Fintech company IMFact secures US$4m investment from FSD Africa Investments

KENYA – IMFact, a FinTech company that uses supply chain financing to provide working capital to microbusinesses and small- to medium-sized businesses (SMBs), has received an investment from FSD Africa Investments in the amount of 3 million British pounds (US$4 million).

The IMFact business model is a “pooled receivables” factoring platform, which means it buys bulk invoices from microbusinesses and SMBs for both upfront cash and deferred payments, the release stated.

This gives sellers cash without having to wait for invoices to be paid. It also frees up capital to buy new inventory, pay suppliers and expand business.

This model is different from the pre-existing invoice discount style in which the company picks the best receivables or invoices, while the rest can’t be used as collateral, according to the release. Additionally, IMFact’s model allows more access to working capital as it doesn’t require an upfront deposit or guarantees.

Many of the businesses that will benefit from the investment into IMFact are family-owned ones, which distribute medical equipment and pharmaceuticals. But IMFact will also work with other industries as well, the release stated.

IMFact will provide total funding of US$638 million to around 570 businesses in the next five years, supporting around 5,600 jobs, according to the release.

FSD Africa’s goal is to help finance businesses in Africa, which is behind on global averages for pooled receivables financing, the release stated. Only South Africa has a significant factoring model. Kenya, meanwhile, where IMFact is based, had numbers sitting at under 2%.

“Building back from COVID-19, boosting Kenya’s status as a hub for financial services, and creating jobs, are at the core of the U.K.’s Strategic Partnership with Kenya,” said British High Commissioner to Kenya Jane Marriott in the release.

“We’re pleased to support this investment by FSDAi into IMFact, which will support [SMBs] in Kenya to build back from the challenges of the pandemic.”

In October last year, East Africa leading digital logistics company Amitruck partnered with IMFact, a Smart Finance alternative to traditional bank lending for Small and Medium Enterprises (SMEs) operating in the supply chain business.

The move will see Amitruck increase its financial stability while optimizing working capital that eliminates overhead cost constraints and other long payment cycles.

A few months back Kwara, a Kenyan digital banking startup, raised US$4 million in seed round funding to develop its neobank app and help turn savings cooperatives into modern digital banks.

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