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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.

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Lessons Learnt

Scaleup Learnings From Our Top Clients – What The Most Successful Entrepreneurs Do Right

So, how do our successful clients move through these constraints to scaling up? We see four key drivers of success, and they are: people, strategy, flawless execution and finance.

Louw Barnardt

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You’re out of your start-up boots, staff is increasing, your client base is growing, revenue is up and you’ve proven your case to the market. Now it’s time to scale up. The challenges of this vital growth phase are different and it’s a time that demands different mindsets and different actions. In a world littered with small business failures, it helps to be well-prepared for scaling up using a proven methodology. At Outsourced CFO, we get an inside look at the success factors of our clients who are mastering the transition.

On the one hand, scaling up is a really exciting phase; this is what moves you into real job creation and making an impactful contribution to economic growth. On the other hand, it is really hard to scale up successfully. We see three major constraints that limit companies’ transition from start-up to scale-up:

Leadership

The business has to have the leadership that can take it to the next level. When you start scaling up, especially rapidly, the founders can no longer do everything themselves. The team must grow and include new leadership talent that can take charge and execute so that the founders are working on the business instead of in the business.

Infrastructure

The processes, procedures, networks, systems and workflows of the business all need to be scalable. This is imperative when it comes to your infrastructure for the financial management of your business. You’re only ready for growth when your infrastructure can seamlessly keep pace.

Market access

Scaling up demands more innovative marketing and storytelling so that you can more easily connect and engage with the new employees, clients, network partners, investors and mentors that need to come along with you on your scale-up journey.

Businesses that build a market conversation and a compelling brand narrative during their start-up phase are better positioned to have this kind of market access when they need to scale up.

People

It is critical to have the right people on your team. Our successful entrepreneurs have what it takes to attract, inspire and retain top talent. A strong team of smart, ambitious and purpose-driven people who love the company and want to see it succeed contribute greatly to a world class company culture. They are adept at communicating a compelling vision and establishing core values that people can take on. These entrepreneurs are tuned into the aspirations of their people and focus on developing leaders in their teams who can in turn develop more leaders.

Strategy

It is planning that ensures that the right things are happening at the right times. At successful scale-ups strategies and action plans are devised to ensure that the most important thing always remains the most important thing.

Strategy includes input from all team members and setting of good priorities for the short, medium and long term. Goals are clear and everyone always knows what they are working towards. The needle is continuously moved because 90-day action plans are implemented each quarter to achieve targets and goals that are over and above people doing their daily jobs.

Flawless execution

Top entrepreneurs are not just focused on what operations need to achieve, but how the business operates. They have the right procedures, processes and tools in place so that everyone can deliver along the line on the company’s brand promise. Frequent, quick successive meetings ensure the rapid flow of effective communication. Problems are solved without drama. There is no chaos in the office environment. Everyone is empowered to execute flawlessly to an array of consistently happy clients.

Finance

Everyone knows that growth burns cash. A rapidly scaling business faces the challenge of needing a scalable financial infrastructure to keep the company healthy. Our successful entrepreneurs pay close attention to finance as the heartbeat of the business, ensuring that everything else functions. They look at the tech they are using for financial management and for the ways that their financial systems can be automated so that they can be brought rapidly to scale. The capital to grow is another vital finance issue.

The best way to finance a business is through paying clients on the shortest possible cash flow cycle. However, when you are scaling up and making heavier investments in the resources you need for growth, it is likely that you will need a workable plan for raising capital. Our scale-up clients know the value of accessing innovative financial management that provides high level services to drive their business growth.

Navigating the scale-up journey of a growing private company is one of the hardest but most rewarding of careers to pursue. Having people in your corner who have been through this journey before helps take a lot of pain out of the process. No growth journey looks the same, but there are tried and tested methods that will – if applied diligently – lead to definite success. Happy scaling!

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Lessons Learnt

That Time Jeff Bezos Was The Stupidest Person In The Room

Everyone can benefit from simple advice, no matter who they are.

Gene Marks

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When you think of Jeff Bezos, a lot of things probably come to your mind.

You likely think of Amazon.com, a company he founded more than twenty years ago, that’s completely disrupted retail and online commerce as we know it. You probably also think of his entrepreneurial genius. Or the immense wealth that he’s built for himself and others. You may also think of drones, Alexa and same-day delivery. Bezos is a visionary, an entrepreneur, a cutthroat competitor and a game changer. He’s unquestionably a very, very smart man. But sometimes, he can be…well…stupid, too.

Like that time back in 1995.

