South African fintech Yoco has secured a $100 million credit facility, roughly R1.6 billion, from US private credit firm Victory Park Capital. The money will fund Yoco Capital, which advances cash to the small businesses that use Yoco's card machines and point-of-sale software. Yoco says it's one of the largest dedicated merchant cash advance raises in Africa.
How Yoco Capital works
Since 2018, Yoco has helped more than 40,000 small businesses access over R6.5 billion in funding, but through partner lenders. This deal allows Yoco to fund those advances itself, giving it direct control over that financing for the first time at scale. There's no application to fill in. Merchants are pre-approved based on their live sales data, need no collateral, and repay through small deductions from their daily takings rather than a fixed monthly instalment. Advances range from R2,000 to R1.5 million, and businesses typically use them to hire staff, stock up before a busy season, upgrade equipment or open a new branch. Yoco says it hasn't recorded a single unprofitable group of advances since it started, including through Covid. As CEO Carsten Holtkemeyer put it, financing "was the one layer we didn't fully control," and this facility changes that.
Debt, not a new valuation
Importantly, this is debt financing, not another investment round. Yoco hasn't raised new equity, and the deal doesn't set a new valuation for the company. The $100 million is also the total size of the facility, not money already handed out to businesses. According to Bloomberg, it's Yoco's first move into the debt market, after previously raising more than $150 million in equity from backers including TPG and Dragoneer. Victory Park itself has invested more than $12 billion across about 260 investments since 2007.
Owning the lending book means Yoco sets the pricing and carries the risk itself, which it says will feed straight back into a better offer for merchants. It has already cut the fees merchants pay by R250 million a year. There's plenty of room to grow: South Africa's small business financing gap is estimated at about R350 billion, and SMEs receive just 13% of bank lending. The test now is whether Yoco can extend credit to more of its 200,000-plus merchants without defaults rising as the book grows.
