Fintech small and medium-sized enterprises (SMEs) capital provider ProfitShare Partners on July 2 announced that it had secured R100-million from the SA SME Fund, which would enable it to partner with more SME businesses to provide much-needed capital to catalyse growth.
In the midst of the Covid-19 crisis, SMEs have been severely affected – even after the easing of lockdown restrictions over the past few weeks.
In a colloquium held on June 23 and 24 by the National Planning Commission, it was reiterated that small business is the spine of economic recovery and stimulation.
ProfitShare states that reports show that as much as 92% of small businesses are struggling to operate and researchers have estimated that over 50 000 SMEs will not survive the pandemic.
In response to the call for private and public sector organisations to contribute to SME growth and development, ProfitShare remains committed to enabling small businesses with its capital solutions, the company says.
ProfitShare financially partners on transactions with SMEs to deliver successfully on their orders and contracts with reputable organisations, allowing them to access bigger business and grow exponentially in short periods of time.
Since introducing its business model to the market, the fintech disruptor has assisted more than 100 SMEs and helped numerous SMEs grow their turnover tenfold in less than two years, it states.
The SA SME Fund, which invests in intermediaries that provide debt and equity instruments to SMEs, has recognised the potential that ProfitShare’s business model offers to SMEs for high-impact growth and has provided the company with R100-million that will assist in catalysing more growth in the SME market.
“The availability of funding and access to working capital has always been a challenge for SMEs. This has been exacerbated by the country’s economic crisis which has been deepened by the pandemic.
"ProfitShare will provide SMEs with an alternative funding model to act as a catalyst for their survival and growth. The SA SME Fund is extremely pleased to be announcing this investment; it could not be more timeous,” says SA SME Fund CEO Ketso Gordhan.
The ProfitShare business model is best described as a hybrid between venture capital and private equity; however, it does not involve taking up shares in its clients’ businesses but rather, partners with them principally on the specific transaction.
The fintech business provides the capital and business support needed for the SME to deliver on their contract.