On July 2, 2020, ProfitShare Partners announced that it had secured US$ 5M (R 100M) from the SA SME Fund during the pandemic. The funding will enable ProfitShare Partners to partner with small and medium businesses in South Africa to help accelerate growth for SMEs that are negatively impacted by COVID-19.
About ProfitShare Partners
ProfitShare Partners is a South African fintech SME and capital provider. It provides alternative funding to SMEs that either have a contract with a reputable company or the government. This funding helps SMEs who have an order but cannot access the capital needed to deliver. It’s because they do not qualify or do not have the necessary track record, financial history or paperwork. ProfitShare Partners help them to successfully deliver on their orders and contracts. Thus, results in them gaining access to a bigger pool of business and growing exponentially. Till now, ProfitShare Partners has assisted more than a hundred SMEs by providing them with the tools to grow their turnover tenfold in less than two years.
Andrew Maren, CEO and founder of Profitshare Partners explained their business model. “Our model gives 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,” says Maren.
Maren also shared his thoughts on the benefits of the deal. “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.”
Impact of COVID on SME Market
According to National Planning Commission’s data analysis on small business as the spine of economic recovery and stimulation, 92% of small businesses are struggling to operate. Additionally, over 50,000 SMEs can shut down due to COVID-19.
Ketso Gordhan is the CEO of the South African SME fund. He explained that their investment in ProfitShare Partners comes at a crucial time for the SME market. “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.” said Gordhan.
COVID-19 has effects on the SME market and ProfitShare Partners securing fundings is a step towards revitalising this sector.