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6 Lessons The Founders Of iKhokha Used To Launch An African Fintech Start-up

Local start-up iKhokha now has a secure foothold in a tough industry, but getting there wasn’t easy. Launching a fintech company in a country like South Africa brings with it a unique set of challenges. Here are the founders’ lessons and tips for building a business in Africa.

GG van Rooyen

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ikhokha

Vital Stats

  • Players: Matt Putman, Ramsay Daly and Clive Putman
  • Company: iKhokha
  • Founded: 2012
  • Visit: www.ikhokha.com
  • About: iKhokha is for anyone needing to accept debit and credit card payments from home, work or even on the go. The service can be accessed through a dedicated iKhokha device and smartphone. The company recently also started offering cash advances to entrepreneurs who make regular use of iKhokha.

As a fintech start-up operating in South Africa, iKhokha has climbed a mountain. It has had to devise a prototype of a complex device, navigate stiff regulation, raise money for growth, and educate potential customers on its offering. It was not an easy journey, but the company is now in a good position.

Not only has iKhokha secured substantial funding, but it has also partnered with significant brands such as MasterCard and Game (Massmart). How did it get there? These are the lessons that the founders learnt while launching a fintech start-up in Africa.

Related: How Fintech Zoona Is Solving Customers’ Real Problems

1Look global, think local

Looking for a business idea? It’s never a bad strategy to try and find international ideas that can be brought to South Africa. The founders of iKhokha came up with the idea for a local point-of-sale (POS) solution when they saw Square in the United States.

Even though South Africa and the United States are two very different markets, an American idea can be transplanted successfully to Africa. However, it’s important to remember that each territory offers its own opportunities and challenges.

A fintech start-up in the US often faces intense competition, but it benefits from greater access to investment and a much larger potential market.

2Size of the market

matt-putman-ramsay-daly-and-clive-putman

Compared to many overseas markets, South Africa is fairly small. It’s important to keep this in mind when launching your business. What does your business model look like? What sort of scale do you need? Also, what’s it going to cost you to acquire each new customer?

“You have to remember that in a smaller market like South Africa, the cost of customer acquisition is going to be higher. You can’t compare it with the United States. You are going to work harder and pay more to sign up users,” says iKhokha marketing director Ramsay Daly.

Related: How To Accelerate Your Fintech Start-up

3Local regulations

Local regulations can complicate a business idea. For instance, iKhokha must deal with the Financial Intelligence Centre Act (FICA). Each new customer must go through the FICA process, and while this isn’t an insurmountable hurdle, it does add a layer of complexity to the business.

When launching a company, especially a fintech one, it’s important to consider the regulations involved.

4Can you build a prototype?

Co-founder Clive Putman had a background in engineering and technology, which helped a lot when the first iKhokha prototype was built, but even with this advantage, getting it done wasn’t easy.

“Don’t underestimate the time and money you’ll need to invest when creating a protoype. Chances are, it will take much longer and cost much more than you initially thought,” says iKhokha managing director Matt Putman.

“Also, think about the long-term. How do you scale things? How do you produce 10 000 of these devices at a reasonable cost? Don’t develop the technology yourself if it is already available.”

5Getting funded

“Finding an investor is never easy,” says Matt. “In our experience, both seed funding and growth funding are available, but there is a big gap between the two. So, it can be hard to find the money necessary to scale your business. Be careful of the terms.

“Don’t give away equity cheaply just before you take the business to the next level. Make sure you find a partner who wants your business to grow and succeed. We were lucky enough to join up with Capital Eye Investments, which was interested in a long-term partnership.”

Related: South Africa Is Becoming Africa’s Fintech Hub

6Partnerships are important

When you’re a new company, gaining the trust (and business) of customers isn’t easy. When you’re a fintech start-up that wants to process transactions, it can be especially difficult. So, how do you win the trust of potential customers?

“Education is important. You need to explain your offering to customers, and also show them the benefits of using it,” says Matt.

