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How to Win Funders Over

It’s the most common question in the entrepreneurial world. Whether you are a start-up or an established business that needs funding for growth, the ever-present dilemma remains: How do I access funding?

Nadine Todd

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So, you have an idea for a business.

Congratulations.

Business ideas are not only cheap, they’re a dime a dozen. That said, you believe that you don’t only have an idea, but a viable business plan. So where can you access funding? According to Pavlo Phitidis, the assumption that someone else should give you money is your first big mistake. He is a firm believer that funding should start at home, at least in the start-up phase. “The bootstrapping phase is an essential ingredient to the overall success of a business,” he insists. “If you put everything you own into a business, and then proceed to ask friends, family, your book club and everyone else you know for additional funding, you will think very carefully about how you spend those resources. This will make you a better business owner, running a business that is already more likely to succeed, and it will make you far more attractive to banks and financiers when you need additional funding to grow the business.”

Indeed, many entrepreneurs waste a huge amount of time looking for funding which they could otherwise be putting into their businesses. A good case in point is a local seamstress who applied to the National Youth Development Agency (NYDA) for funding to produce matric jackets. While the finance was approved in principle, she needed to prove that she had orders and there was a demand for the product first. “She ended up approaching scholars and collecting deposits for their orders,” says Lebo Gunguluza, founder of the South African Black Entrepreneurs Forum (SABEF). “The deposits gave her enough money to actually manufacture the jackets, and then she received the remainder of the money for each order upon delivery — all before she actually received the funding she was looking for.”

The lesson is simple: the belief that a business can’t get off the ground without funding means entrepreneurs focus on securing finance instead of innovative ways they can get cash to launch their businesses.

“This entrepreneur actually got her company off the ground faster than she managed to secure funding,” says Gunguluza. “Don’t wait around for finance simply because you think that’s the only option open to you. Think out the box — your goal is to get cash. How can you do that? If you stop focusing on finance alone, you might be surprised by what you come up with.”

Gunguluza calls it ‘pre-selling’. If you need cash to fund your business, get that cash by pre-selling your product or service. In other words, get your clients to pay you before you deliver the goods.

There does come a point in the lives of many businesses, however, where future growth is not possible without funding. In order to make yourself an attractive prospect for financiers, Phitidis recommends first bootstrapping, and then taking the time to ask what you have to offer the financier.

The secret to finding funding

Don’t think for a moment you are alone in the financier-financee relationship. In fact, according to Alexandra Fraser, research analyst, Invenfin Venture Capital, the average funding partnership in the US lasts longer than the average marriage. So it’s important to be on the same page from the word go.

“No-one takes the time to ask the simple question, ‘What does a financier want from me?’” says Phitidis. “Entrepreneurs are always so busy thinking about what they want from financiers, that they forget that finance houses are businesses as well, with specific mandates that they must follow. As a business owner, before you start looking for finance, do your research and recognise that there are different types of funding that have specific criteria and mandates that must be met. Ask yourself which financier suits your business and industry best, and vice versa. No amount of moaning, sulking and bashing down doors will work if you are approaching the wrong financier. Figure out what they want, establish if you suit their profile, and then show them why you are a suitable candidate for their funding.”

Christo Fourie, IDC Venture Capital Unit, agrees. “Each fund has a unique mandate,” he explains. “You can’t change that mandate.
Move on and find a fund that fits, rather than banging your head against the wall and wasting your time.”

So what do financiers want?

According to Alexandra Fraser, the first thing funders want is for entrepreneurs to validate their ideas before they even pitch them to investors. “This can be as simple as starting with a Google search,” she says. “Did you research your idea and your market? Yes, innovative ideas are great, but not all ideas are as innovative as entrepreneurs seem to think they are, and many are simply not feasible. Is there a need or a want, and is there a market? That’s where you need to start.”

Fraser offers two examples. The first is Coca-Cola’s marketing success. “People were not dying of thirst before Coca-Cola hit the market. The brand needed to find another need or want to attract customers. It’s vitally important that you know what that hook will be. You can’t simply say: I have a product and people will buy it. Why will they buy it?”

