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Team FACTS Africa team 9
Team FACTS Africa Amsterdam, NL

DUTCH FINTECH CONQUERS AFRICA

Financing of fast growing SMEs in East Africa through an innovative Fintech platform. Live since 2015 and managed by a team with over 30 years of experience

$389.801 INVESTED
167%
$232.884 0
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7,00% 5 years
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WE ARE IN OVERFUNDING! WE DECIDED TO RAISE AN EXTRA €100.000,-. YOU CAN READ MORE ON THE HOW, WHY and WHAT IN OUR LATEST UPDATE HERE.

WE WOULD LIKE TO THANK ALL INVESTORS AND ALL THOSE WHO ARE INVOLVED. 


FACTS is an independent FinTech company active in East Africa. We provide much needed short term working capital to established small businesses, mainly in the Food & Agriculture and Healthcare industry. This means the businesses are getting paid when goods are delivered instead of waiting for client payment, which can take up to 60 to 90 days. We call this Supply Chain Finance and use state-of-the-art technology that allows us to scale-up our lending operations fast. We have the first mover advantage in breaking open an SME finance market that is truly enormous.

FACTS has established a firm basis in the past 1,5 years and we are ready to scale up, with a pipeline of over 30 clients waiting for funding in the next 2 months. Current investors include the Dutch Good Growth Fund and a number of Dutch funds/investors.

FACTS clients are SMEs in the fast-growing economies of Kenya, Uganda and Tanzania. SMEs are the motor of the economy, but from a financing perspective are part of the “missing middle”. SMEs like to work with us because they generally do not have sufficient access to finance - sorely need to grow their businesses.

We score high on impact. Most microfinance institutions focus on micro-entrepreneurs and most banks on corporates, while SMEs have greatest impact in terms of local job creation. FACTS stimulates BoP development - by focusing on those enterprises that buy from smallholders.

You are investing via a convertible loan which annually pays 7% interest until conversion combined with the option to convert into FACTS shares against a 20% discount. We envision an exit in 5 years. The crowdfund is part of a larger capital raising effort. Firm commitments have already been made by investors and we are looking to raise at least Euro 1 million in total to be able to build a SME lending portfolio of Euro 5 million within the next 9-12 months and Euro 10 million by the end of 2018.  

Unique Selling Points

  • Financing fast growing SMEs – where banks are slow and evasive

  • Total dedication and focus on one thing – SME banking

  • Fast credit processing through our 24/7 SCF platform

  • Credit decisions based on cash flow - not on hard collateral

  • Risk mitigation through assigned receivables (and insurance)

  • First movers in a very large market; existing turnover

  • Highly experienced team with over 30 years of experience 

Revenue model

We charge our clients 2.5% interest per month on the basis of actual credit days. In addition they pay a 1.5% flat fee on every invoice financed.

Achieved so far

  • We were founded with sponsoring from the Dutch government and received capital from amongst others ICCO Investments and SEAF 
  • In the past 1.5 years we have invested in our operations, validated our Proof on Concept and hired and trained strong core teams in Kenya, Tanzania and Uganda 
  • We are in scaling-up mode. In the first quarter, we expanded the number of live anchor clients to 10 with a total exposure of almost EUR 1 mln. We have a pipeline of over 30 potential clients waiting for funding in the next 2 months. We’re ready to accelerate!

Required investment and purpose

FACTS's total investment needs are EUR 1 million of which EUR 600,000 has already been committed. The target closing amount is set at EUR 200,000 but we do hope to reach more investors and reach our target of at least EUR 250,000. The first EUR 250,0000 invested via this platform will be matched in full by one of our investors.


The invested amount will be used as follows:

  • Capital investment for FACTS to maintain a capital ratio of 20% as required by our financiers (an injection of EUR 200,000 capital allows us to build a SME-loan portfolio of EUR 1 million);

  • EUR 50,000 -100,000 will be used as working capital e.g. to finance the start-up of our business in Tanzania (Kenya and Uganda are already fully operational) and to develop our bank collaboration model;

  • EUR 100,000 will be invested in product development and the technology platform in co-investment with our SCF software provider ASYX International BV; 

  • Any additional funds will be used for refinancing FACM loans so we can achieve lower costs of capital, allowing us to on-board 50 anchor clients in 2017

On top of the convertible loan, we provide the following additional incentives to investors:

To make the investment even more attractive, the interest of 7% is paid annually and not at the end of the term. 