That was when Amazon was just a startup operating from a 2,000 square foot basement in Seattle. During that period, Bezos and most of the handful of employees working for him had other day jobs. They gathered in the office after hours to print and pack up the orders that their fast-growing bookselling site was receiving each day from around the world. It was tough, grueling work.

The company at the time, according to a speech Bezos gave, had no real organisation or distribution. Worse yet, the process of filling orders was physically demanding.

“We were packing on our hands and knees on a hard concrete floor,” Bezos recalled. “I said to the person next to me ‘this packing is killing me! My back hurts, it’s killing my knees’ and the person said ‘yeah, I know what you mean.'”

Related: Jeff Bezos: 9 Remarkable Choices That Shaped The Richest Man In The World

Bezos, our hero, the entrepreneurial genius, the CEO of a now 600,000-employee company that’s worth around a trillion dollars and one of the richest men in the world today then came up with what he thought was a brilliant idea. “You know what we need,” he said to the employee as they packed boxes together. “What we need is…kneepads!”

The employee (Nicholas Lovejoy, who worked at Amazon for three years before founding his own philanthropic organisation financed by the millions he made from the company’s stock) looked at Bezos like he was — in Bezos’ words — the “stupidest guy in the room.”

“What we need, Jeff,” Lovejoy said, “are a few packing tables.” Duh.

So the next day Bezos – after acknowledging Lovejoy’s brilliance – bought a few inexpensive packing tables. The result? An almost immediate doubling in productivity. In his speech, Bezos said that the story is just one of many examples how Amazon built its customer-centered service culture from the company’s very early days. Perhaps that’s true. Then again, it could mean something else.

It could mean that sometimes, just sometimes, those successful, smart, wealthy and powerful people may not be as brilliant as you may think. Nor do they always have the right answers. Sometimes, just sometimes, they may actually be the stupidest guy in the room. So keep that in mind the next time you’re doing business with an intimidating customer, supplier or partner who appears to know it all. You might be the one with the brilliant idea.

This article was originally posted here on Entrepreneur.com.

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Lessons Learnt

How Sureswipe Built Its Identity By Building A Strong Company Culture

Culture is unique to a business, it’s the reason why companies win or lose.

Nadine Todd

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A company’s culture is its identity and personality. Since this is closely linked to its brand and how it wants to be viewed by its employees, customers, competitors and the outside world, culture is critical. The challenge is understanding that culture contains unwritten rules and that certain behaviours that align to the culture the company is nurturing should be valued and cherished more than others.

At Sureswipe, the core of our culture is that we value people and what they are capable of. We particularly value people who are engaged, get on with the job, take initiative, are happy to get stuck in beyond their formal job descriptions, and who sometimes have to suck up a bit of pain to get through a challenge.

We include culture in everything we do, so it’s a fundamental element in our recruitment process. In addition to a skills and experience interview, each candidate undergoes a culture fit in the form of a values interview. We look for top performers who echo our core values (collaboration, courage, taking initiative, fairness and personal responsibility) and have real conviction about making a difference in the lives of independent retailers. If we don’t believe a candidate will be a culture fit, we won’t hire them.

If we make a mistake in the recruitment process, we won’t retain culture killers, even if they are top performers. This is such a tough lesson to learn, but it liberates a company and often improves overall company performance.

Culture should be cultivated, constantly communicated and used when making decisions. At Sureswipe, we often talk about what it takes to win and have simplified winning into three key elements: A simple, yet inspirational vision; the right culture; and a clear and focused strategy. The first and third elements can be copied from organisation to organisation. Culture on the other hand is unique to every business and can be a great influencer in its success.

Catch phrases on the wall are not the definition of culture

A strong culture is purposeful and evolving. It’s what makes a company great, but also exposes its weakness. No company is perfect and it’s important to acknowledge the good and the bad. Without it, we cannot ensure that we are protecting and building on the good and reducing or eradicating the bad.

Mistakes happen. That’s okay. But we are very purposeful about how mistakes are handled. Culturally we’re allergic to things being covered up or deflected and have had great learning moments as individuals and as an organisation when bad news travels fast. It’s liberating to ‘tell it like it is’ and almost always, with a few more minds on the problem at hand, things can be rectified with minimal impact.

Related: Starbucks Coffee Is All About Culture… For A Reason

Culture should be built on values that resonate with you and that you want to excel at. In our case, some are lived daily and others are aspirational in that we’re still striving for them. In each case we genuinely believe in them and encourage each other to keep living them. This increases the level of trust within the team, as there is consistency in how people are treated and how we get things done.

We are always inspired when, after sitting in our reception area, nine out of ten visitors will comment on the friendliness of staff. We hear their remarks about how friendly the Sureswipe team is or a potential candidate will talk about the high level of energy and positivity they experience throughout the interview process.