An example of poor research is entrepreneurs who do not understand the market they want to operate within. “For example, we have received a number of pitches from entrepreneurs who have developed technology for mobile lotto sales,” says Fraser. “On face value this is a great idea: there is a need and a market. Unfortunately, there is also legislation expressly forbidding lotto tickets from being sold on mobile phones. Before they put time and effort into these pitches and even developing the technology, these entrepreneurs should have done their homework and validated their ideas.”

Ultimately, whether an entrepreneur receives funding or not boils down to market research. “Research can be painstakingly slow, but it’s also vitally important and will save time, money and effort in the long run. Market research isn’t only about creating a marketing plan. It determines everything you do in your business: what will customers pay? What should the business’s revenue model look like? How can the business attract and keep customers? If you can’t answer these questions, you won’t get finance.”

Reality check

Innovative ideas are by nature ‘big picture’. They are based on the belief that anything is possible. Proper market research grounds the big picture in reality, which decreases risk for investors, and ultimately makes the business viable. “Great business ideas also don’t need to be brand new,” says Fraser. “Creating a market can be incredibly expensive because you need a huge marketing budget to introduce consumers to an unknown product or service. But, if you are offering something that is known, but solving a need or doing it better, you are tapping into an existing market. You simply need to differentiate yourself.”

Securing finance is all about proving to investors that you understand your business, you know who your market is, and you know what you are selling to them, how much you are selling, and what you will make based on those sales. In other words, you have a realistic sales forecast.

Investors aren’t going to be fooled by inflated projections either. “Using the example that there are one billion people in Africa, of whom 95% have cell phones, does not tell me who your market is for an application that lists restaurants in Cape Town,” says Fraser. “An industry and a market are not the same thing. Understand your market and then start from the bottom up.”

Do your homework

According to Daniel Hatfield, co-founder of VC firm Edge Growth, a general rule for all investors is that due diligence has been undertaken by the entrepreneur, which means – among other things – knowing where the sales will come from. “Top down thinking is great for big ideas, but the details lie in bottom up thinking,” he explains. “An entrepreneur who has researched their market, spoken to potential customers and understands what they can buy and for how much, can determine what their sales will be – and through that, how much money will actually be coming through the door. Top down thinking says, ‘I only need 1% of a R15 million market each month to make a profit’. Bottom up thinking asks, ‘How will I make my first three sales, and how will I meet the revenue target of my first six months?’” These are the answers investors are looking for. After all, they either need to see a return on their investment, or, if they are a bank, they need to know you can service the debt.

“The golden rule in partnerships is that a partner with money is very useful, but a partner who will also provide you and your team with the space, time and freedom needed to build the business is a true friend – and that friendship will stand the test of time.”

Richard Branson, Founder of Virgin group of companies

Four things funders look for

Edge Growth co-founders Daniel Hatfield and Jason Goldberg share the four main questions funders ask prospective fundees.

1. The market

Is there a great market for your product? Is it a growing market full of opportunities, or is it saturated?

2. Competitive advantage

Does your business have a competitive advantage? Do you have a value proposition that is quicker, smarter or cheaper than your competitors? Why should your potential clients buy from you?

3. The team

An idea is all fine and well, but unless it can be executed it isn’t worth much. The team is a vital component to the overall success of a business. What kind of experience do the various team members have? What does their network look like? What qualities do the various team members display, including competence, balance, high energy, motivation, determination and trustworthiness. A golden rule here is to do what you know.

4. Economies of scale

Can you start small and expand over time? Is the business scalable? If it is going to make money you need to be able to scale the idea – and you need to show how you plan to do that.

“There are never NO competitors. Tell your funder that there aren’t, and you come across as naïve, uninformed and out-of-touch with your market.”

Alexandra Fraser, Invenfin Venture Capital

Perfecting your funding pitch

If you have banged on more doors than you can count and are still receiving “no” to your funding pitch, your problem might lie in how you’re delivering your pitch. By Jason Fell

Effective elevator pitches can be crucial for entrepreneurs trying to secure funding from angel investors. The goal of the pitch – written or delivered face-to-face – is to briefly share the ’who, what, where, when, why and how’ of your business, while piquing an investor’s interest. The tricky part is cramming all of that into one explanation that, hypothetically, should be delivered in the time span of an elevator ride.

