Kenya’s Umati Capital, an SME lending startup that provides invoice discounting and other forms of working capital financing in East Africa recently received funding from Accion Venture Labs.
“East African farmers, like all small business entrepreneurs, need access to capital to expand their businesses, hire more employees, or buy materials in bulk. And generally, the banking system fails to meet their needs,” said Accion President and CEO Michael Schlein. ”Umati will provide affordable, timely working capital to help Kenyan farmers and other small enterprises grow and reach their potential.”
Founded by ex-Ringier Africa’s Munyutu Waigi, Umati Capital partners with upstream value-chain buyers to provide receivables-based loans to producers and finances its loans through wholesale debt.
Umati plans to source and conduct due diligence on the majority of its SME clients from brokers who are engaging on the platform.
“We believe that our technology-driven approach presents an exciting opportunity to disrupt traditional financial services and fundamentally change how SMEs access capital and process payments,” said Munyutu Waigi, co-founder of Umati Capital. “We are thrilled to be partnering with Accion to expand our business and serve SMEs throughout the region.”
Accion had set up a $10 million initiative dedicated to providing seed capital and management support to innovative financial inclusion start-ups.”In Africa, most SMEs are unable to secure financing from banks and other providers to address working-capital needs,” said Paul Breloff, Managing Director of Accion Venture Lab. “Banks typically require a proven track record and it usually takes them months to make a decision before issuing a line of credit. By letting enterprises borrow against their invoices and providing financing in only a couple of days, Umati has huge potential to streamline agricultural and other value chains, capturing more value for smaller enterprises in the region.”
