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Lessons Learnt

How Fintech Zoona Is Solving Customers’ Real Problems

Having bootstrapped in the early days, Zoona’s executive team is now taking things to the next level with massive outside investment. Here’s their advice on how, when and why to search for growth funding.

GG van Rooyen

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Vital Stats

  • Players: Brad Magrath, Lelemba Phiri and Brett Magrath
  • Company: Zoona
  • Established: 2009
  • Contact: ilovezoona.com

Zoona is a fintech company founded in Zambia in 2009, though the company is headquartered in Cape Town. The company developed a financial application that enables grass-root entrepreneurs to become agents who not only provide key financial services to their communities, but earn an income for themselves at the same time.

When founders (and brothers) Brett and Brad Magrath developed the platform, top of mind was the fact that much of  Africa is made up of cash economies with high rates of poverty and unemployment and very little access to formal financial services.

This doesn’t mean that people living in these communities don’t still have dreams and aspirations, and the desire to achieve better lives for themselves and their families.

Zoona’s solution provides technology, capital, and business support to emerging entrepreneurs in Africa, enabling them to start their own businesses as agents.

Connecting communities to financial services

As agents, they can process essential financial services to communities who historically haven’t had access to these facilities within their communities via mobile money transactions, including local and international money transfers, bill payments, even savings products.

Related: 10 Young Entrepreneurs Under 30 Share Their Start-Up Secrets

Over $1 billion in mobile money transactions have been processed on the Zoona system since inception, and 1,5 million people regularly use the service. The company has since expanded to Malawi and Mozambique. It has grown from a text message between two brothers to a company employing well over 100 people today.

In 2012, Zoona raised a series A round of $4 million, followed by a series B investment round of $15 million in 2016. Investors include Omidyar Network, Accion’s Frontier Investments Group, Quona Capital, the International Finance Corporation (IFC) and local VC company 4Di Capital.

How has Zoona attained quick success, and how has it managed to attract funding from some of the largest and most respected investors in the world? Entrepreneur spoke to Brad and Brett Magrath, and chief marketing officer Lelemba Phiri.

Why did you launch a combination of a for-profit and a social enterprise?

zoona-south-africa-founders

Brett: The world is changing and it’s quite different from what it was even a few years ago. Today, doing good and making money are no longer mutually exclusive. To build a sustainable business that attracts great people and is able to stand the test of time, you need to point to the good you do. It’s something you can’t fake and something that you genuinely need to do. At Zoona, we are creating opportunities and not dependents.

How have you achieved such tremendous growth?

Brad: The fuel for growth is undoubtedly great people, so we’ve tried to attract the best to come and work with us at Zoona. Get great people in a room and great things happen. Beyond this, you absolutely must be customer-led, stay focused on what is important and say no to everything else. As an entrepreneur, the only people in your world should be your customers, and your focus should be on understanding their needs and pain points and working with them to solve them.

Every industry has a choke point: One thing that unlocks real customer value or solves a real customer problem.

Understanding that one thing and relentlessly focusing on absolutely owning that niche is all that matters. Your key drive must be to commit to be ten times better than anyone at that one thing that matters most to the customer. At Zoona, that one thing that customers wanted was the seamless and simple ability to cash-in and cash-out, so we focused on owning that experience and being ten times better than our competitors at that. We deliberately did not compete with promotions, or even price. We relentlessly competed where it mattered most and that’s where we won the battle and why we could grow.

Related: 12 Mega Money-Savvy Tips To Make You a Millionaire Before 30

Lelemba: Another key factor has been our ability to stay true to our mission, sometimes under tremendous pressure. Growth comes with opportunities, but some may lead you to deviate from your reason for being. At one point, we were approached by a gambling company that was proposing very attractive terms for distributing their services.

As a company whose mission was helping communities thrive through building entrepreneurship and financial inclusion, we declined the opportunity and stayed true to our purpose. Growth is about spotting opportunities, but it is sometimes also about turning opportunities away. You can only be successful if you focus on what you’re truly great at.

