Zanifu, a prominent Kenyan fintech specializing in providing inventory financing to micro, small, and medium-sized businesses, has successfully raised $11.2 million in a pre-Series A funding round. The round was led by Beyond Capital Ventures and Variant Investments, with participation from Founders Factory Africa, AAIC Investment, Google Black Founders Fund, and existing investor Launch Africa. The latest injection of funds brings Zanifu’s total debt-equity funding to an impressive $12.7 million.
Zanifu’s core mission revolves around extending much-needed inventory credit to retailers, enabling them to sustain and grow their operations. This infusion of capital will further empower the fintech to extend its services to distributors as well, as revealed by Steve Biko, the co-founder and CEO of Zanifu, in an exclusive interview with TechCrunch.
The company specifically targets businesses that face difficulties accessing credit from conventional financial institutions due to their lack of formal structure, accounting records, and tangible assets suitable for collateral. Despite these challenges, these businesses require credit to support their operations and expansion efforts. Zanifu employs a data-driven approach to offer credit to these enterprises, leveraging information collected from both the businesses themselves and their suppliers. Notably, the fintech mitigates the credit risk by directly disbursing payments to the suppliers.
“In our initial product, we focused solely on providing credit to retailers to aid their growth. However, our research indicated that distributors also face similar challenges,” stated Biko.
The financing offered varies based on the size of the business. Distributors are eligible to access up to $10,000 in credit, while retailers can secure goods with values ranging from $200 to $500. Zanifu has already assisted 13,000 micro-businesses with credit and expanded its customer base to include 500 distributors following the recent expansion.
Zanifu implements a monthly interest rate ranging from 5% to 6%, contributing to an impressive repayment rate of 99.2%. This remarkable repayment rate can be attributed to Zanifu’s refining of its underwriting algorithm over time.
Customers of Zanifu utilize an Android application to determine their credit limits and place orders. The fintech has seamlessly integrated multiple payment channels into the app, facilitating swift and convenient repayments. Furthermore, the app empowers retailers to pay for stock obtained from distributors not featured in Zanifu’s database.
Biko also emphasized Zanifu’s plans for the future following the infusion of new funding. The company aims to concentrate on scaling its operations within Kenya, redirecting its previous intention to expand to Ghana and Uganda. These markets, similar to Kenya, pose challenges for small businesses in accessing capital for their growth and operational needs. Small enterprises across Africa play a pivotal role in economic development, accounting for nearly 90% of all businesses and significantly contributing to job creation. It’s estimated that Kenya faces a substantial $19 billion financing gap for micro, small, and medium-sized enterprises (MSMEs).
Zanifu joins the ranks of other companies, such as Pezesha and Solv (backed by Standard Chartered Ventures), working to address the credit requirements of these enterprises within Kenya.
“We’ve made the strategic decision to deepen our presence in Kenya. Our focus is on supporting more micro-SMEs and expanding our network of distributors, ensuring that the capital we provide translates into tangible growth for these businesses. Once we achieve profitability, we will consider expanding to other markets,” explained Biko, who co-founded Zanifu alongside Sebastian Mithika.
With a license from the Central Bank of Kenya, Zanifu has ambitious plans for the future. The fintech aims to diversify its offerings to encompass additional financial services like insurance and create tools to assist businesses in managing inventory and maintaining proper bookkeeping practices.
Photo Source: Google
August 21, 2023
Delino Gayweh
Serrari Financial Analyst
