Kuruka aims to support a portfolio of small businesses with revenue share financing and a unique long-term, counseling and coaching service, rooted in the principles of behavioural science, psychotherapy, and performance coaching.
The objective of Kuruka is to accelerate small businesses' growth and facilitate access to follow on finance quicker and on fairer terms. Importantly, Kuruka expects to serve these businesses in a commercially viable way. Kuruka believes the success of their model could have transformational benefits both to the ecosystem in the region and around the world.
Kuruka will be launching a pilot programme shortly and hopes to quickly demonstrate success and then start expanding the offer to more businesses.
Describe the innovative financial instrument that your accelerator uses?
Revenue shares are a mechanism in which a provider of capital buys a time-limited share of the sales revenue of a business. It works by the client (in this case, the small business) paying the provider of the capital (in this case, Kuruka) a percentage of sales revenue for an agreed period or until the original capital plus an agreed multiple has been paid.
The beauty of an RPA is that it is straightforward. It cleanly ties together the interests of Kuruka and the client in generating consistent and increasing revenues. As the client benefits from increasing revenues and market penetration, Kuruka benefits by generating greater returns which can be used to support more small businesses.
With the focus of revenue growth at the forefront, RPAs shape the business to make it more attractive to follow on financiers who use revenue generation and market penetration as two of the most significant determinants for an investment.
Revenue shares avoid owner dilution as is the case with equity whilst avoiding the pitfalls of debt in harming the business during periods when revenues are low. Sharing revenue gives a cash flow advantage over debt since a reduction in revenue leads to a reduction in the amount paid.
Describe the innovative non-financial instrument that your accelerator uses?
Instead of traditional advice, this first-of-its-kind counseling and coaching function will help entrepreneurs make better decisions and better navigate their growth paths by questioning critically, promoting methodical and logical thinking, offering key information, instilling good habits, and helping build good business and financial management skills.
The Kuruka team designed and tested this role on a previous programme, Connect to Grow (DFID 2015-2018), which aimed to help small businesses grow by forming cross-national joint ventures. The role proved highly effective and presented an opportunity to offer a similar service as part of an accelerator, where the value of the financial and non-financial instruments could be greater than the sum of their parts.
