Uncap, a venture capital firm based in Munich and Nairobi, has launched a $33 million fund aimed at helping small and medium-sized enterprises (SMEs) in Africa grow. The fund, called Unconventional Capital, was introduced on September 18, 2024. Unlike traditional funding models that require businesses to give up part of their ownership, this fund offers a non-dilutive, revenue-based financing model. This means early-stage businesses can receive funding without having to give up equity.
The fund is co-led by Esther Ndeti, Uncap’s Investment Principal, and Franziska Reh, CEO of Uncap. Both Ndeti and Reh will serve as Managing Partners. Uncap has partnered with organizations like O-Farms, a circular agriculture program funded by the Ikea Foundation, and SAIS, an agritech initiative funded by the German government, to support African businesses. These partnerships are expected to create growth opportunities, particularly in the agriculture and technology sectors.
Global organizations, including the Bill & Melinda Gates Foundation and the Bayer Foundation, have also shown their support for the fund. Ndeti mentioned that the fund aims to transform how SMEs in Africa receive financing, especially in underserved areas. SMEs make up about 90% of businesses on the continent, but they often struggle to secure capital while maintaining control over their operations.
Unconventional Capital offers a solution to this issue by providing businesses with the funding they need without forcing them to dilute their ownership. This is especially beneficial for early-stage businesses that need flexibility while growing.
Uncap has already invested in 87 companies across seven countries in sub-Saharan Africa, covering sectors such as agriculture, education, food and beverages, and media and entertainment. Each company receives between $22,000 and $112,000 in funding. To be eligible for this support, businesses must be registered in Kenya, Rwanda, Uganda, or Nigeria, have been in operation for at least two years, and have earned a minimum revenue of $89,000 in the past year.
In addition to launching the new fund, Uncap announced the separation of its financial operations from Level, a standalone software platform. The level is designed to simplify investment management for funders and accelerators in Africa.
Uncap’s new fund offers much-needed support to African SMEs, providing them with financial backing without requiring them to give up control of their businesses. This innovative approach is expected to make a significant impact on the growth and development of small businesses across the continent.
