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    HomeEcosystem NewsVenture Capital & Funding SourcesRevenue-based Financing: South Africa’s Linea Capital Lands New Investment to Get Creative 

    Revenue-based Financing: South Africa’s Linea Capital Lands New Investment to Get Creative 

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    In a bid to bolster financing opportunities for Small and Growing Businesses (SGBs) in South Africa, FSDAi Nyala Facility BV, an initiative established by FSD Africa Investments, has announced a $1 million investment in Linea Capital, a prominent financier based in the country. This move underscores the growing demand for innovative funding models tailored to the needs of emerging businesses across the continent.

    Specializing in revenue-based finance (RBF), Linea Capital offers a unique approach to funding, addressing the challenges often encountered by SGBs in accessing traditional sources of capital. Unlike conventional debt financing, which may necessitate substantial collateral or prove financially burdensome, Linea Capital’s RBF model offers a collateral-light and non-dilutive capital solution. Repayment structures are intricately tied to the company’s revenue cycle, alleviating the pressure of fixed monthly repayments commonly associated with debt instruments. Moreover, the typical term of Linea’s financing spans between 2 to 3 years, providing a flexible and tailored approach to support business growth. Additionally, Linea Capital extends a suite of post-investment support services designed to facilitate sustainable expansion for recipient businesses.

    The injection of funds by FSDAi Nyala Facility BV into Linea Capital is strategically aimed at enabling the company to secure lower-cost senior debt through junior funding tranches. This approach is anticipated to attract interest from both local and global financial institutions seeking less risky and more liquid non-equity investments, thereby fostering a conducive environment for SGBs to flourish.

    This latest investment marks the third commitment by FSDAi Nyala Facility BV, following previous engagements with Aruwa Capital Management, a Nigeria-based fund focusing on enterprises serving the burgeoning female economy or led by women or gender-diverse teams, and WIC Capital, a Senegal-based entity offering capital and support services to female-led businesses in the region. Anne-Marie Chidzero, Chief Investment Officer at FSD Africa Investments, emphasized the significance of this partnership, stating, “We are excited to collaborate with Linea Capital to expedite local financing for small and growing businesses. This investment underscores FSDAi Nyala Facility’s dedication to championing innovative financing solutions that empower businesses to thrive and catalyze economic growth.”

    Expressing their appreciation for the investment, Linea Capital’s cofounders, Julia Price and Colin Hundermark, highlighted the potential impact on South Africa’s business landscape. “We are delighted by FSDAi Nyala Facility’s decision to invest in our venture. This partnership reinforces revenue-based financing as a viable alternative for SGB owners and founders in South Africa. We are optimistic about its contribution to securing further capital and supporting the growth of a pivotal segment of our economy,” they remarked.

    The collaboration between FSDAi Nyala Facility BV and Linea Capital signifies a concerted effort to bridge the financing gap for SGBs in South Africa, offering a promising avenue for sustainable growth and prosperity in the region’s business ecosystem.

    Linea Capital is dedicated to raising and mobilising capital to small and growing businesses in Southern Africa. Linea invests using an innovative revenue-based finance model to limit founder, staff and investor dilution.

    The Company has partnered with USAID and the Dutch Good Growth Fund to scale its revenue-based finance model in Southern Africa. Revenue-based finance is a critical source of funding for emerging market entrepreneurs. As a funding alternative it limits founder dilution, retaining incentives to create jobs and preserves equity ownership for women and previously disadvantaged founders. 

    Linea has a special interest in agri-processing, education, job creation & gender. It is run by an experienced team of professionals based in South Africa. The Company’s model is to partner with local VCs, angel networks and tech hubs to source deal opportunities. 

    Colin Hundermark, James King and Julia Price are co-founders of Linea Capital and that James King serves as a non-executive director.

    Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard.

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