ProfitShare Partners secures R100-million Funding for SA SMEs

• ProfitShare Partners, the FinTech SME capital provider, has raised R100-million from SA SME Fund to support SMEs amid the COVID-19 Pandemic.
• In acknowledging the business model of ProfitShare Partners and its positive effect on SME growth, the SA SME Fund supported the R100-million in funding.
• SMEs in supply and delivery who are unable to access the capital needed to deliver will now have a greater chance at delivering more effectively on their contracts.

ProfitShare Partners, the FinTech SME capital provider, has raised R100-million funding from SA SME Fund. With this capital, ProfitShare Partners will collaborate with small and medium-sized companies to help accelerate growth for SMEs.

In acknowledging the business model of ProfitShare Partners and its positive effect on SME growth, the SA SME Fund supported the R100-million in funding to help accelerate the growth of the SME sector in South Africa.

Ketso Gordhan, SA SME Fund’s Chief Executive Officer, explains that their investment in ProfitShare Partners comes at a time when the survival of SME ma is dire.

“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. PSP 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,” he said.

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Data obtained from an international conference on small business conducted by the National Planning Commission as the foundation of economic growth and stimulus show that 92 per cent of small businesses are struggling to function. Furthermore, researchers predicted that more than 50 000 SMMEs would be shut down due to the pandemic impacts.

Covid-19 has had extensive effects on the SME market and the funding given by ProfitShare Partners is a step towards revitalizing this field.

Andrew Maren, CEO and founder of Profitshare Partners, commented on the funding impact of the R100 million.

“This deal is a great win for SMEs who can’t access traditional funding. This capital helps ProfitShare Partners financially partner with hundreds of SMEs to catalyse their businesses to becoming bigger and more sustainable, enabling them to attract traditional funding in the future.”

The business model for ProfitShare Partners is best described as being a combination of venture capital and private equity. It does not, however, involve taking shares in the businesses of its clients, but rather partners with them primarily on the particular transaction. The fintech firm provides the capital and business support necessary for the SME to deliver on its contract.

“Our model is designed to give SMEs a boost. As opposed to providing capital as a form of a loan, we share in the profit and assist our clients in achieving financial sustainability to the point where they are either in a position to qualify for traditional finance or they no longer require finance,” Maren continues.

SMEs in supply and delivery who have an order but are unable to access the capital needed to deliver, either because they are not eligible or because they do not have the requisite track record, financial background or documentation, now have a greater chance of gaining access to business and delivering on their contracts more effectively.