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Lessons Learnt

Show Me The Mic, Matt Brown

Matt Brown should have given up on podcasting within two weeks. He had no listeners and podcasting as a medium had no data to draw from. Instead, he trusted his gut and followed his passion, and today celebrates 100 episodes with some of South Africa’s greatest entrepreneurs, and the growth of a media company that is making a serious play to become a household name.

Nadine Todd

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The first rule of scaling your business, idea or concept is to do things that don’t scale. Matt Brown, founder of Matt Brown Media and host of The Matt Brown Show, a local podcast focused on bringing great ideas and entrepreneurs together to drive personal and business growth, intuitively built his business on this very principle.

“I should have given up after two weeks,” says Matt. “My downloads were almost non-existent. But it wasn’t about the downloads. If I could give just one person the information they needed to push through and not give up on their business journey, I was achieving my why.”

Although at the time podcasting was a relatively new medium, Matt understood their ability to generate huge amounts of trust and attention in a very short space of time. Podcasts sit comfortably at the nexus of authenticity, storytelling and conversation. Two years later and Matt consistently receives feedback telling him how much his show has impacted entrepreneurs and their ability to see through their challenges and hold onto their dreams.

“It’s incredibly motivating to know you’re creating something of real value and that you’re making a difference,” he says. “It’s what’s kept me going when things have gotten tough as well.”

Over and above the motivational factor, there’s a solid business case for creating loyal fans as well.

Kevin Hale, a partner at Y Combinator, one of Silicon Valley’s most successful incubators, has a simple philosophy: The best way to get to $1 billion is to focus on the values that help you get your first dollar to acquire your first user. He believes that if you get that right, everything else will take care of itself.

Related: [PODCAST] Gilan Gork, The Mentalist – How To Get What You Want In Business Using Influence

Entrepreneur and lead developer of Gmail, Paul Buchheit, agrees. According to the advice he most often shares with start-ups, it’s always better to seek deep appeal and to create something that a few people love, even if most people don’t get it right away.

The lesson is simple: Large-scale, long-term success depends on creating a product or service that truly surprises and delights your customers. But you can’t achieve that if you’re too focused on the big picture. If you’re too worried about building a R1 billion business, you’re not taking the time and effort to think about the individual customer experience.

It’s all about the why

“It’s funny, but failing in six different businesses actually taught me this lesson,” says Matt. “Success often comes after the lessons that failure brings.”

So how do you find your big idea? According to Matt, you fail — a lot. “If you don’t know what you really want to do, it’s either because you haven’t had real success — and realised you’re still unfulfilled — or you haven’t failed. Without failure, there are no lessons to push you forward.”

The problem is that you can’t fail if you don’t take risks. You need to start. And then figure out what’s working and what’s not working. “Are you in love with the vision? Are you making money? If you have a vision it’s about making it work, and where there’s passion, there’s a will and a way. There will always be people wanting to buy innovative products or prepared to change for the right reasons — you just need to offer them the right solution.”

If there’s one thing Matt has learnt along a journey spanning one hundred episodes with some of South Africa’s most successful entrepreneurs, it’s the value of passion and hunger.

“It’s what you do every day in the trenches that culminates in something of value. You need to be hungry for experiences and lessons and what you can take from them,” he says. “I’ve asked over 9 000 questions over the past two years, and this is the only consistent question I ask: Why do you do what you do? What’s in it for you? What gets you out of bed in the morning?

“Even though I’ve spoken to so many individuals with different stories, experiences and backgrounds, their answer is consistent, and it’s the golden thread that binds them together. They always speak about contribution. Not about the money, but the contribution they’re making to the human race or beyond themselves.”

In other words, they have a ‘why’ that they pursue relentlessly.

“Unlike in my other businesses, what I was trying to do with the podcasts was very clear and simple to me: I wanted to work towards something that can make a difference to one person, and start there. That’s the purpose of life; to make a difference to humanity. When you look back and you ask who you became, will you be happy with the answer? Will you know you followed your purpose, or even had one?

