Investment company Futuregrowth Asset Management has invested R150-million in small, medium-sized and microenterprises (SMMEs) finance and specialist supply chain support financial technology (fintech) company Sourcefin.

Sourcefin works to bridge the critical R300-billion gap in SMME financing and empowers businesses to overcome working capital challenges and successfully fulfil public and private sector purchase orders, which are binding agreements on which the SMME is obliged to deliver.

Sourcefin is set to deploy more than R1-billion in funding for its financial year ending February 2025 through its innovative platform, which integrates financing, supply chain management and end-to-end project support, Futuregrowth says.

“With the support from Futuregrowth, Sourcefin’s ability to scale investment into the SMME sector significantly increases and it is our commitment that all R150-million will be deployed as a reinvestment into the backbone of our economy,” says Sourcefin co-founder, director and CEO Joshua Kadish.

Additionally, the strategic partnership with Futuregrowth accelerates Sourcefin’s ability to provide innovative financing solutions, scale its operations, enhance its technology platform and expand its funding deployment nationwide.

“Sourcefin’s technology-first approach, coupled with their expertise in procurement and project management, has created a transformative solution. Their proven ability to support tender fulfilment while maintaining strong financial performance made this a compelling investment opportunity,” says Futuregrowth Private Equity & Venture Capital head Amrish Narrandes.

“The SMME sector is vital for South Africa's economic growth, yet traditional financing solutions often fail to meet their unique needs, particularly in government-issued orders,” he explains.

Further, Sourcefin’s platform provides clients access to a network of more than 2 000 pre-vetted local and international suppliers and ensures operational efficiency and risk management through advanced technology and project oversight.

Sourcefin’s funding approach is opportunity-centric, thereby providing a lifeline to SMMEs where more traditional funders may have declined applications for funding based on history, or a lack thereof, Futuregrowth notes.

The SMME sector is a crucial contributor to socioeconomic development and improved service delivery, an enables previously disadvantaged and minority groups to enter the economy. It also accounts for more than 30% of South Africa’s GDP.

More than 90% of Sourcefin’s client base includes black female-owned and youth-owned businesses, as well as rural-based entrepreneurs, among others.

Beneficiaries of Sourcefin funding include emergency housing projects, medical equipment to allay shortages in government hospitals, human immunodeficiency virus health solutions, construction, security, and civil maintenance, among others.

Further, government spending is projected to exceed R7-trillion over the next three years, and Sourcefin’s core products, namely purchase order funding and invoice discounting, combined with its proprietary technology platform, uniquely position it to help SMMEs access these opportunities efficiently and sustainably, Futuregrowth says.