“Another way you can improve your credibility is through partnerships. We partnered with MasterCard and Massmart, with our devices being sold through Game stores.

“By aligning ourselves with brands that people know and respect, we show that we can be trusted. Of course, it can be hard to establish these partnerships when you’re a new start-up, but don’t assume that larger companies won’t be interested in you. Know your own value and have the courage to approach established businesses.”


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Launching a fintech business in South Africa is not at all like launching it in a tech-hub such as Silicon Valley. There is less competition, sure, but there are also fewer opportunities. 

Company Posts

The Make Up of Makeup: How One Entrepreneur is Changing the Cosmetics Industry

Energetic, enthusiastic and fun are three words to describe Alina Lucía Imbeth Luna. But her favorite words are organic, vegan and cruelty free. They’re the backbone of her Medellin, Colombia-based cosmetics company, Pure Chemistry. Learn how this chemist and engineer is revolutionizing the cosmetics industry and read about her advice for future entrepreneurs.

FedEx

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This article originally appeared on FedEx Blog.

What is Pure Chemistry?

Pure Chemistry is a company that invents, manufactures and sells beauty products directly to the consumer. What makes us stand out is that we are certified organic, vegan, and cruelty-free.

Many companies say they do no testing on animals, but we go one step further. None of our processes or ingredients has any animal components. Ingredients from animals are common in the cosmetic industry but for us it is not an option.

If it’s common, how do you avoid using them?

For virtually any synthetic or animal ingredient, there is an organic, plant-based alternative.

Collagen, for example, is an animal protein that we don’t use because there are vegetable alternatives that give us better results.

As for honey, we don’t take honey away from bees, we use cane honey.

So for whatever reason people have, be it religion, ethics or they just decide not to use a product that has ingredients that come from or are tested on animals, they can come to Pure Chemistry.

Related: Going The Extra Mile With Neil Robinson Of Relate Bracelets

Many companies use the word “organic,” but you are “certified organic.” How is that different?

We are proud to have the Ecocert certification. Ecocert is an international entity that has a standard for the definition of what’s considered organic cosmetics.

To get certified, ingredients need to come from renewable resources, manufacturing must be environmentally friendly, packaging must be biodegradable or recyclable so it’s not just about the product, it’s also the packaging and the production of all our ingredients.

Certification, for us, is very important. I could tell you right now that I am Hillary Clinton, but if I don’t show you an I.D., you won’t believe me, right?

That’s why it’s important to be certified.

How are your products tested?

Our products are tested on people because they are made for people.

We have a testing club at Pure Chemistry. Many are from our University and are chemists and physicists as well friends and customers who volunteer to test our products.

People call all the time about being in our new product test group and we pay no one for testing.  This is very important to us so people are honest about the product and their results.

What is your team like?

We are a company of women and everyone has their own expertise.We all have some authority roles over our own specialties but there are no hierarchies here. The business model is a circle. We all support each other.

We have no set schedule. Our team comes to work when they need to – at the time that they need to work. You don’t have to be sitting here doing nothing if, at that time, there is nothing to do. It works very well for us.

Our customers are also an important part of the Pure Chemistry team. Since 2015, many new product ideas have come from clients’ requests. They write to us, send us messages, and we keep a list.

People started requesting, “Please, we need a toothpaste,” and we said, “Let’s work on a toothpaste.”

Others wrote, “Please, we need a product in a size that can go in a carry on bag at the airport,” so we did.

We mean it when we tell our clients, “Your comment, message, suggestion won’t be in vain.”

How hard is it to develop your products?

As a child, you don’t think about having to make money to do this and that.

For me, product development is like that little girl inside me that wants to experiment.

It’s fun, but not easy. It took us almost six years to develop a shampoo to make sure it did not have sodium lauryl sulfate or sodium laureth sulfate, the quickest, fastest, and cheapest way to make shampoo. It took us that long to get a product that would comply with the organic certification and one that you could use on both babies and adults.