The pitch has to quickly grab potential investors, who often only read the first few sentences of a written application and then toss half to two thirds of them away. The best pitches however, describe the market the business is in, explain what problem it solves and demonstrate a track record. The worst ones fail for countless reasons.

Here are five of the worst elevator-pitch mistakes entrepreneurs make – and how to avoid them.

Mistake No. 1: You don’t explain what problem your business solves

Some entrepreneurs spend too much time talking about how their product or service works and not enough time explaining what problem it solves. People buy solutions to problems. Don’t tell an investor how your lawn fertilizer works. Tell them about their lawn.

The Fix: Share why customers will buy your product or service

If you don’t understand or can’t explain what problem you’re solving and why customers want to give you money, then investors are probably never going to want to invest in your company. Who’s your best customer? How much money do they make from buying your product? And, how much money will you make from selling it?

Mistake No. 2: You offer too many facts and numbers

Entrepreneurs often use statistics to help explain their business. While some figures – such as your sales and revenue – are important to establish a track record, don’t go overboard. Leave out the ‘step-by-step numerical proof of your market size’ and rather be compelling. Save the reams of facts for later.

The Fix: Tell a story

To capture an investor’s full attention, explain your business by telling a story. Use personal examples about how your service or product has solved a problem in your own life. Or, put the investor into your story. If you’re selling a product for people who are blind, don’t start off talking about the difficulties blind people face. Instead, say something like, ‘Imagine if you or a loved one were to go blind tomorrow…’

Mistake No. 3: You tout sales forecasts

Early-stage sales projections often don’t carry weight with investors because they aren’t supported by actual sales history. As businesses grow, revenue streams, prices and even entire markets can change, rendering preliminary forecasts useless.

The Fix: Focus on the benefit your business offers customers

To help make up for the fact that you might not have a long sales record, it’s better to explain the benefits the business will provide customers and how the company is different from the competition. Answering services companies have been around for centuries, but if yours, for example, uses technology to deliver messages immediately without the client having to call in and pick them up, that solves a problem and has the potential to create excellent revenue and profit. That’s what’s attractive to investors.

Mistake No. 4: You’re too attached to your business plan

For some investors, it’s a red flag when entrepreneurs aren’t willing to work outside the protocol outlined in their business plans. For example, you have a device that monitors electricity and, according to your business plan, you sell that device to customers for a fixed price. But, when a customer wants to lease the device instead of owning it, and you tell them you can’t do that, it might be a problem for an investor.

The Fix: Embrace new revenue opportunities

If there’s a new way to consider packaging or selling a service, a ‘true entrepreneur’ will seize the opportunity to make money. Being flexible and willing to accommodate customers when they want your service in a format that differs from what you already offer is good. The goal should be to make your product as sellable as possible.

Mistake No. 5: You discuss ownership stakes

While it might seem natural to explain how much ownership you’re willing to offer investors, don’t do it in the initial pitch. It’s like the sticker price on a car. If it’s too high, you don’t even talk to the salesman. You just walk off the lot.

The Fix: Save it for the follow-up

Details about who gets what after an investment generally come up after an investor has finished researching your company. If an investor asks about ownership terms early on, you should simply say you’re “flexible.” Remember, your goal in the pitch is to build a relationship with the investor. Get them to fall in love with your idea.

“I invest in a person who understands their subject matter and has a strong passion to succeed. I need to see big drive and stamina to know they are in it for the long haul and won’t give up when there are hurdles, disappointments and difficulties.”