“You need to have an idea of who you want to be, and then paint a vision around what that looks like. Start with the vision, and then enjoy the beauty of becoming, because that’s what life’s about — failing, learning, succeeding and growing as a person — and in the process of doing that, contributing to someone else as well.”

Pivoting the big idea

matt-brown-pdocast-studio

Matt Brown Media launched as Digital Kungfu in 2016. It was Matt’s ninth foray into the entrepreneurial space. Six businesses had failed, and two he had built and sold. He was heading up innovation at a major advertising agency, driving the digital products division of the group and thinking about what his next entrepreneurial play would look like, when he started realising how completely out of reach everything he did was for SMEs.

“I started thinking, what if we gave big agency thinking to SMEs? They can’t afford big agency fees, but if they had access to the knowledge, it could really drive SME growth.”

Envisioned as a digital media agency for SMEs, the podcast was a way for Matt to create content that would support the launch of the business. “I wanted a way to distribute my ideas, give SMEs access to experts and build the brand through a medium that was largely untouched in South Africa, which is why I chose podcasting. It’s on-demand content that really suits busy entrepreneurial lifestyles, and it was still a blue ocean, with very few players cluttering the market.”

There were a few things Matt hadn’t thought through. For one, he’s an introvert, and although he liked the medium and wanted to create content with industry experts, he didn’t want to conduct face to face interviews.

Related: [PODCAST] Benji Coetzee, Founder & CEO Of Empty Trips – How To Disrupt A $8 Trillion Logistics Industry

“My first interview was with Arthur Goldstuck on tech trends. It was a skype interview, and he was typing messages to other people while we chatted. It was full of errors. I sent him the questions ahead of time, and without face-to-face rapport it was hard to take me seriously.”

In fact, Matt had already interviewed the likes of Vinny Lingham, Allon Raiz and Rich Mulholland before he even used a mic. But, practice makes perfect — as an interviewer, in the way he shapes narratives, and most importantly he began to enjoy the process of face-to-face interviews. If you put in the time and effort, you will increase your skills and comfort levels, you just need to stay the course.

That focus has been a huge influencing factor on the growth of the now rebranded Matt Brown Show. “The people I interviewed enjoyed the concept. My interview style is really different, and we often have a lot of fun. They recommended me to other people, and slowly my brand started growing, in terms of listenership, my local profile and the calibre of people I’ve had on the show.”

Slowly and organically, Digital Kungfu pivoted into Matt Brown Media. The podcast became the product, and seeded the way for a media company, which is what the business has grown into, hosting blockchain/crytpo events that are streamed live and then syndicated on podcast networks around the world. This formula is clearly working with one of Matt’s events trending in the number one hashtag position on Twitter — the first podcast to achieve this feat in the history of South African media.

“If I hadn’t started something I believed in and really enjoyed, it wouldn’t have grown into what it is today. If your foundation is right, it will grow into something that other people care about and want to support.”

The Matt Brown Show

Matt thought he was building a digital consultancy. What he was really building was a media company, and almost two years into his journey, he realised he needed to rebrand the business and the show to reflect that.

“The vortex of what I was doing was entrepreneurship; digital was an enabler but not the core. I’m building a brand that gives you information that you need at the right time. How I do that might change. It started out as podcasts, and this remains a viable medium. According to research undertaken by Matt Brown Media, the addressable market for podcasting alone is 16 million people. When I do a keynote address and ask how many people listen to podcasts, 80% of the room put up their hands. We know that 50% of all growth in podcasting happened in the last 12 months. There’s a huge competitive advantage to being a first mover in this space. But it’s also not where the money is right now.

“For over a year people were asking me why we didn’t do video. I answered ‘why play in such a competitive space when I’m in such an untapped space?’, but the truth was that I wasn’t ready. I recently hosted the biggest live event on blockchain in the country — 600 people in a room, and we released the live video and podcast post the event. I’ve learnt that in order to create a sizeable impact, entrepreneurs need to behave like a media company and tap into as many channels as possible.”

