How Untapped Global Plans to Bring a Revenue Funding Model to African Startups – TechCrunch

In the developed world, almost anyone can obtain financing, for example, for a car rental. But in an emerging economy like South Africa, the only people who own cars or can even get a rental car are the people who actually have something to guarantee, or a payroll to work with. As a result, small businesses, especially in Africa, suffer from a financing gap of $5.2 trillion, according to the World Bank.

Untapped Global wanted to rethink this situation by allowing small businesses to use their ongoing revenue as collateral and enabling this through the ability to trace their assets. So, for example, if an African entrepreneur wants to buy a water treatment system for a new project, he usually cannot afford it. Instead, they can use the untapped platform as collateral to acquire a machine, and Untapped will take a share of the proceeds from the water they sell. So now they can start a business and start making revenue without going through the traditional machine leasing process.

Untapped has now launched the public beta of its platform, which uses real-time data to track the assets and revenue of entrepreneurs using its platform. The idea is to provide transparency to international investors looking to tap into Africa and other emerging markets. Funded by $10.3 million in debt and a preliminary equity round that ended in March, the platform uses a model called “smart asset financing.” This enables it to fund income-generating assets for entrepreneurs and SMEs in emerging markets. It does this by utilizing the Internet of Things from assets such as the motorbike network in a fleet or, for example, a “smart” irrigation system connected to a Wi-Fi network.

The model thus assesses investment risk to secure returns for investors.

It has now funded assets for more than 5,000 entrepreneurs working in sectors such as clean water, solar energy, e-mobility, and inclusive financial technology. The company claims to have an annual turnover of $2.5 million.

Jim Chu, CEO and founder of Untapped Global, says Untapped is taking advantage of the wave of digitization happening across Africa and other emerging markets, making this model now possible.

Jim Chu. Image credits: untapped world

He said, “We set up Untapped to bring capital to market entrepreneurs who are often left out of funding opportunities, while at the same time ensuring transparency for investors…Our data showed that for every dollar invested, more than $3 of value is created in local economies” in the current situation.

It’s exciting (for the planet) that most of the Untapped Global portfolio companies are building solutions for climate action, including solar irrigation farms, electric mobility companies, and clean water systems.

It only takes $300 to start investing in these entrepreneurs, Chu says, and there are no monthly fees, because the platform displays real-time data on the impact and activity of the investments.

Cho says he started investing in emerging markets about 12 years ago, investing in more than 80 companies across Africa, mostly as an equity investor: “But I kept having deals like ‘Wow, this is a great company, great cash flow, but I’m not going to invest’ Never in this company because there was no exit, and other reasons. Also, investing in capital would place a burden on entrepreneurs.”

So he started doing revenue-based financing, taking a percentage of the revenue going forward. But then he started getting to know companies that were essentially tech-backed companies and discovered that their customers needed some kind of financing built into their products. Most of these companies were hardware companies, using motorcycles, cars, or something similar. But soon these are smart cars, smart motorcycles, smart Wi-Fi systems, smart irrigation systems, you name it, with the Internet of Things.

As a result, Chu hits revenue-based financing: “We’re going to take all the data from your assets and use it as a way to manage how your business is doing. In fact, forget about the regular whole way of doing due diligence and risk management safeguards that banks typically want, like balance sheets, etc. instead of So, we’ll look at, OK, how much will a motorcycle earn over its lifetime? How much will it earn over the year? Can we pay off that motorcycle in a year? And so we created this model.”

The platform is now available to accredited investors, and will be available to retail investors at the end of 2022.

Here is a video explanation:

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