Vinny Lingham, Serial entrepreneur and investor

Improve your chances of obtaining funding

Understanding bankers and knowing how credit decisions are made can mean the difference between getting a loan – or missing one. By David Bangs

Banks typically don’t fund start-ups, but there is a point where your business is generating revenue and you are ready to apply for a bank loan. Here’s a brief guide to what makes funders tick and some tips to help you navigate their world. The main concern bankers have is protecting their capital, money with which their depositors have entrusted them. Consequently, bankers are generally very conservative. Their first priority is to recoup the principal of the loan. Their next priority is to earn a reasonable rate of interest on the loan. And their third priority is that you prosper and open more accounts with them.

Your job is to provide the banker with as many reasons to feel safe as you can. You start with a loan or financing proposal – a statement of what you need, why you need it, when you need it, and how you plan to repay it. The documentation should include a description of how much you need and what you’ll do with the loan, up-to-date balance sheets, cash-flow pro formas and projected income statements. All banks have forms to help you prepare these, but using your own business plan increases your credibility.

The nuts and bolts

Applications are rejected for the following credit-related reasons:

  • Too little owner’s equity
  • Poor earnings record
  • Questionable management
  • Low quality collateral
  • Slow/past-due trade or loan payment record
  • Inadequate accounting system
  • Start-up or new company
  • Other (only 4% of rejections have other reasons)

“If we recognise red flags during the pitching process we won’t give funding. These include a lack of understanding of the industry in which the entrepreneur operates, false claims being made or misrepresentations and a misalignment between the business plan and the entrepreneur’s oral ‘pitch’.”

Keet van Zyl, HBD Venture Capital

The ‘Six Cs of Credit’

What do bankers look for when considering a financing proposal?

1. Character: Character judgement of an individual is based on past performance. Personal and business credit histories are reviewed.

2. Capacity: This is figured on the amount of debt load your business can support. The debt-to-net-worth (debt/net worth) ratio is often used to justify a credit decision. A highly leveraged business with a high debt/net worth ratio is perceived as less creditworthy than a company with low leverage (low debt/net worth).

3. Conditions: Economic conditions, both regional and national, have a profound effect on credit decisions. If the bank is persuaded that a depression is coming, it won’t extend credit easily.

4. Collateral: Collateral is a secondary source of loan repayment. Banks want the loan repaid from operating profits and inventory so you become a bigger, better borrower and depositor. But just in case things go sour, a bit of collateral makes your banker sleep better at night.

5. Credibility: Do you know your business? Can you be counted on to be level-headed? How credible are your plans? Are they a collage of dreams or a carefully reasoned and researched plan? A business plan helps you answer the banker’s questions without hesitation.

6. Contingency plan: A contingency plan is a useful financing tool. Bankers like to see that you look ahead. A contingency plan proves forethought. It is a short worst-case business plan that examines the options open to the business and how those options would be treated. Decisions made in panic are poor decisions. A contingency plan avoids panic.

“It is vital for entrepreneurs to demonstrate a pragmatic and proven approach to getting the product to market.”

Charmaine Groves, Old Mutual’s Masisizane fund

Your funding options

Need cash but don’t know where to look? Here’s a breakdown of funders:

Angel investors: Angel investors are individuals who want to support start-ups financially. They use their own funds, and they tend to back the entrepreneur rather than the business.

Government grants: There are various government funds out there, and they all have their own terms, conditions and mandates. Do your research to determine which fund’s mandate suits your business.

Venture capital: This is not debt funded (ie debt that needs to be serviced, or paid for, like a bank loan). It is funding for high-risk, scalable, tech-related businesses. Venture capitalists are taking a huge risk, so they expect large returns. You will need to prove that your business is scalable and offers those returns. Again, make sure your business suits the fund’s mandate.

Seed funding: Some VC firms will offer seed funding, which is for start-ups.

Private equity: This is a share of the business in exchange for funding, and will usually involve angel investors or VC funds.

Bank loans: Banks specialise in debt products, which means you need to be able to service the loan. If you can’t prove that you can make loan repayments, you won’t qualify for a loan. This means you need to already be generating revenue.

Bootstrapping: Bootstrapping refers to building a business without funding. Why would you need to do this? The type of funding you receive is dependant on the stage of your business. The younger your business, the greater the risk you pose to financiers. As soon as you are successful and generating revenue, it becomes much easier to source funding.