The decision to rebrand the show with his own name was also deeply personal for Matt. “This was a big risk for me. Now whatever happens, good or bad, my name is linked to it. There’s no escaping your own name, but it also adds personality and authenticity to the brand and the media we create, which is important. Ultimately, we want to give our users a narrative that supports their business and personal development. Narratives are personal by nature, and so the brand needs to be personal too. If you want to make something truly immortal, it must be based on your name, and you need to make your name worth something.”

Related: Everything You Need To Know About Podcasting But Were Afraid To Ask


Lessons Learnt

Business is about personal growth

I often ask this question: Would you agree with the statement that your only barrier to achieving what you want is your own limitations? The answer is always yes.

Learn to shift your perspectives

I spent a lot of time saying ‘I don’t play there’ because I wasn’t ready to go into video. Instead, I needed to ask ‘what would it look like if I did play in this space? That’s how you evolve and grow.

Change your story and change your life

If you tell yourself something isn’t working, that’s the story that becomes fact. You need some sense, and to pivot if necessary, but don’t give up.

Use triangulation to find your truth

I call three people and ask them what they think about an idea. It allows you to pull yourself out of your own head, and evaluate different perspectives. It’s also a good way to stop obsessing over negatives. When a service provider let me down at a big event, it was all I could focus on. Triangulation gave me a different perspective, particularly when someone I respect told me that the people in his circles — his peers — really believe in what I’m doing.

Tell a story, and people will listen and learn

It doesn’t matter what information you’re sharing, people respond to narratives. If you’re able to craft a message that people understand and care about, you will tap into a loyal fanbase, and really help your customers at the same time.

Find your competitive advantage

If you outwork everyone around you, and really care about what you’re doing and what your customers need, you will achieve success.

Podcasting is seriously hard work

It’s easy to produce content, it’s hard to create really great content. If you’re willing to put in the work, this will always give you a serious competitive advantage. In addition, if you care more about your relationships than your competitors, you will win.

Access to market is everything

In media, this means you need the right distribution channels — it doesn’t matter what you’re doing if no-one knows about you — but it’s true of any business. How are you accessing your market? If you can’t answer this question, you don’t have a business.

Ask for help

Not asking for help is the number one sin that so many entrepreneurs make. You aren’t invincible. If the market isn’t ready for you, or you need to pivot to solve a problem, you get through it by asking for help and advice. We all need support systems. I’m lucky — I have 99 people whom I’ve interviewed to reach out to, but we all need a network, and we all need to pick up the phone — and then pay it forward; help someone else in return. I’ve learnt entrepreneurs — even in competing industries and companies — will bend over backwards for each other. You just need to ask.


Related: Listen And Learn: Why Podcasts Aren’t Just For Start-up Founders

Listen to the podcast

nadine-todd-podcast-matt-brown

For his 100th episode, Matt Brown is in the hot seat. Entrepreneur editor Nadine Todd interviews Matt about starting the Matt Brown Show, the many lessons he’s learnt and mistakes he’s made, and unpacks why this is just the beginning of the journey.

To listen to the podcast, go to www.mattbrownmedia.co.za or find the Matt Brown Show on iTunes or Stitcher.

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

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Lessons Learnt

(Slideshow) Top Advice From Local Entrepreneurs That Will Change Your Business In 2019

Here’s my collection of game-changing words of wisdom from top local entrepreneurs.

CEOwise

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If I had to summarise my own learnings since starting CEOwise, it would be these ten points:

  1. I need to know the critical numbers in my business.
  2. The magic number is two co-founders. Teams build entities, individuals might start them, but teams build them.
  3. Don’t be scared of failure, that’s how we learn.
  4. It’s better to earn 10% of a bigger pie than 100% of a smaller one.
  5. Businesses in the service industry should create products out of their services, or sell value and not hours.
  6. Stick to your core competencies and outsource the rest.
  7. Make small incremental changes everyday.
  8. Your team is your biggest asset.
  9. It’s cheaper to retain clients than attain new ones.
  10. If you’re worrying about paying too much tax, you’re not earning enough.