In addition:

  • If you invest EUR 5.000 or more, we invite you for a workshop about supplier finance in Africa (workshop will be in Amsterdam)

  • If you invest EUR 10.000 or more, you will also be mentioned as a supporter on our website

  • If you invest EUR 20.000 or more, on top of that, we will book you a flight to Kenya and take you into the field to visit our clients and experience the impact we make with your own eyes

What are you waiting for?

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Peter van der Krogt
Chairman, FACM

Peter is Co-founder of Financial Access and an investor in FACTS. More than 35 years of experience working in private as well as public financial institutions (Ministry of Finance in the Netherlands, World Bank/IFC, ING Bank ).

He has advised banks and investors in financial institutions globally and rolled-out various new banking products, including Supply Chain Finance.

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Maarten Susan
Managing Director, FACTS East Africa

Maarten has over 30 years experience in financial institutions (including ABN AMRO, Rabobank), and has held board positions with banks and insurance companies in the Netherlands and abroad. He has been working in Africa for the past 9 years.

A Partner in Financial Access, he is one of the founding fathers of FACTS. He believes in leading from the front, and has an unrelenting hands-on personality

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+ 16 staff in Kenya and Uganda

The FACTS team in Nairobi consists of 11 staff, and in Uganda of 5. The teams in Kenya and Uganda focus on client origination, monitoring the loan portfolio and daily management of operations. A regional Management Team ensures alignment and coordination of all activities in the region. The GM’s and Regional Heads of IT/Operations are members of the team.

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FACM B.V. ("FACM") is a Dutch management and investment company and for more than 90% owner of FACTS EA B.V. ("FACTS") - the finance company. FACM is responsible for governance, compliance, finance and funding activities and managing the treasury function and credit policies. FACM will charge all direct cost to FACTS and the management is entitled to a profit share to be determined by the board and has a carried interest in the sale of the company, all documented in a Management Agreement dated 19 October 2016.  

FACTS has 2 wholly owned subsidiaries in Kenya, Uganda and is planning a 3rd in Tanzania - and focuses on client origination, monitoring the loan portfolio and daily management of operations. A regional Management Team ensures alignment and coordination of all activities in the region and the GM’s and Regional Heads of IT/Operations are member of the team which is chaired by Maarten Susan.

Maarten is the Managing Director of FACTS and resides in Nairobi, Kenya.   

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Working for FACTS requires a profound understanding of best practice lending principles. All staff in Business Development and Risk Management have been recruited on the basis of many years of banking experience. But we are not interested in standard banking profiles. We select people who have worked outside the financial sector - preferably for SMEs in a management or consultancy role.


At present the FACTS team in Nairobi consists of 11 staff, and in Uganda we currently stand at 5.  Both teams are expected to double in size over the next two years - with growth mostly projected in the operations and processing departments.  In addition, FACM handles the overall CFO desk out of Amsterdam with 2 persons.

The product

FACTS lends money to SMEs in developing countries. Our financing is very short term (30-90 days) and is based on principles of invoice discounting or factoring.  What we do is called Supply Chain Finance (SCF): 

  • We provide credit on the basis of completed trade transactions. A sale has taken place between seller and buyer, but instead of cash settlement, the parties have agreed on payment terms (of, say, 30-90 days)
  • We speed up these payments by providing early payment to sellers, and collecting from the buyer on the due date . We provide the sellers with working capital, and shift our credit risk to the buyer (which is often a bigger, financially stronger party). They pay the outstanding invoice to FACTS on the agreed due date.

Why this is important:

Late payment of invoices (either through agreed commercial terms, or consciously delayed by buyers) leads to pressing working capital shortages for sellers – which are often SMEs who already face challenges to access finance from other sources like commercial banks.

The issue of late payment is a worldwide problem  but is even more pressing for SMEs in developing countries who have few avenues to find financing.

Unique Selling Points

What is new in our product is the (cloud) technology that enables Buyer, Seller and FACTS to interact on a 24/7 platform and conduct their sales and financing operations on-line with minimal human intervention. Thereby, risks are reduced and cash movements accelerated.

In Africa, commercial banks confine themselves to traditional lending against hard collateral (deposits, land and buildings). This approach excludes large numbers of SMEs from access to finance. As a result, banks have so far not invested in technology to process large volume/small ticket trade transactions which underpin the FACTS Supply Chain Finance model.