“Funding works on a one in 100 rule: for every 100 business plans we receive, one will get funded.”

Alexandra Fraser, Invenfin Venture Capital

Nadine Todd is the Managing Editor of Entrepreneur Magazine, the How-To guide for growing businesses. Find her on Google+.

Attracting Investors

3 Components Of The Perfect Elevator Pitch

Can you clearly demonstrate value when faced with a time crunch?

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After filming two seasons of Entrepreneur Elevator Pitch, I’ve come to realise that there are three key elements to delivering the perfect pitch.

Our show is unique when it comes to pitching: Potential entrepreneurs have just one minute to pitch their idea, service or product. Those 60 seconds have added pressure because the contestants are being filmed, and they are talking to a camera (instead of people) while riding up to the penthouse suite in an elevator.

Related: 6 Tips for Perfecting Your Elevator Pitch

In real life, with a different set of distractions, it’s essential to know how to deliver a convincing elevator pitch. Whether you are pitching a product, a service or yourself, here are the three essential components in a pitch:

  1. Stimulate interest
  2. Transition that interest
  3. Share a vision.

Can you stimulate interest?

The first step, stimulating interest, is the most important. In fact, an “elevator pitch” is usually determined by the limited amount of time you have, and circumstances may only give you the opportunity to stimulate interest. If you do a good job of stimulating interest, this can yield a second opportunity, where you transition that interest and share a vision with those you are pitching to.

Keep in mind that people generally buy based on emotion, using logical reasons as their impetus for action. So, make a point to connect with them emotionally in order to stimulate their interest. Don’t be afraid to show your feelings; demonstrate high energy and excitement for your idea, business or service. Your passion and belief need to come through in your pitch!

Use the 100/20 Rule to your advantage: Have the energy that you are providing R100 worth of value and only asking for R20 in return. This attitude will generate enough attention, giving you the opportunity to transition the interest that you’ve garnered.

Make the transition

But people don’t buy exclusively on emotion. There needs to be some logic in the decision to make a purchase. Therefore, you must address some sort of pain, fear or guilt in your pitch, that those without your product or service may experience. And if you can illustrate how you (efficiently) solve a big problem, you’ll have more statistical success in your elevator pitch.

Making a genuine connection can help you transition interest. Learn to make yourself equal, then make yourself different.

Simply having connections to the same people or a point of similarity in your backgrounds will help bridge the gap with those you are pitching. Then you can emotionally connect, following that up with the logic portion of your pitch.

Related: (Video) Crafting Your 30 Second Elevator Pitch

Transition the interest you’ve generated with a clear explanation of what differentiates you. Build credibility by discussing your sales, distribution, revenue, awards and/or successes. All of these different ways to “attract” allow you to segue from emotion to the logical reasons to buy.

Of course, it is of the utmost importance to be honest when you are pitching. The truth always comes out, so ensure that you aren’t over-promising with your pitch. Don’t create a void that you are unable to fill.

What’s your vision?

Finally, in order to excel when sharing a vision, you need to have a value proposition that backs the 100/20 Rule. Make the value that you bring to the table as clear as possible. The value you’re asking for in return also needs to be clear. If you don’t display confidence in what you’re asking for, you won’t instill confidence in those you ask.

Tell others exactly what you want, why you want it and what you’re willing to give in return. You should have already proved your valuation when transitioning interest, then reiterated that valuation as you progressed in the pitch.

Take the people you are pitching through the reasons why you can be of value to them, the impact that you can have on their life or organisation and the capabilities you (or your product/service) possess that makes working together beneficial for all involved.

Practice your pitch, then get rich

After following each of these three steps, close with one simple question to gauge whether you are aligned or not: “Can you see any reason you wouldn’t want to move forward?”

If you utilise your pitch to stimulate interest in your product/service/self, transition that interest, then share a vision with those you are pitching to, the answer is almost always a resounding “no.”

And if you get objections or rejections, so what? Address whatever objections there are and if you still can’t get aligned, that’s OK. Take the perspective that the universe has a set number of rejections you need to get to before you find the right partner.

