Uncap, a venture capital enterprise with headquarters in Munich and Nairobi, has recently unveiled a new $33 million funding initiative aimed at fostering the expansion of small and medium-sized enterprises (SMEs) throughout the African continent. This initiative, dubbed Unconventional Capital, was officially introduced on Wednesday, September 18, 2024, and it presents a novel approach to investment known as non-dilutive, revenue-based financing.
This approach is particularly advantageous for early-stage companies as it provides them with the necessary capital infusion without compelling them to relinquish any ownership stakes. The leadership of the Unconventional Capital fund is shared between Esther Ndeti, who holds the position of Investment Principal at Uncap, and Franziska Reh, the Chief Executive Officer of the firm.
Together, they are collaborating with prominent partners such as O-Farms, an initiative focused on circular agriculture managed by Bopinc and financially backed by the Ikea Foundation, as well as SAIS, an agritech project supported by the German Federal Ministry for Economic Cooperation and Development (BMZ) and executed by GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH).
These strategic partnerships are anticipated to catalyze the growth of African enterprises, particularly those operating within the critical sectors of agriculture and technology. The fund has also garnered support from major global entities, including the Bill & Melinda Gates Foundation and the Bayer Foundation.
Both Ndeti and Reh will oversee the fund as Managing Partners, offering a compelling funding alternative for African SMEs that often face challenges in securing capital without sacrificing their autonomy. Ndeti has expressed that the primary objective of the fund is to revolutionize the financing landscape for SMEs in Africa, which represent approximately 90% of the business ecosystem on the continent, with a special focus on regions that traditionally lack sufficient financial support.
Unlike conventional venture capital investments that necessitate founders to dilute their equity for funding, Unconventional Capital’s revenue-based financing model allows businesses to access necessary funds while maintaining complete control over their operations. This model is particularly appealing to companies that are in the throes of early-stage development and are dealing with the inherent complexities of growth.
To date, Uncap has reported investments in 87 companies across seven countries within sub-Saharan Africa, with these companies being active in a diverse range of sectors, including but not limited to agriculture, education, food & beverages, and media & entertainment.
Since its establishment in 2019 and its formal launch in 2021, Uncap has been committed to providing financial support ranging from $22,000 to $112,000 to each company in its portfolio. To be considered eligible for funding, SMEs are required to be registered as limited companies in Kenya, Rwanda, Uganda, or Nigeria, have a minimum of two years of operational history, and have generated revenue of no less than $89,000 in the preceding 12 months.
In conjunction with the fund’s launch, Uncap has also announced its operational separation from Level, an independent SaaS platform that has been developed to streamline the investment management processes for funders and accelerators within the African continent.