What are some of the barriers to growth and how did you overcome it?

Brett: Lelemba has alluded to this, and I agree that the greatest threat to entrepreneurship today is totally in one’s power to control and remove as a threat. In simple terms, it is our inability to focus — to truly focus with laser-like discipline. As entrepreneurs, we all see opportunities everywhere, like kids in a candy store.

We also actively try to mitigate risk by doing lots of different things, thinking if this one fails, maybe this other one will work out. The research shows, however, that if you try to do ten things simultaneously, you will fail at all of them. Exceptional results are only achievable when you try to do less. In doing less, you actually achieve more.

We built Zoona by focusing all our attention on this one business, in one market, with one simple product. We removed complexity and opportunity and adopted relentless focus. My advice to entrepreneurs is to focus on one business idea.

Focus on who your customers are, and what they want and need.

Brad: Another common barrier entrepreneurs need to overcome is the notion that ideas by themselves have value. The fact is, they don’t. Your business only becomes valuable when you start to grow, show that the idea actually works and can generate revenue.

This requires focus and commitment, so don’t even start thinking about raising money until you have a business that is proven to work. I believe people spend far too much time thinking about how big something can be, and not enough time in the trenches proving it will work.

Can you describe Zoona’s investment history?

zoona-logo

Brett: I think we may be one of the few businesses in South Africa that have experienced the full spectrum of fundraising activities. Brad and I bootstrapped the business for three years, then received grant funding, followed by angel investment.

We also raised funding through convertible debt and two rounds of international VC investment. We have an employee share option pool where employees can buy into the business. All in all, we have raised over $23 million.

Related: 10 Businesses You Can Start Part-Time

What advice do you have for other businesses looking for funding?

Brad: An idea is worthless. You absolutely need to bootstrap until you gain some real traction. Once you generate revenue, you can start looking for outside investment. It’s much easier to get hold of money to grow your business, than it is to launch it. Once you’re making money, you can get a fair valuation. So, don’t start a business with the aim of raising funds.

Launch a solid business that can survive without outside funding — that’s what investors are attracted to. Only raise capital when you are ready to grow aggressively, not when the business is struggling.

You need to be able to walk away from any investment negotiations. You also never want to attract just one investor, so you need to build a compelling business that attracts multiple investors and generates a bidding war.

How do you know that you’re getting a fair valuation?

Brad: When you raise capital, raise from people who know how to value start-ups. This is the main reason that Zoona’s investment was raised overseas. In South Africa, many investors know how to value corporates, but are only now learning how to value start-ups. If an investor wants to value your business based on your price-earnings (PE) ratio, walk away. Only ever accept valuations that are based on growth.

Brett: Be aware that raising money is complex and time-consuming, and the people you’ll be dealing with know what they’re doing and are very sharp. So, it’s important to bring them in early and be completely transparent. Don’t hide any skeletons in the closet. It’s also good to get advisors and mentors to help you navigate the process.

Related: Funding And Financial Assistance For SA Women Entrepreneurs

Investment term sheets are complex and hard for many entrepreneurs to understand, which is why you need mentors or a board of advisors who can assist. Don’t sign something if you’re not completely happy with it. When we received our first term sheet, it was the best day of my life. When someone actually explained the terms to me the following day, I felt like crying. Understand the term sheet, otherwise you’re going to pay for it down the line.

Lelemba: When it comes to measuring traction, it’s important to track not only the traditional metrics, like revenue and profit, but also key impact metrics, like the number of people who are benefitting from your product in rural areas, or the jobs that your product is directly and indirectly creating. There are many investors who are looking to invest in businesses that have the potential of making profit, and are also creating social, economic and environmental change. So, start measuring your impact early.