These are indicators that our culture is alive and well. It’s these components of our culture — friendliness, helpfulness and positivity — that cascade into how we do business and how we treat our customers and people in general. Being able to describe your culture and support it with real life examples is a great way to communicate and promote the type of behaviour that is important and recognised within the organisation.

Culture doesn’t just happen

We are fortunate that culture has always been important to us, even if it wasn’t clearly defined in our early days. As we grew it became important to be more purposeful in the evolution of our culture. About four years ago, the senior leadership team and nominated cultural or values icons were mandated to relook all things cultural.

A facilitator said to us, “You really love it when people take the initiative, and get very frustrated when they don’t.” That accurate insight became core to our values. We love to see people proactively solve problems, take responsibility for their own growth, initiate spontaneous events, change their tactics or implement new ideas. It energises us and aligns to the way we do business.

We celebrate growth and love to see our staff getting promoted due to their hard work and perseverance. We recently had one of our earliest technicians get promoted to the Regional Manager of Limpopo. It was one of the best moments of 2018.

Be purposeful with culture, describe it, communicate it and use it in all aspects of business. Culture should change. Don’t allow phrases like ‘this is not how we do things,’ or, ‘the culture here is changing,’ to stifle the growth and development of your culture. When done correctly change is a good thing. Culture is driven from the top but at the end of the day it’s a company-wide initiative. Design it together with team members from different parts of the organisation to get the most from it. And then make sure everyone lives and breathes it.

Cost Cutting

The best ROI is achieved when you stop wasting money.

Peter Drucker once said that businesses have two main functions — marketing and innovation — that produce results. “All the rest are costs.”

If you agree, that means that the average business has a lot of fat to trim. Obviously you can go overboard trying to cut costs too. My philosophy has been to look at some of the general areas where you can add some efficiency but not at the expense of impairing your most valuable resource — your focus.

The following cost-cutting measures will do that. Think of these as adding value to your company, whether it’s time, creativity or a closer connection to your consumers.

Related: Wise Words From wiGroup On Building A “Wow” Company Culture

Uncover inefficiencies in your process

This is where I begin. In fact, it was analysing the inefficiencies of legal communication and knowledge sharing that led me to create Foxwordy, the digital collaboration platform for lawyers. I noticed that attorneys in our clients’ legal departments were drafting new documents from scratch when they could pool their knowledge and save time by using language that a trusted colleague had employed in a similar document. Business is all about process. When you create a new process, or enhance an existing process, you will drive cost efficiency.

Refine your process, then automate

If existing processes are lacking, it is time to create process. If you have processes, but they are not driving efficiency, it’s time to redefine your process. Either way, a key second step is refining processes that are needed in your business. Only then can you go to automation, since automating without a process will result in chaos — and won’t save time or money. Similarly, automating a poor process is not going to give you the cost-saving results you are looking for.

Thanks to the Cloud, there are very accessible means of automating manual processes. For instance, you can automate bookkeeping functions with FreshBooks and use chatbots to interface with clients — for very basic information. If you’re a retailer, a chatbot on your site can explain your return policy or address other frequently asked questions. Automating such processes allows you to spend more time focusing on clients and customers. Technology alone isn’t a panacea for all business functions, but if you find something you’re doing manually that can be automated, take a look and consider how much time and process definition automation would save you.

Rethink your outreach

Marketing and outreach are usually big and important challenges for an organisation. In my experience, there are two main components to successful marketing — knowing your customers and using the most effective media to spread your message. For the first part, I recommend polling. There are various online survey services that offer an instant read on what your customers are thinking. You may think business is humming along, but a survey could reveal that while consumers like your product, a few tweaks would make it even better.

For the second part — marketing messaging — once you have a firm idea of your marketing messaging, Facebook is a great vehicle for outreach. The ability to granularly target customers and create Lookalike audiences (from around 1 000 consumers) can help grow your business.

Related: Take Responsibility For Your Company’s Culture To Boost Productivity

Scrutinise your spend history

There are tools that can help you assess spend history and find cost-cutting opportunities. For example, you might be able to take advantage of rewards or loyalty programmes to reduce common business expenses, like travel, or consolidate vendors for a similar function. If you have a long-standing relationship with a vendor, negotiate better pricing.

The most important elements to keep in mind are resources that make your company special. Your company may be built on one person’s reputation and expertise. Guard against tarnishing that reputation with inappropriate messaging in advertising or social media. If your company’s special sauce is intellectual property, protect that too. But everything else — ranging from physical property to salary and benefits — are costs and should be considered negotiable. — Monica Zent

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