Alphacode provides R23m in loans to three black-owned fintech startups

Fintech accelerator AlphaCode announced today that it has provided R23-million in funding under the BEE code of good conduct’s supplier development element, to three SA fintech startups, Zande Africa, Bright On Capital and Livestock Wealth.

The Johannesburg based accelerator is an initiative of Rand Merchant Investment Holdings (RMI).

Zande Africa and Bright On each received about R10-million, while Livestock Wealth got a R2-million loan, AlphaCode head Dominique Collett said in statement today.

Under the Black Economic Empowerment (BEE) codes, companies that make interest-free loans or grants to black-owned small enterprises in their supply chain, can score BEE points.

“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 startups, we’ve leveraged our supplier development spending to support them,” said Collett.

AlphaCode has loaned Zande Africa and Bright On each about R10m, while Livestock Wealth got a R2m

Zande Africa was founded in 2016 by Siya Ntutela and Mdu Thabethe. The business provides trade and merchant finance to spaza shops to enable stock purchases.

The startup is one of several SA fintechs that provide finance to SMEs and that have won investment recently (see this story).

It now has a turnover of R17-million with 71 staff and it is about to open a third depot in Orange Farm, south of Johannesburg, after growing its operations in Nelspruit and Ermelo.

Ntutela says he plans to use the loan for working capital to set up the company’s third depot and to improve his technology platform.

In 2016 AlphaCode awarded the startup R1-million in a grant money from a pitch competition, which it has used grow the business. AlphaCode also provided the startup with office space in Sandton.

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 was founded in X by Tsepo and Koena Headbush.

It has grown its SME lending book beyond R25-million and expects the lending book to exceed R50-million by early 2020, increasing to potentially R100 million in 2021.

The company has six permanent staff. Currently four additional candidates are being recruited to join the sales and credit teams.

Headbush said the loan will be used to grow its SME lending book, to develop distribution channels and to grow market reach.

In 2016 the startup was provided with a R500 000 grant from AlphaCode.

Said Headbush: “At that stage, the grant was a critical source of seed capital which enabled us to expand our technology and provided us the necessary financial support to further develop the business”.

AlphaCode has also provided the startup with office space in Sandton and has provided the company with experienced sector mentors.

Livestock Wealth has pioneered investment in cows since 2015 and now has over 2000 cows at various partner-farms.

These are valued at over R40-million and managed like an investment portfolio on behalf of 1200 local and international investors.

Livestock Wealth CEO Ntuthuko Shezi (pictured above), said the startup will use the loan to build its team.

The startup has been part of AlphaCode since 2015 when it won R500 000 at a pitch evening. It has grown from 26 customers in 2015 to over 1000 customers.

Said Shezi: “Our platform has grown to become a dependable supplier to large off-takers such as Woolworths.

“We have also grown beyond cows into a platform that connects farmers with investors where the investor owns real, high value, agricultural assets. These assets grow in the farmer’s care and earn profits when the products are sold at maturity,” he said.

Read more: Five SA fintechs that service the growing market of SME lending [Updated]
Read more: AlphaCode awards R16m in grants, support services to eight black-owned SA fintechs
Read more: AlphaCode Incubate launches call for black fintech startups to tap R16m in support, funding
Read more: Twenty candidates on Explore initiative prepare to pitch for AlphaCode Incubate

Featured image: Livestock Wealth CEO Ntuthuko Shezi (Supplied)