Is it important to have a good relationship with those investing in your business?

zoona-pay-point

Brad: Make sure you find the right investors who are aligned with your vision and priorities. This means you need to interview the investor, and their other investees. Do your research to know how they act when things don’t go as expected, and what level of support you can expect.

It’s also important to keep in mind that the value a good investor brings is much more than financial: They can help open doors, build relationships and make connections.

Getting the right investor on board is more important than securing the highest valuation, so be willing to go for someone you like and who can add real value, instead of the one who is offering you the best valuation.


Key learnings

  • Growth is about laser-like focus, not chasing every opportunity. Focus on what your customer wants.
  • Only chase funding once you are ready to grow aggressively. Bootstrap in the beginning.
  • Always bargain from a position of power. Don’t try to get funding when the business is struggling.
  • Understand the valuation and term sheet offered by a potential investor. Have an advisor who can help you unpack the details.

Lessons Learnt

Taking It To The Malaysian Market – Karl van Zyl Of Antipodean Café

Karl van Zyl approach has always been logical and simplified and he highlights three principles that he believes to be critical in the food and beverage industry.

Dirk Coetsee

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Karl van Zyl has a 17 year history in the food and beverage industry in South-Africa and now applies his skills and knowledge in the extremely vibrant and competitive Malaysian market. I had a very interesting conversation with him to explore both similarities and differences of both markets and to share his accumulative learning of this industry to those entrepreneurs considering to open a restaurant or café.

He has a history working for the Mikes’ kitchen and Fishmonger groups in South-Africa fulfilling a range of roles from being a General Manager to Operational Manager. Currently he both manages an well-known Café called Antipodean and facilitates the opening of new cafes’ in Klang Valley, Malaysia.

Karl shared that his approach has always been logical and that applying sound basics has always served him well. Would you eat the food served at your restaurant and really enjoy it? Posing questions such as the aforementioned to yourself as a restaurant owner or manager helps you to be aware of the quality of your operation and to always keep the customer in mind when making decisions.

One of the key learnings that he shared was to get a very good and experienced team of waiters together that has previous restaurant or hospitality industry experience. He strongly advises quality over quantity when it comes to waiters and fondly remembers one of the waiters that he managed whom could take orders from a group of twenty people and remember each order from the top of his head.

It is not only about quality of service to the customer but also when there is a small but quality team of waiters operating then their earnings are much higher and they will feel valued and happy as opposed to a large group of waiters competing for relatively small rewards.

Related: What Comfort Zones? Get Comfortable With Being Uncomfortable Says Co-Founder Of Curlec: Zac Liew

Karls’ approach has always been logical and simplified and he highlights three principles that he believes to be critical in the food and beverage industry:

  1. Quality of food
  2. Quality of service
  3. Pricing.

He adds that in addition to the above principles your location should of course be in area with very good ‘foot traffic’.

When the entrepreneur venturing into the food and beverage market considers the right suppliers it is a critical factor to go and visit their facilities, thoroughly check their quality and enquire which other quality brands they are supplying in addition to buying at good prices.

In his view comparing the Malaysian food and beverage market to the South African market there are a lot more Malaysians eating at restaurants than in South Africa. One of the reasons for this is that there are a lot of ‘street café/restaurant’ options with quality food at a very low price due to the restaurant not being air-conditioned and making use of for example plastic chairs and tables.

Personally the author has found much more twenty four hour food options and countless varieties of food compared to the South African market. If you are awake and hungry at 3 am in the morning in Kuala Lumpur, no problem! You also will not be limited to only 24 hour fast food options, almost any type of food that you desire will be available that is if you know where to go off-course.

Related: Don’t Be ‘Outside Standing’ On Your Own Exponential Growth Says Serial Investor, Jimmy Phoon

As a matter of interest Karl regards the prices of restaurants in general in Kuala Lumpur to be better than in South Africa and holds the service levels in KL in higher esteem due to it being more ‘personal’ and customer orientated. He believes that South African food matches the quality of Malaysian food but that there is however much more variety of food available in Malaysia.