FACTS bases its credit decisions on cash flow, and as such we make access to lending a real possibility for many SMEs that lack the hard collateral to qualify for bank finance. We reduce our credit risk by taking over the payment of receivables, where necessary reinforced with Trade Credit Insurance (now) or Loan Guarantee schemes (being developed for the future). 

Finally, we deploy state-of-the-art technology that most banks lack – allowing us to manage our client credit processes at relatively little operational risk and cost.

Revenue model

We charge our clients interest on a monthly basis on the basis of actual credit days. In addition they pay a flat fee on every invoice financed by us. Our fees and commissions are transparent and easy to understand. For short term credit, clients compare our charges to (informal) money-lenders who are usually 2-3 times more expensive, if they are willing to help at all.

Scalability

The FACTS model is scalable in all aspects:

  • First of all, Supply Chain Finance (= access to working capital) is something that every entrepreneur struggles with. As such we can work across all value chains and client segments. The market is truly enormous.  
  • Secondly, all loans are booked centrally on the FACTS Balance Sheet.  This means it is very easy to add additional countries to our model, as processing is done centrally and relatively little overhead is needed to start new teams. 
  • Thirdly, the platform itself has been designed to work with the largest banks – meaning that we can increase volume 100-fold and would still not reach system limitations.

In summary, scalability of FACTS hinges on two drivers only: (a) the timely provision of available funding that is available for on-lending to clients, and (b) the amount of capital that we need to support our own balance sheet and loan book.

Current status

FACTS is fully operational in Kenya and Uganda. We have started to refinance (some of) our client loans through the Lendahand platform, and booked EUR 500,000 in just over 6 weeks. 

We are on track to reach our target of EUR 5m in client assets (lending) by end-2017, and anticipate to have over 30 active anchor client relations in each of Kenya and Uganda by that time. However no assurance can be given we will indeed be able to achieve our targets. 

Planned developments

The ASYX-Platform is tested and live in Kenya since 2015. We are rolling out a new factoring module next to our existing SCF products in May 2017. This allows us to service clients with large and diverse numbers of off-takers (distributors) in an efficient manner. 

Our operations in Tanzania are set to commence in June 2017. In Kenya we are going to work with Bank of Africa as payment bank and we reached agreement with the bank routing its SCF-clients through FACTS.

Target group

We focus on SMEs that work in the Food & Agriculture and Healthcare value chains. In the future this may well be expanded to Manufacturing (including exporters) and Tourism. Our ideal profile clients are well managed companies that are involved in processing (in Agriculture, think of dairies, fruit/vegetable exporters, millers, seed companies etc.). 

In healthcare we have so far focused on pharmaceutical wholesalers, but we’re also interested in the relationships between private hospitals and clinics, and health insurers.

Our clients are established enterprises, ideally with a turnover of USD 500,000 or larger. In our credit analysis we study the sustainability of positive cash flow - which is for us more important than bottom line profitability. We look for the possibility of our clients doubling their total sales in the next 36 months, which will also them to graduate to mainstream commercial banking.

Market size

In Kenya alone, FACTS will address between 0.5 and 1.3% of the existing shortfall in SME credit. In other words, the market for SME credit is truly enormous:

  • there are 7.5 mln SMEs active in Kenya (FSD, 2016);
  • of these, 350,000 are formally registered enterprises (Kenya National Bureau of Statistics, 2016);
  • of these 60% operate in the greater Nairobi area (FSD, 2016);
  • this is equal to 210,000 enterprises;
  • let us assume that 25% of these would qualify for a EUR 100,000 SCF credit facility;
  • this would translate into an SME credit demand of EUR 5.2 billion;
  • aggregate bank lending to SMEs is estimated at EUR 2.9 billion in 2013 (FSD, 2016)

This implies a credit gap for Nairobi based enterprises of EUR 2.3 billion. In an extreme stretch scenario FACTS Kenya would have booked EUR 30 mln in SME loans by 2021. Should this materialise, FACTS would have bridged less than 1.3% of the prevailing credit gap. 

Competition

We are classified as a NBFI (non-bank financial institution). In Kenya there are two companies that offer similar products:  Umati Capital and Biashara Factors. In Uganda and Tanzania, we are the first finance company that is totally dedicated to Supply Chain Finance.

For short term funding (30 days), SMEs often have no choice but to resort to informal money lenders which offer fast credit but at exorbitant interest rates (7-10% per month).

