Uncap’s Revolutionary Approach to SME Financing


Uncap, a venture capital firm with headquarters in Munich and Nairobi, has unveiled a $33 million fund aimed at supporting the growth of small and medium-sized enterprises (SMEs) across Africa. Launched on September 18, 2024, the fund, named Unconventional Capital, introduces a game-changing approach by offering revenue-based financing—a model that allows early-stage businesses to secure funding without sacrificing equity.

This initiative comes at a crucial time for African SMEs, which often face significant barriers to securing traditional financing while maintaining full ownership of their companies.

A Non-Dilutive, Revenue-Based Model for Early-Stage Growth


Unlike traditional venture capital models that require founders to dilute their ownership stakes, Unconventional Capital provides a more flexible solution. This revenue-based financing model enables businesses to raise capital by repaying a percentage of their future revenues, thus preserving control over their operations. This approach is especially appealing for SMEs navigating the complexities of early-stage growth, where maintaining ownership can be critical to long-term success.

Esther Ndeti, Uncap’s Investment Principal, explained, “This fund aims to transform SME financing by offering a supportive environment where businesses can grow without the burden of giving up equity.” She emphasized that this model addresses the unique needs of African SMEs, which make up 90% of businesses across the continent, particularly in underserved areas.

Strategic Collaborations to Unlock Growth


The new fund is co-led by Esther Ndeti and Franziska Reh, Uncap’s CEO, and is supported by key partnerships designed to unlock new growth opportunities in high-impact sectors like agriculture and technology. These collaborations include:

  • O-Farms, a circular agriculture program run by Bopinc and funded by the Ikea Foundation.
  • 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 partnerships position Uncap’s fund to make a meaningful impact by addressing the funding needs of African businesses working in sectors critical to the continent’s development.

Global Support and Commitment to African SMEs


Uncap’s $33 million fund has attracted support from major global institutions, including the Bill & Melinda Gates Foundation and the Bayer Foundation. This backing underscores the growing recognition of African SMEs as key drivers of economic growth and innovation across the continent.

As Managing Partners of the fund, both Ndeti and Reh aim to build a strong foundation for African entrepreneurs by providing them with capital that enables them to scale without compromising ownership or control. This approach is particularly important in Africa, where access to finance remains a significant challenge for SMEs.

Uncap’s Growing Portfolio: Supporting a Diverse Range of Sectors


Since its inception, Uncap has already made a significant impact, investing in 87 companies across seven countries in sub-Saharan Africa. Its portfolio spans eight sectors, including agriculture, education, food & beverages, and media & entertainment, demonstrating the broad potential of SMEs across various industries on the continent.

Uncap, which was founded in 2019 and officially launched in 2021, continues to focus on providing between $22,000 and $112,000 in funding to eligible businesses. The fund’s criteria are clear: SMEs must be registered limited companies in Kenya, Rwanda, Uganda, or Nigeria, with at least two years of operation and $89,000 in revenue in the last 12 months.

Focus on Financial Inclusion and Operational Independence


In addition to launching the Unconventional Capital fund, Uncap has also 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. This separation allows Uncap to focus on its core mission—providing flexible, revenue-based financing to African SMEs—while Level continues to offer investment management solutions to other stakeholders in the ecosystem.