Kenyan venture capital firm Uncap unveils Sh4.3bn SME fund
Uncap is expected to select beneficiaries of a Sh4.3 billion (€30 million) fund by assessing their growth potential, business models, and their ability to generate revenues.
Kenya-based venture capital firm Unconventional Capital (Uncap) has rolled out a new Sh4.3 billion (€30 million) fund to support early-stage small and medium enterprises (SMEs) on the continent.
The fund is expected to invest up to Sh14.4 million (€100,000) in each qualifying recipient business, drawn from the sectors of agribusiness, trade and logistics, climate resilience, and financial inclusion.
The financing is expected to be disbursed to the startups in the form of non-collateralised debt- to be paid back from the businesses’ future revenues.
Uncap is expected to select beneficiaries by assessing their growth potential, business models, and their ability to generate revenues.
The beneficiaries must be registered as limited liability companies in Kenya, Rwanda, Uganda, and Nigeria and have at least two years of operations as a minimum.
The business must also have reached at least Sh11.5 million ($80,000) in revenues over the past year.
The firm says it is seeking to offer flexible alternative financing to growth captive sectors underserved by traditional sources.
“SMEs account for about 90 percent of Africa businesses, yet many face challenges in raising capital. The inefficiency of Africa capital markets in effectively supporting SMEs, coupled with limited visibility to a broad investor base, continues to hinder access to essential funding for SMEs across the continent,” Uncap Managing Partner Esther Ndeti said.
The venture capital firm is looking to differentiate itself from peers by offering a non-dilutive, revenue-based financing model to allow SMEs to access growth capital without giving up equity/ownership or collateral.
The fund is backed by key global institutions including the Bill & Melinda Gates Foundation and the Bayer Foundation and has collaborations with entities such as the German Federal Ministry for Economic Cooperation and Development (BMZ).
Uncap was founded in 2019 and officially commenced operations in 2021, leveraging on its revenue-based financing approach to invest in early-stage African SMEs.
The venture capital firm has so far invested in 87 companies across seven countries on the continent, with the businesses falling in eight sectors including agriculture, education, food and beverage, and media or entertainment.
Uncap additionally runs its proprietary technology platform–Level, a standalone subscription-based application that serves to simplify investment management for funders and accelerators in Africa.
The platform enables the venture capital firm to drive its tech-driven investment support services in addition to its delivery of financial solutions.