After each interview, there is generally one main word of advice that sticks in my mind, and which I ponder on for days afterwards. The following advice from local entrepreneurs may stay with you too:

  • Benji Coetzee, Empty Trips
  • Allon Raiz, Raizcorp
  • Joel Stransky, Pivotal Group
  • Gideon Galloway, King Price Insurance
  • Adriaan Rootman, Luxury Time
  • Brian Mills, New Concept Projects
  • Byron Clatterbuck, SEACOM
  • John Sanei, Global speaker and trend specialist
  • Ryan Kahan, CallCabinet
  • Regine Le Roux, Reputation Matters
  • Miles Kubheka, Vuyo’s brand
  • Eben Uys, Mad Giant
  • Mark van Diggelen, GameZBoost
  • Erik Kruger, Mental Performance Lab
  • Musa Kalenga, Public speaker
  • Marnus Broodryk, SME Africa
  • Rich Mulholland, Missing Link
  • Mike Sharman, Retroviral
  • Cairo Howarth, EFC Worldwide
  • Dinesh Patel, OrderIn
  • Andrew McLean, Cycle Lab
  • Albé Geldenhuys, USN
  • Ran Neu-Ner, The Creative Council
  • Nic Haralambous, NicHarry
  • Mark Sham, Suits & Sneakers
  • William Wertheim Aymes, Artemis Brands
  • Matt Brown, Matt Brown Media
  • Pat Pillai, Lifeco Unltd
  • Vuyo Tofile, EntBanc
  • Ian Fuhr, Sorbet
  • Colin Timmis, Xero
  • Felix Martin-Aguilar, ReWare
  • Fritz Pienaar, Advendurance
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Lessons Learnt

How Yoco Successfully Secured Capital And The Importance Of A Pitch

Yoco entered the market in 2015. In 2018, the founders raised R248 million in Series B Funding. Here’s how they’ve built a business that funders will back.

Nadine Todd

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Vital Stats

  • Players: Bradley Wattrus (chief financial officer), Katlego Maphai (CEO), Carl Wazen (chief business officer) and Lungisa Matshoba (chief technology officer).
  • Company: Yoco
  • What they do: Yoco is an African technology company that builds tools and services to help small businesses get paid, run their businesses better and grow.
  • Visit: www.yoco.com

From scrappy start-up to professional contender

Yoco launched in 2015 as a Silicon Valley-type fintech start-up (above). Today, the brand is an established business that wants to change the way SMEs are supported in the payment, funding and financial management space.

When Yoco went live with its card machines in 2015, it wasn’t just a late entry to market, it was a full nine months behind many other entries. The founders weren’t worried. They had a very specific business model and weren’t going to let a noisy market distract them from their vision.

In fact, instead of rushing, they spent the next year growing the business to 500 happy merchants. They were late to market, but getting the model right was more important than being fast.

Since late 2016, the team has closed Series A and Series B rounds of funding, totalling close to R300 million. Slow and steady has worked. That doesn’t mean raising capital was easy, just ultimately successful. Here’s how Yoco did it.

Starting with Angels

“In a strange way, we were lucky that we didn’t receive venture capital funds early on,” says Katlego Maphai, founder and CEO. “We had a funder pull out at the last minute, which was scary, but also a blessing in disguise. It meant we had only angel investors and family offices invested in the business, which gave us the capacity to think long term and not take shortcuts. We’ve since realised the importance of only taking on VC investment at the last possible moment. It’s imperative to have product/market fit before you chat to VCs, and we only really achieved that at the end of 2016.”

The team learnt this lesson in hindsight though, and like so many start-ups, did approach VCs too early. “We tried to raise VC in early 2015 when we started our beta programme,” recalls Katlego.

