and invested in six mobile technology start-ups between 2015 and 2017, investing an average of Sh23 million ($175,000) per startup.
In 2020, Safaricom made an additional $5 million (Sh559.3 million) allocation to the Spark Fund opening the program to more startups while increasing the investment in each to Sh65.9 million ($500,000), an amount put in as convertible notes or equity.
Safaricom CEO Peter Ndegwa says the telco’s continued investment in startups mirrors its goal of impacting society and the economy.
“Leveraging technology to drive meaningful innovation is a strong premise under which the Spark Accelerator program was founded. By supporting and investing in these tech-enabled startups, we aim to drive significant societal change and economic growth,” he said.
