FSD Africa Investments (FSDAi), the investing arm of FSD Africa, has invested £3 million in IMFact, a Kenyan fintech firm that provides working capital to micro, small, and medium enterprises (MSMEs).
IMFact, which was founded in 2019, provides an alternative to traditional bank lending to Kenya’s disadvantaged SME sector.
Local businesses may use their working capital more affordably and sustainably using IMFact’s fintech factoring solution.
IMFact accomplishes this by unlocking the cash locked up in its clients’ outstanding bills and depositing it directly into their accounts, rather than the firm having to wait 90-120 days for payment.
IMFact was founded by its parent business, Cardano Development, an Amsterdam-based incubator, and fund manager. It is supported by KfW on behalf of the German Ministry of Economic Cooperation and Development with a grant (BMZ).
The Rockefeller Foundation and Convergence have also provided early-stage grant money to IMFact.
FSD Africa Investments has committed the first external equity investment in IMFact, following Cardano Development’s (CD) first investment.
CD established IMFact Kenya with finance from Total Impact Capital Advisors, and it was the first regional center to go live (TIC).
IMFact is a non-deposit-taking financial institution that provides operating capital to SMEs through supply chain finance.
IMFact purchases large invoices from MSMEs for a mix of upfront cash and delayed payments as a “pooled receivables” factoring company.
This provides sellers with immediate cash without the need to follow up or wait for bills to be received, allowing them to invest in new inventory, pay suppliers, and expand their business.
“We’re thrilled to have FSDAi join IMFact to help us accelerate our growth in Kenya and expand into other African markets.” We are passionate about financial services innovation, and we believe that IMFact will be a game-changer in broadening access to working capital for Africa’s SMEs. With its novel method to risk mitigation through debtor pooling.” Cardano Development’s Chief Executive Officer, Joost Zuidberg, stated.
“We are thrilled to be collaborating with IMFact to help the speedy financing of MSMEs in Kenya at a time when many are struggling to acquire access to operating capital from traditional lending institutions,” said Anne-Marie Chidzero, Chief Investment Officer, FSD Africa Investments. We’re particularly interested in monitoring how the investment affects Kenya’s medical and pharmaceutical sectors, and we intend to inspire more fintech solutions to help small firms bridge the finance gap.”
According to current plans, ImFact is expected to give £475 million in capital to roughly 570 businesses over the next five years, supporting around 5,600 employment.