We also have to think ahead. When we started developing nail polish, we also needed an organic nail polish remover, one that was also not flammable so it can easily be shipped internationally. Now we have a patent pending water based nail polish remover.

We are always amazed and encouraged when something that we came up with is working for someone. They write things like “I love this product. I love this company. I love you guys.” It’s very heartwarming.

This is what makes me get up in the morning.

It’s creativity with a purpose.

What advice do you have for other women entrepreneurs?

 Don’t just make a business plan and wait. Entrepreneurship shouldn’t stay on paper.

There should be no excuses. Go for it. Be willing to make mistakes. As long as you are clear about where you want to go, there are many ways to get there.  You can make a mistake, you can fall, a million things can happen.

 Examine and redefine your goals as you learn from your mistakes.

Related: Funding And Financial Assistance For SA Women Entrepreneurs

What advice do you have for little girls?

I would tell any little girl or boy, “Start by writing it.” Write about what you want to do, what you dream about.

As years go by, look to see if that was just a kid thing, a whim, or if it was really a dream. As you grow up you forget that as a child you wanted many things, but if you write them down, it will give you something to look back on.

For me, I can say, “Look, I wanted to be a scientist, and I did it!”

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Communication Skills To Succeed In Business

Article by Nicky Lowe, Wits Plus Lecturer in Business Communication.

Wits Plus

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A Scientific American blog about the role of luck in success mentions the popularity of magazines such as Success, Forbes, Inc., and Entrepreneur and argues that we can learn to be successful by reading about successful people:

There is a deep underlying assumption, however, that we can learn from them because it’s their personal characteristics – such as talent, skill, mental toughness, hard work, tenacity, optimism, growth mindset, and emotional intelligence – that got them where they are today. This assumption doesn’t only underlie success magazines, but also how we distribute resources in society, from work opportunities to fame to government grants to public policy decisions. We tend to give out resources to those who have a past history of success, and tend to ignore those who have been unsuccessful, assuming that the most successful are also the most competent.

While not discounting the role that luck, or family inheritance and reputation might have in success, consider the massive role that good communication skills play in success. For example, if you cannot express yourself well, your proposal will be unsuccessful. If your business plan is full of grammar errors, then even if the financials add up, and you can show a past history of success, you are less likely to get the funding you’re after.

Related: A Business Lens For Learning And Development

There are many daily examples where stronger communication skills would have made the difference between success and failure. If a junior data processor bypasses her line manager to ask another manager for help with entering a batch of data in a different format, but is not clear about the batch names, she is unlikely to be successful in getting her job done. Jumping ranks will not go down well in corporate hierarchies, for starters. Moreover, if she lacks the corporate know-how to avoid this faux pas once, she is likely to blunder several times, thus generating the impression that she is disloyal to her own line manager and not a valued team-player. On the other hand, the lack of clarity in her emails can very effectively be overcome by improving her business communication skills.

Effective business emails need to be short and to the point, with very specific detail, especially if a request or instruction is given. The reader cannot be expected to do anything if they do not know what is actually being requested. It may be a simple case of giving the label names of the data batches, as in this example, but often managers grumble about staff being incompetent or lazy when the problem is their own poor communication skills and inability to use email effectively.

The best part of this solution is that it does not rely on luck. We all have the innate ability to improve our own communication skills. For those who want to improve their communication skills mindfully, there are short courses that take only a few hours a week for a couple of months that will give them insights into well researched theories and techniques so that they can apply these strategically in their personal and professional lives.

Related: Personalised Learning Is Optimised For Your Needs

In the reading about luck, talent is defined as “whatever set of personal characteristics allow a person to exploit lucky opportunities” and talent includes “intelligence, skill, motivation, determination, creative thinking, emotional intelligence”. These skills are highlighted in the Wits Plus Effective Business Communication short course to equip our students to make the most of opportunities. Studies have shown that the most talented people are not the most successful in life, but that luck and opportunity may play an unseen role in that success. Excellent communication skills are key to making the most of opportunities and breaking through to success!

