South African fintech, ProfitShare Partners has secured ZAR100 million (US$5.87 million) in debt and quasi-equity funding from the SA SME Fund to help it provide small and medium enterprises with much-needed capital to spur growth and assist them during the COVID-19 crisis.
ProfitShare Partners uses tech to fast-track SME performance and delivery via its profit-sharing business model. As a short-term capital partner to small businesses, the fintech firm also provides the professional business expertise and guidance.
The company had secured a ZAR25 million (US$1.47 million) capital line from the Vumela Fund in 2019, and has now secured a further ZAR100 million (US$5.87 million) from the SA SME Fund; a fund earmarked to invest in intermediaries that provide debt and equity instruments to SMEs. Three-quarters of the fund amount is in the form of a five-year loan, and the other quarter quasi-equity.
ProfitShare Partners with SMEs on transactions to deliver successfully on their orders and contracts with reputable organisations, thereby allowing them to access bigger business opportunities and grow exponentially in short periods of time. Since launching its business model, the company has assisted over 100 SMEs.
The company’s founder and chief executive officer (CEO) Andrew Maren said the deal was a great win for SMEs that cannot access traditional funding.
“This capital helps ProfitShare Partners financially partner with hundreds of SMEs to catalyze their businesses to becoming bigger and more sustainable, enabling them to attract traditional funding in the future,” he said.
“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.”
Ketso Gordhan, CEO of the SA SME Fund, said the availability of funding and access to working capital had always been a challenge for SMEs. he further stated that:
“The SA SME Fund is extremely pleased to be announcing this investment; it could not be more timely.”
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