Zanifu, a Kenyan fintech startup, has successfully secured $11.2 million in debt-equity funding during a pre-Series A funding round.
The round was led by Beyond Capital Ventures and Variant Investments, with additional participation from Founders Factory Africa, AAIC Investment, Google Black Founders Fund, and existing investor Launch Africa.
The total debt-equity funding raised for the startup now amounts to $12.7 million.
“The infusion of funds will primarily be directed towards the expansion of Zanifu’s offerings to distributors and the amplification of its operations within Kenya,” the firm noted.
Established in 2017 by co-founders Steve Biko and Sebastian Mithika, Zanifu has a distinctive focus on extending inventory financing solutions to micro, small, and medium-sized enterprises (MSMEs) in the African Fast-Moving Consumer Goods (FMCG) supply chain.
These businesses often struggle to secure credit from conventional lenders due to their limited organizational structure, incomplete accounting records, and lack of viable assets for collateral.
Zanifu tackles this issue by utilizing the data it gathers from these enterprises and their suppliers to grant credit.
By directly paying the suppliers, Zanifu minimizes the inherent risk associated with extending lines of credit.
“The newly acquired funding will empower Zanifu to provide additional financial services like insurance and develop tools to assist MSMEs with inventory management and bookkeeping.”
The startup’s objective is to provide distributors with stock financing of up to $10,000, while retailers can access goods valued between $200 and $500.
Currently serving 500 distributors and offering credit to 13,000 microbusinesses, Zanifu attributes its success to its robust underwriting algorithm, which has contributed to an impressive repayment rate of 99.2%.
The monthly interest rates for the extended lines of credit range between 5% and 6%.
In order to enhance user experience and convenience, Zanifu has introduced an Android application that facilitates credit limit checks and order placements for customers.
The app also integrates multiple payment options to ensure prompt repayments.
Furthermore, retailers can utilize the app to make payments for inventory acquired from distributors not included in their existing database.
With the latest influx of funding, Zanifu has decided to focus on the expansion of its operations within Kenya, putting its previous plans to expand to markets like Ghana and Uganda on hold.
These markets, like Kenya, also face challenges in accessing sufficient capital for small business operations and growth.
Notably, small enterprises play a crucial role in driving the economy in Africa, constituting nearly 90% of businesses on the continent and significantly contributing to job creation.
In Kenya alone, there exists a substantial financing gap of $19 billion for MSMEs.
Co-founder and Chief Executive Officer (CEO) of Zanifu, Steve Biko emphasized the startup’s commitment to deepening its impact in Kenya by focusing on serving more micro-SMEs and attracting additional distributors.
The priority is to ensure that the capital being disbursed generates meaningful returns for these businesses, aiding in their growth.
Biko stated that the company’s expansion to other markets will be pursued once profitability is achieved.
Licensed by the Central Bank of Kenya, Zanifu has plans to introduce a range of other financial services, including insurance, and develop tools to support businesses in managing their inventory and conducting bookkeeping activities.