AlphaCode gives R23m in loans to fintech firms

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 04 Sept 2019
Ntuthuko Shezi, CEO of Livestock Wealth.
Ntuthuko Shezi, CEO of Livestock Wealth.

Three local tech start-ups – Zande Africa, Bright On Capital and Livestock Wealth – have been awarded R23 million in enterprise supplier development (ESD) loans by AlphaCode.

AlphaCode is an incubation, acceleration and investment vehicle for early-stage financial services businesses, powered by Rand Merchant Investment (RMI).

The three loans, supplied under black economic empowerment codes of good practice, is RMI’s first ESD funding initiative aimed at supersizing and supporting black local fintech firms, to help them achieve exponential growth.

The initiative is offered by AlphaCode as part of it financial support programmes, which include grant funding, ESD loans and growth equity capital.

All three businesses have gone through the first version of the AlphaCode Incubate programme, where their strong potential was identified.

Bright On Capital is an online peer-to-peer lender that provides affordable working capital funding to emerging small supplier businesses with sustainable growth prospects. It has grown its SME lending book beyond R25 million and expects the lending book to exceed R50 million by early 2020.

Established in 2015 by KwaZulu-Natal-born electro-mechanical engineer Ntuthuko Shezi, Livestock Wealth has pioneered investment in cows since October 2015 and now has over 2 000 cows at various partner-farms. These are valued at over R40 million and are managed like an investment portfolio on behalf of 1 200 local and international investors.

Zande Africa was established in 2016 by Siya Ntutela and Mdu Thabethe. The business provides trade and merchant finance to spaza shops to enable stock purchases. It now has a turnover of R17 million, with 71 staff members.

Dominique Collett, head of AlphaCode, says: “We have granted Zande and Bright On, with whom we’ve been associated for over four years, around R10 million in supplier development loans each, and Livestock Wealth has been granted R2 million. Businesses like these don’t always get the funding they require to grow from commercial funders, but as part of our commitment to partner and grow financial services start-ups, we’ve leveraged our supplier development spending to support them.”

Ntutela, CEO of Zande Africa, says he plans to use the loan to set up the company’s third depot and improve its technology platform.

“The funds will be used for capital expenditure and working capital. We are currently constructing our third depot located in the middle of Orange Farm. This is a 2 000sqm facility, which will be used as a fulfilment centre for our spaza customers and accommodate bulk buying from communities such as the burial societies, churches and stokvels. In addition, we are currently working on integrating our trade financing platform to various point of sale systems and card terminals,” explains Ntutela.

Tsepo Headbush, CEO of Bright On Capital, says the loan will be used to grow its SME lending book, to develop distribution channels and grow market reach.

“The funding provided by RMI is critical to Bright On Capital’s growth. It will allow us to strengthen our management team, expand our sales capacity, improve our credit assessment capabilities and grow our tech development team. Effectively, the funding will allow us to scale our operations, in order to significantly expand the number of small businesses we are able to fund,” explains Headbush.

Bright On Capital, he continues, received enquiries from a number of smaller regional and pan-African financial institutions, to operate its enterprise-lending platform in other African countries.

Livestock Wealth CEO Shezi adds: “We are using this loan to build our team. We are actively looking for senior resources in finance, sales and technology streams to drive business growth.

“We have recently expanded our offerings to include a fully-stocked organic vegetable garden that anyone can buy for their home, or alternatively they could rent it out to farmers who grow high-value vegetables for niche markets such as restaurants, hotels and online delivery companies.”

The crowd farming platform already has 15% of its customers hailing from countries such as Germany, US, Canada, France and China.

“In future, we intend having a physical presence of assets being farmed outside of SA, but only when the time is right,” notes Shezi.

“AlphaCode is a support system for fintech start-ups that want to scale their businesses. In addition to our funding and support programmes, we also provide a full hybrid of support, providing grant money, equity and debt funding. We are seeing our approach paying dividends and we look forward to providing funding to more exceptional, growing fintechs,” concludes Collett.