Karl pointed out that it is possible to have people from all five continents represented in one night at a restaurant as the food culture in Malaysia is very diverse and so is the cultural phenomenon in general in Kuala Lumpur.

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Lessons Learnt

What Comfort Zones? Get Comfortable With Being Uncomfortable Says Co-Founder Of Curlec: Zac Liew

Zac Liew was offered to be CEO and Co-founder of Curlec at the age of twenty six and took up the offer knowing that he would be engaged in a steep learning curve. Curlec is a FinTech company that is redefining the customer experience for Direct Debit.

Dirk Coetsee

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Botanica Deli, Bangsar South, Malaysia a vibrant environment where a number of entrepreneurs and office workers go to meet and have great food and coffee. I walked into the Deli to meet a man that might just possess the ‘entrepreneurial gene’ if indeed that gene exists.

Zac Liew always wanted to venture onto the exciting yet challenging playing field of entrepreneurial ventures having his dad and mother as examples. His father a lawyer, whom ventured into property development and his mother whom started the first chain of liquor stores in Malaysia.

His parents’ ventures interested him from a very young age and helped to ignite the entrepreneurial fire in this very young CEO and co-founder of Curlec. Zac is a qualified lawyer whom also did a stint in the banking industry but at all times he had a burning desire to do something entrepreneurial and always had an interest in tech.

To him tech was always logical and simply made sense within this ever changing business environment within which we as entrepreneurs launch our start-up ventures. He also enjoys the challenging demands that the tech environment places upon his problem solving skills.

Related: Brian Tan Of FutureLab.my – Bridging The Knowledge Gap Through Social Learning

The Creation of Curlec

curlec-malaysia-mobile-appZac Liew was offered to be CEO and Co-founder of Curlec at the age of twenty six and took up the offer knowing that he would be engaged in a steep learning curve. Curlec is a FinTech company that is redefining the customer experience for Direct Debit. They are the first Malaysian software company to enable online Direct Debit payments in Malaysia. One of the core principles that Curlec was founded upon is to Build great tech that solves a basic need.

Zac together with his co-founders Steve Kucia and Raj Lorenz found a simplified and effective solution to collecting money on a recurring basis. Normally recurring billing and collections is a big issue for SMEs’ and other options were exceptionally costly and timeous.

Zac pointed out that the size of the issue of recurring collections exceeded all expectations and that is one of the reasons that their start-up phase has been successful and gained very good traction in the market.

Curlec has a razor sharp focus on only two products which enables them to focus on giving a great service and customer experience. Curlec cuts through the normal levels of bureaucracy of big companies and has a laser focus on their customers.

How does this apply to start-up entrepreneurs?

Create a product or a system that is simplified, very user friendly, cost and time effective, and more importantly that solves a very challenging issue within the market place that adds great value to customers. Underpin this by being customer centric.

I asked Zac to enlighten me on the key learnings of his journey thus far and also share success principles that has served him well in business and in his life in general. He pointed out that he believes that every entrepreneur should get comfortable with being uncomfortable and venture outside the boundaries of their own comfort zones.

‘Be comfortable with making mistakes’ he says. Get feedback learn from it and integrate the useful feedback in your thinking and in practically applying solutions.’

As business and life has a natural and general ebb and flow to it persistence is a key factor to your success. Accept challenges as they occur and realise that the mind of the entrepreneur should always have a problem solving focus. As a fan of combat sports, Zac shared the following quotes that resonates with him:

“The more you seek the uncomfortable the more you will become comfortable” – Conor McGregor

And

“I have been training under the dark lights so that I can shine in the bright lights’ – Anthony Joshua

Related:  Zac Liew Channeling The Fire Of Authenticity: Asia’s’ Top ‘YouTuber’, Joanna Soh

As a writer I have always been fascinated by the wisdom imparted by philosophers and masters of their respective fields. I am even more excited and hopeful for our future when I hear wisdom ‘rolling of the tongue’ of a twenty six year old entrepreneur:

‘Be idealistic in your ideas but be pragmatic in actualising them. If things are not working out do not be stuck in that. Take what you can learn from your experiences and move on.’

