Kenya’s Zanifu raises $11.2m debt-equity funding to expand its credit services

Zanifu, a Kenyan fintech company that offers inventory financing to micro, small, and medium-sized businesses, has successfully secured $11.2 million in debt-equity funding during a pre-Series A funding round.

With this funding, Zanifu’s total debt equity raised to date amounts to $12.7 million. The round was spearheaded by prominent investment firms Beyond Capital Ventures and Variant Investments. Other participation included Founders Factory Africa, AAIC Investment, and Google Black Founders Fund, along with continuing support from existing investor, Launch Africa.

This new funding is to enhance its offerings, expanding its inventory credit services from retailers to distributors. The company’s co-founder and CEO, Steve Biko, claims that this strategic move aims to close the credit gap faced by companies that have difficulty accessing traditional financial institutions because of things like poor organizational structure, incomplete financial records, and a lack of tangible collateral.

Zanifu aims to address the need by leveraging data collected from businesses and their suppliers to extend credit. The company further mitigates risk by directly remitting payments to suppliers. The extent of stock financing is tailored to the business’s scale, allowing distributors access to up to $10,000, while retailers can procure goods valued between $200 and $500.

According to a report, Zanifu has already supported over 13,000 micro-businesses and expanded its reach to encompass 500 distributors after the enlargement of its customer base.

“In our first product, we only lent retailers to help them expand their business, but we found out that distributors have a similar problem,” said Biko.

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Zanifu’s expansion and future plans

Following the infusion of new funding, the startup is strategically poised to amplify its operational presence within Kenya. This strategic shift involves redirecting its expansion endeavours away from Ghana and Uganda, markets where the challenge of sourcing adequate capital for operational and growth requirements mirrors that faced by small enterprises.

Throughout Africa, these small-scale businesses serve as pivotal drivers of economic activity, comprising nearly 90% of the business landscape and playing a substantial role in job generation.

Notably, Kenya contends with approximately $19 billion deficit in financing available for Micro, Small, and Medium Enterprises (MSMEs). Together with Zanifu, other entities such as Pezesha and Solv, backed by Standard-Chartered Ventures, are active participants in catering to the credit demands of such enterprises within Kenya.

Speaking on the startup’s expansion plan, the co-founder and CEO, Steve Biko said,

“We have decided to go deep into Kenya. We are focusing on serving more micro-SMEs and also getting more distributors into our fold, and ensuring the capital we are dispersing is actually generating returns for these businesses and helping them grow. So that’s really how we’re looking at it for now. We will go to other markets once we get to profitability.”

Zanifu duly licensed by the Central Bank of Kenya, is strategically poised to expand its scope by incorporating additional financial services such as insurance. Moreover, the company aims to develop sophisticated tools designed to assist enterprises in effectively handling crucial aspects like inventory management and bookkeeping.