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In a statement today (23 August) FMO said the grant will provide a “first loss” backstop that is expected to unlock an additional $4.5-million from commercial investors.
The convertible grant is being provided by the Dutch government through its MASSIF fund — which FMO manages. The fund aims to support small businesses, inclusive enterprises, women as well as youth entrepreneurs by financing local financial intermediaries and other institutions that contribute to development.
Lendable was founded in 2014 and has offices in Nairobi and New York
Lendable was founded in 2014 by CEO Daniel Goldfarb, CIO Arjun Batra, and CTO Dylan Fried. The startup, which also has an office in New York, aims to bridge the gap between institutional debt investors and high growth alternative lenders in Africa. It does this by providing alternative lenders upfront capital against their loan book receivables.
Currently the startup provides structured finance facilities to seven alternative lenders across the continent. These include off-grid energy companies, small business lenders and asset finance companies.
The startup’s platform Maestor allows for alternative lenders to get data on loan portfolio analysis and cash flow predictions. The platform also provides portfolio management information to alternative lenders and investors in Lendable’s special-purpose vehicle.
Commenting in the same statement, Goldfarb (pictured above) said by working with FMO, Lendable can scale-up the volume of capital reaching small businesses and consumers in its markets.
“As we scale, finding parties like FMO that are willing to invest alongside Lendable to de-risk commercial investment is key to our success,” said Goldfarb.
Both FMO and Lendable signed the Responsible Finance Guidelines in June. On top of the grant, the partners will co-operate in responsible lending market capacity building initiatives such as workshops and education programmes in East and West Africa.
FMO’s manager for convertible grant programme under MASSIF, Martin Steindl said the ability to harness cutting-edge technology is key to unlocking alternative lending channels in African markets and reducing the financial exclusion of smaller enterprises.
“Which is exactly what Lendable’s proprietary platform and securitisation capabilities offer,” said Steindl.
When questioned by Ventureburn, the PR representative for FMO would not reveal who these seven alternative lenders are, saying only that the names of clients “are private”.
The representative said Lendable has enabled the alternative lender partners to grow faster and introduced a new type of debt financing of off-balance sheet financing to the credit ecosystem. It has also facilitated the introduction of foreign commercial investment into the emerging market consumer and SME credit space, he added.
Editor’s note (23 August 2018): Ventureburn notes that Lendable is the latest in a long line of startups owned by expat founders that have clinched funding in East Africa. Read this Ventureburn piece for more on the debate.
Featured image: Lendable CEO and co-founder Daniel Goldfarb (standing) in a board meeting last year (Daniel Goldfarb via Twitter)