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Lessons Learnt

Author Of The Little Book of Inspiration Gives Great Advice On Having Direction And Courage

If you can keep learning along each step of the start-up journey, you’ll continue to grow, and your business will be a success, says entrepreneur and author, Matshona Dhliwayo.

Nadine Todd

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Vital Stats

  • Player: Matshona Dhliwayo
  • About: Matshona Dhliwayo is a Zimbabwean-born and Canadian-based philosopher, entrepreneur, and author of books such as The Little Book of Inspiration, 100 Lessons Every Great Man Wants You to Know, and Lalibela’s Wise Man.
  • Twitter: @MatshonaD

What is the difference between a ‘learn it all’ entrepreneur, and a ‘know it all’ entrepreneur, and why is it imperative that a start-up strives to be the former?

A ‘learn it all’ is one who is driven by the desire to learn and a ‘know it all’ is one who is driven by the desire to prove how much he knows. It’s imperative that you focus on the former because, in life, we are only as successful as what we know. Knowledge is more than power, knowledge is wealth.

How can someone go about being a ‘learn it all’? First, be humble; humility allows you to learn from others. A humble student is better than a proud scholar.

Related: Relax Spas Founder Noli Mini Shares Her Insights On Building A Business Of Value

Energy is a great thing, but it needs direction. How can a start-up entrepreneur calm down, focus, and find their direction?

You find direction from having well-defined goals in a business plan. You keep a tab on those goals by using a daily planner to help you steadfastly execute your objectives. In good times, be cautious; in bad times, be hopeful; and in busy times, be level-headed, never taking your eyes off your goals.

Why is it important to have direction?

road-directionA chariot can’t travel in two directions, and when you know where you’re going it’s easier to get there. When you lose direction you lose opportunities, and when you lose opportunities you lose rewards.

What are the pitfalls and limitations of ego?

Ego is an inflated sense of self and is therefore no different from arrogance. The pitfalls of conceit, which shouldn’t be confused with confidence, are endless. You start thinking you are better than others and the moment you do, this means you can’t learn from them.

If you don’t learn you don’t grow, and if you don’t grow, you die. Most experienced entrepreneurs understand the importance of being humble because people buy from people they like, and people don’t like egotistical personalities. Humility opens people up to you, but arrogance drives them away. And the more people an entrepreneur draws the more people he can serve, and the more people he can serve, the more money he can make.

That said, a degree of arrogance allows you to push through the hardships. Where is the balance, and how do entrepreneurs find that balance without getting discouraged?

Only a few people in history like Julius Caesar and Nebuchadnezzar II rose to great heights with arrogance, but their very egotism destroyed them in the end. I prefer courage, not pride, because it rises from conviction; and also faith, not ego, because it rises from hope. These two have helped the weakest of men and women achieve the greatest feats. An entrepreneur must be filled with courage daily and emptied of hubris incessantly. The higher you rise with ego, the lower you will also descend in the end because of it.

Related: How To Build A Disruptive Attitude

Why should you never, ever feel threatened by someone smarter or with more skills than you? In fact, why should you be partnering, hiring or learning from these people?

I am never threatened by people who are smarter and better than me because I see them as gifts, and not as competition. I view them as assets, not threats, so I allow them to do what they do best, thereby benefiting from it. It also frees me so I can do what I do best. We can be Jacks of all trades but we can’t be masters of all disciplines. Partnering with people who are cleverer than you elevates you.

Many entrepreneurs trust the wrong people. Why does this happen, and what is the solution?

People are complex creatures. The best of us can’t always predict human behaviour. Entrepreneurs, like everyone else, make mistakes. What they should shy away from are the avoidable ones. My advice: Take time to get to know people. Do your due diligence. Ignorance is your opponent, fear is your enemy, vice is your adversary, virtue is your friend, and wisdom is your helper.

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