Banks are not seen as competitors. Our products and services are complementary to what banks offer. Banks are actively looking for collaboration models with FinTech companies like ourselves, and we are negotiating co-funding and risk sharing agreements with 4 institutions in Kenya (Bank of Africa, Sidian) and Tanzania (Access Bank and Letshego).


Current customers

As per 1 May 2017, we have 11 live clients of which 5 in Kenya and 6 in Uganda. In addition we have lined up 9 clients for our next funding window per June 1st 2017.

The Kenya clients are predominantly Agriculture based, whereas 4 of our 7 clients in Uganda are part of Healthcare value chains.  In subsequent phases we expect a more even and consistent distribution of value chains in all countries where we operate.

Average client exposure is approximately EUR 70,000, where our target exposure ranges between EUR 50,000 and EUR 200,000 per client.  We tend to start with lower credit limits in the initial months of establishing a lending relationship – so we expect these average limits to go up in the remainder of 2017.

Customer feedback

Client feedback has almost by definition been positive. We provide credit that our clients sorely need and have not been able to obtain from banks. Some client feedback: 


Classic Foods (Kenya) - Stella Kimemia, CEO

... “FACTS can act much faster than banks, which helps us anticipate unexpected circumstances.” …

Spring Pharmacy (Uganda) - David Ekau, CEO
... FACTS came on board based on our extensive track record even though Spring itself was a new entity ...

Victoria Seeds (Uganda) - Josephine Okot, CEO
... our business is highly fluctuating. FACTS can react to funding requests in 24 hrs...

By Grace (Kenya) – Patrick Mailinga, CEO

... we procure large quanties of maize throughout the region. The SCF approach is ideal to pay our suppliers ...

New customers

For our next funding window, which we expect to open per June 1st, we have already lined up 9 new clients.

Client targets for 2017 are 25 anchor clients in each Kenya and Uganda (so a total of 50) and a total loan book of EUR 5 mln. We think this entirely feasible.  For Tanzania separate targets are being developed.

Sales pitch

Our pitch normally starts with asking the question if the company faces pressure on working capital. In 100% of the cases the answer is yes.  Indeed, research indicates that more than anything else, the management of payables and receivables occupies the mind of an entrepreneur on a daily basis.  


Collect early, pay late(r) is the desired cash flow model. For many enterprises, exactly the opposite is likely to be reality. Suppliers demand “near cash” payment for goods and services delivered, but on the other hand, larger off-takers can and will delay the settlement of sales invoices at will. This causes a perennial negative cash conversion cycle which severely hampers the growth potential of many companies.


We then outline how FACTS can help. First we steer the discussion towards “early payment” of Sales Invoices which normally the first priority for entrepreneurs. This is a form of factoring. Pricing is discussed, and we have several examples of how companies can share financing costs throughout value chains by making it an integral part of their product cost calculations (instead of treating financing as an afterthought). At this point we need to establish whether receivables are unencumbered – as it’s imperative that we can place a pledge over them, and route payments through a designated collections account.


The entrepreneur will almost always ask if we can financing the procurement side as well.  We can, either through Reverse Factoring programmes (early payment to suppliers), or through a form of buyer Credit (allowing the buyer to stretch payment).


We conclude our pitch with summarising how we can cover the entire value chain for entrepreneurs. Our product (= credit) is in high demand, and product pitches are not the most difficult of the sales conversion cycle. The hard work is in credit analysis – and calculating the optimum level of finance that we can offer prospective clients.

What has been done before

Even before launching FACTS, Financial Access had already become a thought leader and promoter of Supply Chain Finance in East Africa.  SCF was one of the cornerstones behind the Finance4Agriculture programme that we executed together with the Embassy of the Netherlands between 2013 and 2016. As such, we were the party behind rolling out the ASYX platform at KCB, which is Kenya’s largest bank. 

In preparation for rolling out FACTS we have conducted:

  • Market research: identified over 500 food processors active in Kenya as potential clients;
  • Seminars: involving hundreds of banks, NGOs and potential clients in Nairobi and Kampala;
  • Workshops: over 10 small scale workshops with prospective clients (to understand their requirements);
  • MoUs: signed cooperation and client referral agreements with many relevant parties;
  • Forums: spoke about FACTS at large international trade finance forums;
  • Press: selected articles in local and international publications.

Marketing & sales channels

Our business does not lend itself for mass marketing campaigns.  We handpick our prospective customers, either through own research or through referrals. Invariably we bring prospects together for a half-day in house workshop where we explain our products.  Those companies that express interest and meet our lending eligibility criteria are visited – which is the beginning of a formal credit facility approval process.

