Sylvia Duruson
Uncap, a venture capital firm with offices in Munich and Nairobi, has introduced a groundbreaking $33 million fund aimed at fostering the growth of small and medium-sized enterprises (SMEs) across Africa.The Unconventional Capital fund presents a unique non-dilutive, revenue-based financing model that provides crucial support to early-stage businesses without requiring equity stakes.
Co-led by Esther Ndeti, Uncap’s Investment Principal, and Franziska Reh, the company’s CEO, the fund will collaborate with key partners to unlock new growth opportunities for African businesses. These partnerships include O-Farms, a circular agriculture program run by Bopinc and funded by the Ikea Foundation, and SAIS, an agritech initiative supported by the German Federal Ministry for Economic Cooperation and Development (BMZ) and implemented by GIZ.
The fund has garnered support from global institutions, including the Bill & Melinda Gates Foundation and the Bayer Foundation. This backing underscores the potential impact of Uncap’s innovative approach to SME financing in Africa.
Ndeti and Reh, serving as Managing Partners, emphasize the fund’s goal of transforming SME financing by creating a supportive environment for African businesses. This is particularly crucial as SMEs constitute approximately 90% of businesses on the continent, often in underserved areas.
Traditional venture capital models typically require founders to dilute their ownership to secure financing. In contrast, Unconventional Capital’s revenue-based financing allows businesses to receive necessary support while maintaining full operational control. This flexibility is especially valuable for companies navigating the challenges of early-stage growth.
Uncap’s track record includes investments in 87 companies across seven sub-Saharan African countries. Their portfolio spans eight sectors, including agriculture, education, food & beverages, and media & entertainment. The firm, established in 2019 and officially launched in 2021, plans to support each eligible company with funding ranging from $22,000 to $112,000.
To qualify for funding, SMEs must be registered limited companies in Kenya, Rwanda, Uganda, or Nigeria. They should have at least two years of operational history and a minimum revenue of $89,000 in the past 12 months.
Coinciding with the fund’s launch, Uncap announced the separation of its financial operations from Level, a standalone SaaS platform. Level is designed to streamline investment management for funders and accelerators in Africa, further enhancing the ecosystem for SME growth.
This initiative by Uncap represents a significant step towards addressing the financing challenges faced by African SMEs. By offering a flexible, non-dilutive funding model, the fund aims to empower entrepreneurs to grow their businesses while retaining control. As Africa’s SME sector continues to evolve, innovative financing solutions like Unconventional Capital could play a crucial role in driving economic growth and development across the continent.