Related: How To Pitch

Be grateful for an opportunity to prove others wrong, and believe that if you keep working on your pitch, product, service or self, everything will come to you in the right way at the perfect time.

This article was originally posted here on Entrepreneur.com.

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Attracting Investors

Alan Knott-Craig Answers Your Questions On Finding a Funder To Managing Your Staff

What you really need to know to land an investor.

Alan Knott-Craig

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Focus on one customer at a time. Make that customer happy. Move to next customer. Aim for ‘1 000 true fans’, then keep them happy.

The rest will come.

1. How do I find an investor?

You have 4 options:

1. Angels

Applicable if you only have an idea, and you need cash to make your idea a reality. Usually between R500 000 and R1 million. You need to milk your network: Parents, friends of parents, colleagues, parents’ friends, friends. If you have no network, you need to build a network or use your savings. There is no math to these investments. You get money because they believe in you, not because they seriously expect a return.

2. Early-stage VC

Applicable if you already have a working product with traction, ie: users and/growth, and you need cash to build out. Usually between R1 million and R2,5 million. There are a number of early-stage VC’s in South Africa, just ask around. Knife Capital are amongst the best. Ideally you want an introduction from a trusted party. Failing that, just email them directly. Give a simple pitch. They’re looking for 15X return on investment.

3. Late-stage VC

Applicable if you have a critical mass of users and meaningful revenue, ie: R10 million a year, and you need cash to grow. The late-stage VC’s are the likes of 4Di, hard to get access without an introduction from a trusted third party, usually one of your existing investors. They are looking for a 5X return on investment.

4. Private equity

Applicable if you have a cash-generative business that requires capital to either exit a shareholder, or to grow profits exponentially. Looking for 25% IRR.

There are also state-sponsored sources of capital for entrepreneurs from previously disadvantaged backgrounds, for example the Technology Innovation Agency. This is ‘soft’ money, requiring no equity or personal surety. If you can get it, take it.

Investors are looking for return on capital. If I invest R100 in an early stage company, I want to get R1 500 (15x) back within a reasonable period of time, ie. no longer than five years.

The key metric is Total Addressable Market (TAM). The size of the market you’re targeting determines the potential size of your business.

Assume you target a market with a TAM of R100 million (profit), and you assume you can get 10% of that market by 2020. That means your business will have R10 million of profits in 2020.

A private company is valued at a maximum of 7x profit, so your company will be worth R70 million in 2020. If you ask me to invest R1 million today, I need 21% of your company in order to realise a 15x return (R15 million) by 2020.

Start with TAM, work from there. Remember, every assumption you make will be questioned. Minimise your assumptions. Maximise the evidence for your assumptions.

Related: Alan Knott-Craig Answers Your Questions On Money And Partners

2. If you are a start-up, what’s the most important thing you can do to grow?

Focus on one customer at a time. Make that customer happy. Move to next customer. Aim for ‘1 000 true fans’, then keep them happy.

The rest will come.

For consumer products, always make it easy for your customers to share. Friction-free sharing is the easiest marketing tool you can have.

Feature-creep is a big risk and can be a big distraction. You need one single value proposition that is enough to get customers. Having fifteen cool features will never compensate for the lack of one killer use case.

Related: Alan Knott-Craig Weigh In On Living Your Entrepreneurial Dream

3. Our staff is growing, more than 20 now. Any tips on management? 

Having four or five staff is not hard. You don’t need to be a good manager or leader. You can muddle along. It’s when your team starts growing past the twenty number that management becomes a skill rather than a word.

There are hundreds are articles written on the art of management, but Jack Welch (former GE CEO) broke it down to this:

  • People want to know who they report to.
  • People want to know how they’re being measured.
  • People what want to know how they’re doing.
  • That’s it.
  • One boss. Clear KPIs. Regular feedback sessions.

Read this

13-rules-for-being-an-entrepreneur-coverAlan Knott-Craig’s latest book, 13 Rules for being an Entrepreneur is now available.

What it’s about

It’s easy to be an entrepreneur. It’s also easy to fail. What’s hard is being a successful entrepreneur.

