At a time when South African SMEs need it most, FinTech SME capital provider, ProfitShare Partners has announced that it has secured R100 million ($5.8 million) from the SA SME Fund. This will allow ProfitShare Partners to partner with more small and medium businesses to provide much-needed capital to catalyse growth for SMEs.
“This deal is a great win for SMEs who can’t access traditional funding. This capital helps ProfitShare Partners financially partner with hundreds of SMEs to catalyse their businesses to becoming bigger and more sustainable, enabling them to attract traditional funding in the future,” said Andrew Maren, CEO and founder of ProfitShare Partners.
Here Is What You Should Know
- SA SME Fund ‘s latest investment in ProfitShare Partners will enable the firm’s business model to offer South African SMEs capital for high-impact growth.
- SA SME Fund invests in intermediaries that provide debt and equity instruments to SMEs.
“The availability of funding and access to working capital has always been a challenge for SMEs. This has been exacerbated by the country’s economic crisis which has been deepened by the pandemic. PSP will provide SMEs with an alternative funding model to act as a catalyst for their survival and growth. The SA SME Fund is extremely pleased to be announcing this investment; it could not be more timeous,” said Ketso Gordhan, chief executive officer (CEO) of the SA SME Fund.
- The ProfitShare Partners business model is best described as a hybrid between venture capital and private equity, however it does not involve taking up shares in its clients’ businesses but rather, partners with them principally on the specific transaction. The FinTech business provides the capital and business support needed for the SME to deliver on their contract.
“Our model is designed to give SMEs a boost. As opposed to providing capital as a form of a loan, we share in the profit and assist our clients in achieving financial sustainability to the point where they are either in a position to qualify for traditional finance or they no longer require finance,” Maren continues.
- SMEs in supply and delivery who have an order but cannot access the capital needed to deliver, either because they do not qualify or because they do not have the necessary track record, financial history or paperwork, now have improved chances of gaining access to business and delivering more efficiently on their contracts.
“This investment also shows the confidence that funders now have towards our disruptive type of business model, which has demonstrated the real impact we’ve had with our existing SME clients,” Maren concluded.
Read also: ProfitShare Partners Launches A $5.9 Million Fund For South African SMEs
- ProfitShare Partners financially partners on transactions with SMEs to deliver successfully on their orders and contracts with reputable organisations, allowing them to access bigger business and grow exponentially in short periods of time. Since introducing its business model to the market, the FinTech disruptor has assisted more than a hundred SMEs and helped numerous SMEs grow their turnover tenfold in less than two years.
- The SA SME Fund is a private sector led initiative born out of the ‘CEO Initiative’, a partnership between the SA Government and CEOs to stimulate the economy and create jobs. The shareholders of the Fund are 50 of South Africa’s largest corporates and the Public Investment Corporation. The Fund has R1.2 billion of investable capital, which it invests via partnerships with fund managers. The primary focus areas are venture capital and growth capital.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer