Zanifu, a Kenyan fintech company that helps micro, small, and medium-sized businesses finance their inventory, was able to raise $11.2 million in debt and equity funds during a pre-Series A funding round.
With this funding, Zanifu has now raised a total of $12.7 million in debt stock. The significant investment firms Beyond Capital Ventures and Variant Investments were in charge of the round. Other investors who took part were Founders Factory Africa, AAIC Investment, and Google Black Founders Fund. Launch Africa, which was already an investor, kept giving them money.
With this new money, it will be able to improve its services and offer inventory credit services to both stores and distributors. Steve Biko, the co-founder and CEO of the company, says that this strategic move is meant to help companies that have trouble getting loans from traditional financial institutions because of things like a poor organizational structure, incomplete financial records, and a lack of tangible collateral.
Zanifu wants to meet the need by using data gathered from businesses and their suppliers to give credit. The company further reduces risk by sending payments straight to suppliers. The amount of stock funding is based on the size of the business. Distributors can get up to $10,000, while retailers can buy goods worth between $200 and $500.
After expanding its customer base, Zanifu now supports over 13,000 micro Businesses and 500 distributors, according to a report.
“In our first product, we only lent retailers to help them expand, but we found out distributors have a similar problem,” said Biko.
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Zanifu’s growth and plans
After receiving new funds, the company can expand in Kenya. This strategy adjustment means the company will stop growing in Ghana and Uganda, where it’s hard to secure money for operations and growth, exactly like small enterprises.
Across Africa, small companies drive the economy. Nearly 90% of firms are them, and they create many jobs.
Kenya has a $19 billion MSMEs financing gap. Zanifu and other Standard-Chartered Ventures-backed companies like Pezesha and Solv are helping Kenyan businesses acquire financing.
According to co-founder and CEO Steve Biko, the company plans to grow:
“We’re going to central Kenya. Increasing micro-SMEs and distributor partnerships is our goal. We also ensure that the money we grant these businesses grows and makes money. We see it that way now. Once we start making money, we’ll try other markets.”
Zanifu, licenced by the Central Bank of Kenya, can grow by offering insurance. The company hopes to provide high-tech solutions to help businesses manage supplies and books.
About Zanifu
A year after starting the startup in 2017, Biko and Sebastian Mithika started the finance business. The startup has provided 85,000 working capital loans totaling $13 million to 7,000 Kenyan firms. Nairobi’s Woodvale Grove is Zanifu’s headquarters.
Mithika claimed Zanifu is helping 5 million informal small enterprises in the country with $20 billion in MSME loans, according to the World Bank.
The informal sector accounts for 33.8% of Kenya’s GDP and 83.4% of non-agricultural employment. The major obstacle to expansion for micro and small firms is money. Over the last few years, fintech startups like Zanifu have created MSMEs-specific lending products.
Zanifu works with manufacturers and distributors to offer credit to small businesses, with merchants currently buying from the startup’s partners. For manufacturers, distributors, and retailers, Zanifu platforms streamline ordering, payment, tracking, and fulfillment.
Zanifu’s borrowing software lets retailers borrow using historical sales data. After its algorithm rates retailers, they receive a credit limit six hours after signing up. Retailers have one month to repay the 3.5–5% loans.