Tech has the inherent power to reach the far ends of the world seamlessly and when we have more and more tech entrepreneurs solving big consumer issues and thereby making this world a better place we can be more and more hopeful of a better future.

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Lessons Learnt

Don’t Be ‘Outside Standing’ On Your Own Exponential Growth Says Serial Investor, Jimmy Phoon

Serial investor Jimmy Phoon is proud of his and his team at Alps Global holdings in achieving a $300 million valuation.

Dirk Coetsee

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It was a usually warm and humid afternoon in Malaysia as I walked into the foodbar at Fashion library in Kota Damansara, to meet a man who has a deep understanding of leveraging capital mechanisms in order to achieve exponential business growth.

Serial investor Jimmy Phoon is proud of his and his team at Alps Global holdings in achieving a $300 million valuation. He doesn’t speak to the ‘wrongs and rights’ of investments as he believes there are many ways in approaching an investment opportunity. He does however, firmly believe in the MOC (Miracles of Capital) organisations’ (of which he is a senior alumni member) approach to exponentially grow a company and having a clear exit strategy such as selling at a desired price or publically listing the company.

Jimmy enthusiastically highlighted the difference between them, as he names it a ‘feasible’ and a ‘bankable’ business investment. In offering a simple differentiation between the two terms he explained that ‘feasibility’ simply means that the business is making money, whilst ‘bankable’ means that the business is not only making money but that there is a clear succession plan and exit strategy in place.

As an experienced international entrepreneur and investor he recognises that a vast number of entrepreneurs are very well versed in the market mechanisms of their respective industries yet not equally adept at the capital mechanisms that underpins the exponential growth of companies. He points out that when a company has very good management in place, has a clear and attractive dividend policy to its shareholders, and in addition a well-defined and practical exit strategy it will increase the appetite of investors in general.

Related: Business Leadership – Learn How To Embrace Change

He describes the MOC to be an international platform to teach the mechanisms of Capital to entrepreneurs and investors. The MOC is the trifecta of business incubation, acceleration, and investment. One of the core principles of business investment that the MOC teaches and which Jimmy firmly believes in is collaboration between companies and entrepreneurs.

This means the willingness and openness to merge your unique skills as an entrepreneur, the unique offering of your company, profit and loss, with the skills, products and offerings of other companies with the end goal of exponential growth of a newly formed company. This approach can create a big win for all involved.

But what is ‘Outside Standing’?

The aforementioned discussion led to Jimmy sharing one of his favourite sayings:

“Be outstanding or outside standing” – a tongue in the cheek way of saying that by truly understanding and applying both the mechanisms of the market and capital you can experience the exponential growth of your company or alternatively by not fully applying both mechanisms it is then highly likely that you will be a witness from the ‘outside’ to the exponential growth of other companies and unfortunately not your own.

Jimmy’s’ accumulated learnings allows him to assist his team in building an ‘IPO’ compliant company that is formed with a collaborative approach towards a planned and well executed exit. That is part of his mind-set which is to do ‘big things’ and keep a distance from ‘small things’ for as an investor this man is always after exponential growth. He fosters a creation mind-set which is to create a bigger picture through leveraging and combining market and capital mechanisms.

One of the key ‘take always’ for me as an entrepreneur is to be much more open to collaboration in order to add value to others and in turn receive value such as exponential growth. Understanding the market mechanisms within your industry is not enough to multiply business performance, taking a keen interest in the capital mechanisms at play will take major strides towards actualising your bigger picture.

Read next: Entrepreneurship: How To Develop Your ‘Great Idea’

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