FinTech holding company invests in leading SME funder to deliver more than R600 million in funding
Crossfin Technology Holdings has announced its investment into Retail Capital, a leading South African provider of alternative business funding to the SME sector. The deal consists of a significant minority interest in Retail Capital.
Anton Gaylard, chief operating officer and co-founder at Crossfin, says the investment provides Crossfin with opportunities to augment and improve the delivery of fintech products and services to the underserved merchant market. "We believe in innovative companies that focus on solving specific everyday painpoints that are not adequately covered by existing products in the market. Retail Capital has built a reputation and track record as an invaluable partner to local merchants that remain underserved by the traditional financial services system. A healthy partner ecosystem - including with some of Crossfin's existing and prospective portfolio companies - also creates exciting opportunities to integrate a broad suite of financial products and services to support local merchants on multiple levels."
Karl Westvig, CEO of Retail Capital, says the investment will support the company as it accelerates the development of its distribution channels. "We have an already established partnership with Crossfin through which we provide merchants with instant automated access to short-term funding through their mPOS devices. We've seen very high take up rates and great customer satisfaction among business owners accessing funding in real time at any time of day.”
Westvig adds that the majority of merchants and small business owners using mPOS devices are new to accepting debit and credit cards. "These are typically what we'd classify as informal businesses who have never had access to finance. By using their monthly transaction data, we can provide appropriate funding access to businesses with turnovers as little as R10 000 per month, driving true financial inclusion in a major part of our market that is not adequately covered by the banking sector. Overall, we expect to provide funding of R600 million to more than 6 000 SMEs in 2019, and expect a multiplier effect that will create 3 500 jobs," says Westvig.
Gaylard says that Crossfin's strategy of establishing rails and then investing in complementary products that can be pushed down the rails has positioned it for a high-growth 2019. "The investment into Retail Capital supports our larger vision for driving financial inclusion across Africa through the electronification of the continent's payments ecosystem. We have worked with Karl and his team over the past four years and found great cultural alignment with his highly skilled team, as well as common ground in our belief in technology as an enabler of smart financial products that solve real problems in Africa.”