For an entrepreneur, there is only one important metric of success: Money. But life is not only about making money. It’s about being happy.

This book is a collection of tips and wisdom that will help you make money without forgoing happiness.

Get it now

To download the free eBook or purchase a hard copy, go to www.13rules.co.za.  To browse Alan’s other books, visit bigalmanack.com/books/ 

Ask  Al

Do you have a burning start-up question?

Email: alan@herotel.com

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Attracting Investors

XPRS Capital Africa Bridges Funding Gap Faced By South African SMEs

XPRS Capital Africa answers local SMEs call for funding.

XPRS Capital Africa

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Small and medium enterprises (SMEs) are a vital component of the South African economy. However, there is a substantial portion of the country’s estimated 650,000 SMEs that have no access to funding to assist in their continued growth

In response to an increase in demand for reliable and easily accessible capital for businesses like these, XPRS Capital Africa opened its doors in South Africa. The specialist business funding provider is geared towards rapidly vetting and approving short-term business funding ranging from R50,000 to R500,000. In addition, XPRS Capital Africa specialises in extending funding to SMEs that may not qualify for funding from traditional lenders.

Simon Leps, CEO of XPRS Capital Africa explains that XPRS Capital has its roots in the US, having been founded in 2013. “The company is a renowned and established alternative online business-to-business lender. Together with a team of data scientists and using thousands of data points, XPRS Capital has developed a proprietary credit vetting algorithm and packaged product set.”

Related: Angels & Demons: What To Know When Negotiating Equity Funding For Your Start-up

“The technology and approval processes developed by XPRS Capital has a massively successful track record overseas and the experience that our company has gained over the years will help many more SMEs in South Africa to reach their potential,” says Leps.

“The XPRS Capital platform has processed over $1b worth of loans and has a proven track record of funding thousands of businesses across hundreds of industries,” he continues.

Leps adds that the company’s sophisticated algorithm allows XPRS Capital Africa to provide funding to many South African SMEs that are usually denied loans on the basis that their owners have less than ideal credit records. “Traditional lenders are often reluctant to lend capital to SME owners whose credit histories place them in higher risk categories. This has created a massive challenge for many promising SMEs. At XPRS Capital Africa, we focus on the health of the SME, and use state-of-the-art technology to provide businesses the cash flow they need to grow and flourish.”

Using the unique algorithm that we have optimised for the South African market, we are able to accurately assess any SME that has been in business for over a year, to rapidly provide a 3 to 12-month funding solution, notes Leps. “The online application takes less than 10 minutes, allowing SME owners to spend less time filling in forms for funding, and more time on their business.”

XPRS Capital Africa provides funding directly, working closely with SMEs to offer the fastest approvals, best possible repayment terms and most accurate risk profiles for any business.

“Cash flow is the lifeblood of every single business. Our mission is to provide this quickly, affordably and reliably,” Leps adds.

He notes that, given the high number of businesses that have trouble accessing financing, SME owners should also know how to maintain their own positive credit records. Thereby they can ensure that their businesses have access to as many options as possible.

“Ensure that all areas of your company are looked after to the same degree as most funding providers want to see that all aspects of a business are well managed. Up to date, audited financial statements and management accounts, well managed bank accounts, and good budgeting and forecasting show that the owners are attentive. Owners also need to know their businesses inside and out and be able to answer questions about their cash flow and deal pipeline.”

Related: The Investor Sourcing Guide

In addition to this, Leps says that the customer’s experience when dealing with the business could also have a measurable impact. “Any touchpoints that are available to your customers will be looked at by potential funders, so all customer facing assets should look professional and be kept up to date. This goes for websites, online portals and social media accounts.”

“The ability to access additional funds when your company needs it is the key to long-term survival. That’s why it is paramount to maintain the best possible credit record. However, it is also important to remember that, whatever the financial state of your business, business owners are never completely out of options,” Leps concludes.

For more information or to apply for funding, please visit https://www.xprscapital.co.za/ or contact XPRS Capital Africa on (087) 625-0665  or info@xprscapital.co.za.

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