Four black-owned South African financial services start-ups each won R1 million on Monday night at a pitching event hosted by AlphaCode, a club for next-generation fintech entrepreneurs backed by RMI Holdings.
The broad-based black economic empowerment pitching event is an initiative of Merrill Lynch South Africa and Royal Bafokeng Holdings, which seeks to identify and reward high-potential South African fintech entrepreneurs to boost the development of fintech in the country.
The event was run for the third time in collaboration with AlphaCode. Monetary awards were made to four of the 10 black-owned financial services businesses which pitched.
The four businesses, as recipients of the grant funding, will become members of AlphaCode's BEE Centre of Excellence and will receive additional business support services, including free office space at a prime Sandton location.
The programme has disbursed R13 million to 15 businesses over the past two years. The funding ranged from R500 000 to R1 million per business. The winning start-ups were Commuscore, an alternate credit scoring provider that captures payment and lending behaviours of consumers and micro-lenders in the informal sector.
The start-up provides an informal saving scheme administration and management tool that builds a credit profile based on various data points. Founders are Philile Mkhize and Priya Mistry.
The other winner was Investsure, which provides fraud insurance to shareholders against losses in share price caused by actual or perceived deception committed by management. The fintech's fraud insurance product operates on trading platforms and is targeted at individuals investing in the JSE and asset managers. Founders are Mbulelo Mpofana, Ignatius Nkwinika and Shane Curran.
Cascade, the other winner, was founded in 2016 by two actuaries, Mutoda Mahamba and Gavin Waldeck. Through technology and digital marketing, Cascade reduces the cost of insurance and gives the savings back to the consumer through an insurance savings product. The product is the equivalent of a medical aid savings account within the short-term insurance market.
Everest Ventures, founded by Neo Ratau, is an entrepreneurial SME finance advisory service and investment management company offering services such as capital raising, business case solutions, acquisitions and disposals and financial reporting. It's a meeting point of large and small businesses providing access to funding and opportunities.
During the event, contestants had only five minutes to pitch their businesses, with a few minutes set aside for questions from the judges.
The judging panel included senior investment executive at RMI Holdings, Dominique Collett; Justin Bothner, head of investment banking at Merrill Lynch South Africa; Albertina Kekana, CEO of Royal Bafokeng Holdings; and Raymond Ndlovu, investment executive at Remgro.
"We are delighted by the commitment and quality of the entrepreneurs of these high-impact black-owned businesses that we see in the financial services space," said Chipo Mushwana, head of ecosystem development at AlphaCode.
"This is testament to the need for our BEE Centre of Excellence. The winning businesses were selected because of their ability to meet our judging criteria, which included their revenue model, the problem they are solving, how they differentiate from their competitors and their marketing plans."
Mushwana pointed out AlphaCode has seen this funding is used for the development of technical platforms to create annuity revenue for the recruitment of highly skilled team members, purchasing of much-needed equipment such as laptops, and boosting marketing and business development efforts.
"We have also tracked the impact of these businesses over the last two years. Previous successes of this initiative include Isazi Consulting, a machine learning business which used the funds received in 2015 to build a data visualisation tool and made a 266% return on the investment. When Livestock Wealth joined the programme, they had sold only 10 cows and with the funds received in 2015 and increased marketing efforts, they have now sold more than 1 000 cows and attracted additional funding as well as a global audience," she noted.
Julia Benadie, regional executive of operations and corporate affairs at Merrill Lynch, added: "Our company is wholly supportive of young entrepreneurs in South Africa as we recognise them as significant contributors to our economy. Disruptive ideas are to be supported and encouraged as we need to see creative fintech solutions emerge for the challenges that South Africans face."
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