New capital fund of $30-million launches for Southern Africa SMEs

Secha Capital, a Southern African investment impact firm that provides long-term capital to established SMEs, has announced the closure of its second fund worth $30-million (R400-million) to support established SMEs in the region.

The fund adopts an impact investment model and aims to accelerate the growth of the selected SMEs, fostering economic growth within the small business sector

Rushil Vallabh, a co-founder and managing director of Secha Capital comments on the launch of a second fund in supporting SMEs.

“Fund one was always proof of concept: Can we complement growth capital with human capital to solve SME pain points and accelerate growth? Our portfolio data is a resounding yes. It is now time to replicate and scale this investment model across Africa. We need to grow the Secha team to help more SMEs.”

Titled Secha Capital Impact, it is a Southern Africa early-stage operations-focused impact private equity fund. This is the second round of funding launched from the investment firm and will invest up to R12-million into established Southern African SMEs.

The fund adopts an impact investment model and aims to accelerate the growth of the selected SMEs, fostering economic growth within the small business sector.

Secha Capital Fund I resulted in the overall success of the selected participating SMEs.

Nombuso Nkambule, the co-founder of Secha Capital, points out that the fund made a concerted impact on the SME sector and increased business growth, and facilitated the creation of employment opportunities.

“Our first fund, which established proof of concept, invested in a range of African businesses, from plant-based haircare brand, nativechild, to networking marketing company, WUKINA, which empowers women to start their own businesses selling high-quality wigs. These companies have grown over 10x and created over 100 jobs since we invested.”

Secha Capital

Unlike other investment firms, Secha Capital has established itself as a company that supports SMEs as operators and not as investors.

“We find and fund SMEs that others do not. We write smaller, but more impactful checks and then get Africa’s best and brightest to actually join the SME team,” explains Vallabh.

Secha Capital’s team works with selected entrepreneurs to upscale their SME efficiently, increasing overall revenue, sales, and employment opportunities as a result.

With smaller funds, the model adopted at Secha is unique as it aims to invest in a deeper pipeline of established SMEs in large, fragmented sectors that have been founded by previously ignored entrepreneurs.

Secha provides operational support, channel access, and enhanced technical capabilities to selected SMEs.

Secha Capital II expects a final close in October 2021.

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Featured image: Cytonn Photography via Unsplash