HBD Venture Capital has invested R36 million in Cape-based Fundamo, joining other private equity partners Venfin and Sanlam, which already have stakes in the mobile banking software developer.
Fundamo was formed in 1999 with the aim of developing solutions for the mobile banking market. Three years ago, it received the contract to supply the system for the MTN/Standard Bank joint venture that catapulted it into the public eye.
Hannes van Rensburg, Fundamo founder and CEO, says the company has another local banking group, FirstRand, as a client. It also does business in North America and the Middle East, with unnamed clients. In 2006, it won the Frost & Sullivan Technology Leadership Award.
"We now have a fully-developed and mature market with a lot more opportunities, especially in the Asia/Pacific and Latin American markets. The money HBD is investing in us will be used for that," he says.
Julia Long, CEO of HBD Venture Capital, Internet billionaire Mark Shuttleworth's private equity arm, says the Fundamo investment is the third for the firm's second fund after taking stakes in EDH and IncuBeta, bringing its total investments to about R76 million.
"Fundamo is a slightly unusual investment for us as they have been around for a long time. They are typical of a company that was probably a little ahead of its time, but now it has a strong track record and needs to be able to expand into other global markets," she says.
Speedy mobile growth
HBD Venture Capital's II Fund is aimed at companies that need a boost to take them to the next level, such as developing their marketing and sales skills.
The fund, which has a two-year term, will close for further investments in February 2008. Long says it is considering another three investments that should take its investment total to around R90 million.
Van Rensburg says mobile banking is growing strongly.
"It took online banking years to get one million subscribers, but mobile banking reached that level within 18 months."
Van Rensburg says there are four powerful drivers for delivering better financial services on the mobile channel: intimacy - it is a uniquely personal device; ubiquity - it reaches more people than any other electronic channel; immediacy - it is real-time and interactive; utility - the consumer can do more.
Fundamo's board structure will comprise seven directors, two each from Venfin and HBD Venture Capital, one from Sanlam and the rest from the company.
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