Marketing objective

The objective of our marketing strategy is 3-fold:

  1. Generic market education in the area of Supply Chain Finance;
  2. FACTS brand building;
  3. Identification of prospective clients.

Partnerships

FACTS believes in partnerships. In Kenya we have concluded some 8 MoUs with NGO and Sector Organisations in the area of client referrals.  Where possible we conduct joint seminars and workshops, bringing together between 10 and 20 prospective clients to educate them on SCF. An example is our collaboration with the Kenya Agiribusiness and Agroindustry Alliance that gives us access to many hundreds of SMEs working in the Food & Agriculture Sector.  In Uganda we have concluded a similar partnership with the Uganda Agribusiness Alliance.


At a different level, we are pursuing partnerships with commercial banks (up to 3 per country). Banks are collaborating with us to let FACTS run Supply Chain Finance for their clients – based on a co-funding and risk-sharing model. They will earn fees and commission on referred clients, but avoid investing in their own platform and building new skillsets and business lines at incremental costs.

Turnover so far

FACM is the issuer of the convertible loan and the consolidated financial statements (attached) include all the financials of FACTS, the main operating company.

FACTS was established in 2015 and started lending in June last year. To date we piloted our SCF products and delivered the proof of concept with 12 different clients. We have built a loan portfolio, which by end of the first quarter of 2017 was ca. EUR 1 million. For 2016, the net revenues as a finance company are EUR 300,000. We expect for 2017 to book EUR 700,000 net revenues from the financing activities (apart from other revenues). 

Projected turnover

We have ambitious targets and want to scale-up operations rapidly. Our lending portfolio target for this year is EUR 5 million for which we have to on-lend about EUR 500,000 per month to new clients. 


This requires on average on-boarding about 5 clients per month. We have a strong pipeline and have identified a sufficient number of clients in Food and Agriculture as well in Healthcare to deliver on these targets.

We expect to double our loan portfolio in the next 2 years from EUR 5 million by the end of 2017 to at least EUR 10 million by the end of 2018 and we are aiming at a portfolio of EUR 20 million by the end of 2019. These targets are expected to result in the following revenues:

   -  2017: EUR 740,000

   -  2018: EUR 1,686,000

   -  2019: EUR 2,798,000

We hope to beat these targets. However no assurance can be given we will be able to reach the the targets and expected revenues. 

Assumptions

We have tried in our business planning to address all thinkable issues. The assumptions we took are conservative, in our opinion. During the last 12 months of the start-up phase we were able to test most of these assumptions and concluded they are realistic:  

  • Doubling the loan portfolio each year in the first 3 years followed by a growth of 50% per year; 
  • Average loan size EUR 100,000 with a tenor of 60 days;  
  • Half of the loan portfolio will be in Kenya and other half equally split between Uganda and Tanzania; 
  • In total we will on-board 50 anchor clients in 2017, another 100 in 2018 and 200 in 2019 , which by estimation after 3 years we expect more than 1500 small businesses as supplier or buyer directly and indirectly will have benefited; 
  • Introduction and roll-out bank collaboration model with co-funding in Tanzania, and if successful to be implemented in the other countries to scale-up the SCF lending; 
  • Interest rates of 2.5 % per month and a factoring (admin) fee of 1.5% over the invoiced amount; 
  • Cost of Funding in EUR between 7-8% per year;
  • Hedging cost different per country, but on average 8-10% per year;
  • Credit risk insurance and guarantees 3% per year;
  • Provisions 4% on annual basis of outstanding loan portfolio; 
  • OPEX will increase 35% per year and involves required additional staff;
  • IT cost are maintenance fees and development cost (perpetual license and implementation cost, valued EUR 250,000, are fully paid for) ;
  • Use of offered Technical Assistance funds in next 2 years;
  • Payment of WHT in the respective countries and given double taxation treaties offset against corporate taxes in the Netherlands. 

Invested so far

Together with ICCO-Investments, FACM has invested EUR 850,000 in FACTS and will invest a further EUR 300,000 in May 2017 to increase the capital and ensure FACTS to continue borrowing funds for on-lending from specialised financiers and other investors.

Investment requirement

We intend to raise EUR 500,000 (minimum of Euro 200,000) via the placement of this convertible loan. This placement is part of an overall capital raising of more than EUR 1 million in 2017 we will need to invest in FACTS to strengthen its capital. More than half of the required funds are already committed. 


