Africa’s small businesses are increasingly looking to make their products and/or services household names. Ads placements have, therefore, become part of a trend towards improving business visibility and increasing profit. Unfortunately, not all small businesses are able afford these ads or access loans for them from the traditional banking system.
GrowthBond, a Danish fintech company, is a clear leader that aims to provide risk-free microloans for online advertisements to small businesses in Africa. Within a year, the company has funded over 1,000 companies in Nigeria and Kenya. With the aim to finance 60,000 companies by 2022, GrowthBond seeks to ameliorate the problems small business owners face, including the costly and inefficient methods of assessing, delivering, and charging repayments on loans.
The platform is designed to automate the credit assessment process for small business owners, which cuts waiting times by weeks, reduces loan operating costs, slashes minimum loans from thousands to hundreds of dollars, and enables real-time tracking of the deployment and financial return of the funds.
GrowthBond does not rely on paper-based loan applications, loans officers, and official meetings to review old school business documentation. It primarily relies on data from Facebook/Google and, secondarily, on revenue data from payment gateways, such as Stripe and Paypal.
How GrowthBond Works
GrowthBond reviews companies’ marketing and revenue data, monthly revenue, return on ad spend, and unit economics to automate the diligence process and make a funding decision in minutes, compared to months in the traditional banking system. For instance, if a company’s Facebook/Google ads and Stripe/Paypal sales metrics are positive, GrowthBond issues it credit to hire internet marketing experts and increase their Facebook and Google ad spent.
It, however, provides a smaller loan for a marketing expert to setup advertising and a payment gateway for companies that do not conduct online marketing or charge customers offline. Consequently, Growthbond gradually disburses, monitors, and controls the capital going into Facebook/Google ads and the sales and revenue going back into the company to charge the repayment.
This gives small business owners an alternative to expensive bank loans and trying to raise venture capital, which is close to impossible in most emerging markets. It leverages low start-up costs and an established user base of Facebook and Google to reach a wider and increasingly international audience beyond their traditional local market. Today, millions of African and Asian online retailers, selling everything from shoes, clothing, and cars, run their entire business through Facebook.
GrowthBond offers investments up to $50,000 in active companies on Facebook with a positive ad spend and positive unit economics after reviewing their marketing and revenue data. The fintech company normally approves funding within 24 hours, and do not require a personal guarantee or collateral, and seeks to invest in companies as they grow, so long as ad spend and unit economics remain positive.
How to Apply for Funding
Steps to applying for funding:
- Log into your Facebook account.
- Connect your Facebook page and advertising account.
- Connect your payment gateway.
- Choose marketing expert to work with.
- Estimate your ROI forecast for online advertising.
To get started, apply here.
