ImpactAlpha, February 3 – Secha Capital gravitates to what others do not: “boring” business sectors. The South African “micro-private equity” firm launched with 35 million rand ($2.7 million) to invest in small agri- and consumer goods businesses with solid growth and job creation potential. It made its first investment in beauty products company nativechild in 2017. Its sixth and latest investment is Rush Nutrition, a female-run, healthy snacks company.
Secha is set up as a holding company, which means it makes equity investments off of its own balance sheet, without the timeline pressures of an investment fund. It also supplies the team with operational and management support. Secha says this structure allows it to make patient investments in its portfolio, or operating companies, and ensures that long-term growth objectives are aligned (see, “The New Alternatives: Holding Companies that Build Assets and Impact of ‘Infinite Duration’”).
Other impact and mission investors are trying this model as an alternative to traditional venture capital, including i(x) and The Craftory. (Further reading: “Impact holding companies: Breaking the chains of the 10-year fund is harder than it looks.”)
Rush Nutrition has been grappling with a cash flow issue that has limited its growth potential. Secha’s investment will provide sufficent working capital to bridge the gap between making its products in the factory and the time it gets paid income from sales comes in.
Secha’s Kuhle Mnisi joins the Rush team as COO.
Rush will also get a financial boost from South Africa’s Jobs Fund to temporarily cover eight new employee salaries.
In a country with one of the highest unemployment rates in the world, Secha’s primary impact lens is jobs creation. It focuses on small business growth because South Africa’s small businesses account for 90% of formal businesses, but few get enough traction to hire beyond their founding teams.