Our partners from SEAF (The Small Enterprise Assistance Funds), a global pioneer in SME finance and investment (see www.seaf.com) will invest in FACM and in addition agreed it will match up to EUR 250,000 for every euro invested in the convertible loan. 

Purpose of investment

The proceeds of the convertible placed by the Symbid crowdfunding round will be used as follows: 

  • The first Euro 200,000 will be used as capital investment in FACTS maintaining a capital ratio of 20% as required by our financiers;
  • About EUR 50,000 will be used as working capital e.g. to finance the start-up of our business in Tanzania (Kenya and Uganda are already fully operational) and support developing our bank collaboration model;
  • Between EUR 100,000 -150,000 will be invested in product development and the technology platform in co-investment with our SCF software provider ASYX International; 
  • Any additional funds will be used for refinancing FACM loans so we can achieve lower costs of capital, allowing us to on-board 50 anchor clients in 2017.

Return

First of all the interest of 7% will be paid out annually in cash to the investors in this crowdfunding round. 


The start-up cost in 2015 and 2016 are all paid by FACM. FACM was able to place shares in October 2016 with an institutional impact investor who was willing to pay a 50% premium (EUR 1.50 vs notional share price of EUR 1.00) in recognition of the work done and positioning of FACTS in the market. 


Using a discount factor of 15% and a rather standard valuation method of 3x, or respectively 5x EBIDTA, we expect that in 3 years the company could be worth between EUR 6-10 million. 


Given the number of shares outstanding by that time, the share price taking into account the discount of 20% the investor in the convertible would be able to convert the loan for a price between EUR 2.00 and 3.00.


If we would use the same methodology after 5 years the company's value will have increased to about EUR 15 million, but if using other valuation techniques the value may even twice as much and more than EUR 30 million.This is the time we will need to increase the capital base by selling part of the company to a larger financial institution or alternatively, to do an IPO (public listing) in one of the emerging markets specialised stock exchanges such as London/AIM, Johannesburg or Nairobi. 


The investor is reminded that the offer is to invest in a convertible loan to FACM and it has the option to convert into shares of this management and investment company. However, as most of the funds will be used to invest in FACTS, it is agreed that the triggers for conversion are linked to certain events in FACTS as operating company is and will remain the major asset of FACM. 


In the coming years FACM plans to develop SCF business also in other countries than East Africa and it will position itself as independent Fintech company. We like to offer the investors in the convertible to benefit fully in the upside of FACM and not only of FACTS. 


However no assurance can be given the provided valuations or an IPO will be realised by the company. 

Risks

Business specific risk factors:

  • Based on our experiences of the last 2 years in setting up the business in East Africa we can confirm that the demand for working capital is huge. If FACTS has sufficient capital to leverage upon its lending business will grow--and fast enough to meet all commitments, repay the loans and interest and meet the investors requirements.
  • In our preparations we tried to understand and project how our business will do under several scenarios. What if interest rates go up, what if exchange rates move against us, what if taxes have a larger impact than projected, what if customer volumes change, what happens if we are facing unexpected downturn of one of the countries economy, what about political upheaval etc.
  • We do have to realise that we do business in emerging markets. The founders and investors in FACM have together more than 100 years of working experience in these markets. We know that no matter how well you plan ahead and think you have everything under control, surprises do happen. 
  • However, assuming problems occur, experience is required to manage these, adapt models and find or design the relevant solutions. We work with very experienced (local) managers in FACTS and we are optimistic about the future of East Africa.  

Specific risks when investing in convertible loans:

  • The Lender agrees that its claims against the Borrower under this convertible loan agreement rank below all other, non-subordinated, claims against the Lender as referred to in Section 3:277.2 Dutch Civil Code (‘BW’).
  • Lender issues a (subordinated) convertible loan to convert at a later stage to depository receipts to become a shareholder of the company. Lender expects an (exponential) growth of value of the company with the possibility to sell the depository receipts with a capital gain. However in most situations such capital gains do take more than an additional five years after conversion to be realized. In exchange for the possibility of a high return in case of a scenario of exponential growth of the value of the company, there is a risk the investment will be lost in case the company is not doing well. 
  • Please read here carefully the risks while investing in shares or loans offered by the companies published on Symbid. Here you can also obtain insight in the default report of Symbid before deciding to invest.