The news:
- Uncap, a venture capital (VC) firm based in Munich and Nairobi, has launched a $33 million fund to support the growth of small and medium-sized enterprises (SMEs) across Africa.
- The fund, named Unconventional Capital, launched on Wednesday, September 18, 2024, introduces a non-dilutive, revenue-based financing model that provides early-stage businesses with funding without requiring them to give up equity.
- The fund, co-led by Esther Ndeti, Uncap's current Investment Principal, and Franziska Reh, CEO of Uncap, will work with key partners such as O-Farms, a circular agriculture programme run by Bopinc and funded by the Ikea Foundation, and SAIS, an agritech initiative funded by the German Federal Ministry for Economic Cooperation and Development (BMZ) and implemented by GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH).
These collaborations are expected to unlock new growth opportunities for African businesses, especially in high-impact sectors like agriculture and technology.
Global institutions, including the Bill & Melinda Gates Foundation and the Bayer Foundation, have also extended their support to the fund.
Both Ndeti and Reh will serve as Managing Partners of the fund, which is an attractive alternative for African SMEs that often struggle to raise capital while maintaining control over their operations.
According to Ndeti, this fund aims to transform SME financing by creating a supportive environment for African SMEs, which make up about 90% of businesses on the continent, particularly in underserved areas.
Traditional venture capital models often require founders to dilute their ownership to secure financing. By contrast, Unconventional Capital's revenue-based financing allows businesses to receive the support they need while retaining full control over their operations. This flexibility is attractive for companies navigating the complexities of early-stage growth.
So far, Uncap says it has invested in 87 companies across seven countries in sub-Saharan Africa, with a portfolio of companies active in eight sectors, including agriculture, education, food & beverages, and media & entertainment.
Uncap, established in 2019 but officially launched in 2021, plans to support each company with between $22,000 and $112,000 in funding.
Eligible SMEs must run a registered limited company in Kenya, Rwanda, Uganda, or Nigeria, with at least two years in operation and not less than $89,000 in revenue in the last 12 months.
In addition to launching the fund, Uncap announced the separation of its financial operations from Level, a stand-alone SaaS platform designed to simplify investment management for funders and accelerators in Africa.
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