How Zimbabwe’s Panamax crowdfunds working capital for SMEs

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Zimbabwean fintech startup Panamax is helping SMEs obtain access to working capital by crowdfunding it utilising a transparent, tradeable blockchain token.

Formed in October 2021, Panamax provides end-to-end business support for SMEs by bringing together the technology, expertise, support and capital they need to thrive. It identifies SMEs in need of working capital, evaluates their inherent credit risk, and provides access to the necessary support, such as consultancy, clients, technology support, and business process automation.

The platform then allows these SMEs to crowdfund working capital through a transparent tradeable blockchain token called Pnx. Tendai Mugovi, who is chief technology officer at Panamax and founded the business alongside Joseph Magweregwede, said the startup had been launched in response to what he called “alienation of SMEs by established financiers”.

“There is an extremely high cost of borrowing for SMEs due to their perceived risk and lack of a credit record, and a high lag time between time of need and time of capital provisioning. This affects SMEs’ agility in responding to immediate market needs,” Mugovi told Disrupt Africa.

Self-funded initially, in June of this year Panamax borrowed money in order to fund its expansion and growth, as a proof of concept for the blockchain token funding model. It has already exceeded revenue targets, and has almost 50 clients with active contracts. 

“Over 85 per cent of clients have had at least two service arrangements with Panamax, so we have high repeat business. Ninety per cent of SMEs we work with have doubled their revenues within eight months on average,” said Mugovi.

More capital will be needed to sustain its growth, however.

 “The organic growth of the Panamax community through referrals far exceeds our capacity to support them hence our need for support to sustain operations and continue serving our members,” Mugovi said.

“We have never advertised our services since inception and our referral system only accepts people where the referrer is willing to be the guarantor, thereby ensuring high quality members are on-boarded and default rates remain very low.”

Currently operating only in Zimbabwe’s capital, Harare, Panamax plans to expand to other major towns in Zimbabwe, and also hopes to move into Zambia, Malawi and Tanzania. The startup monetises via asset financing, working capital loans, invoice discounting, and order financing.

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