“In our minds, we’d been running the company for two years. We thought we had two years’ worth of traction. When we started talking to investors though, the conversations didn’t go as expected. As far as they were concerned, we’d only been operating for two months, and the valuation we were asking for just didn’t make sense.”

Related: Fitbit And Adidas Know Something That Venture Capital Doesn’t

Two years later, Yoco was in a completely different position. “From the beginning, we recognised that although tech is important, our business model would differentiate us. We needed to be fast, cheap, use digital channels to onboard clients and aggregate our merchants so that our banking partner has only one point of contact — us. This was what we were quietly investing into, removing friction for merchants who were onboarding themselves onto our platform.

“This was our big focus — to make the entire process as simple, efficient and low cost as possible. Merchants need to be able to onboard themselves, with no hand-holding. The problem in this market has always been one of distribution. How do you get to market in the cheapest, most efficient way possible, when the traditional people-intensive distribution model doesn’t work because it’s just not economically viable? Once we achieved that, the ability to manage merchants at scale became a reality, and that’s when we were ready for VC funds.”

In reality, Yoco only achieved product market fit and growth at the end of 2016. “By then, we’d grown ten times our size over the space of 12 months to 5 000 merchants, we had traction, incredible unit economics, and we’d built up infrastructure that allowed us to be efficient. We could really concentrate on growth. In particular, we weren’t worried about anything breaking or the system toppling over.”

It’s an important point for any start-up to consider. Often, the unit economics of businesses experiencing growth are out of kilter, as the business’s efficiencies struggle with the increased pressures of growth. By the end of 2016, Yoco was growing while remaining efficient, which was a big advantage when they started approaching investors again.

Teams and ecosystems

In the two years preceding Yoco’s official launch, the founding team, Katlego Maphai, Carl Wazen, Bradley Wattrus and Lungisa Matshoba, didn’t just research the technology to make card payments possible for merchants in the informal, rural and SME sectors, but were working on a business model that could achieve their business vision at scale.

“We were a multi-disciplinary team that had come together wanting to make a real entrepreneurial play,” says Katlego, who brought the team together. Having grown up with Lungisa, Katlego met Carl while working for a telecoms advisory and investment firm in Dubai, and Bradley at an incubator for online businesses in Cape Town that hired ex-management consultants to assist 
start-ups.

By 2012, all four partners were living in Cape Town and had savings they could live off while they planned their entrepreneurial play. “We kept coming back to the payment space. I’d seen Square, a mobile point of sale system, in action in San Francisco in early 2011, and experienced a small restaurant business that would have been cash-based accepting cards. We knew how under-serviced SMEs were in South Africa, and that card payments presented opportunities to support them. We also knew we could build a suite of services to help our micro and SME clients run and grow their businesses once they were on our platform.”

The team didn’t focus on the tech — it existed elsewhere and could be outsourced. Instead, they focused on their business model. “We focused on why banks hadn’t traditionally serviced this sector,” explains Katlego. “Our business model needed to address those challenges and the pain points of our target market, and it needed to do so in a way that allowed the business to scale efficiently and cost-effectively.”

Yoco’s team came from the mobile space. “You walk into a mobile store, fill in forms, have a credit check, get approved, sign the agreement, receive your phone and sim card and walk out the store. You’re now a customer, and hopefully you grow in value and don’t leave the network. That’s what we wanted to do for the card payment space. We wanted to take a process that takes weeks and strip it down to minutes by applying mobile thinking and using ecommerce as 
a channel.”

Until that point, merchants would source card payment tech from providers, but sign the bank’s merchant agreement, and this was where many small and micro merchants struggled to access services: Banks were just not set up to validate small businesses. It wasn’t economically viable, mainly because it tended to be a high-touch process. It was also a lengthy process.

“We knew that for us to reach smaller businesses, we needed to be able to sign up, vet and onboard applicants digitally, limiting people in the process, as this adds time and costs. This was probably our single most important insight. Once we understood this, we knew we needed to aggregate merchants, so that the partner bank we signed with would treat us like a ‘super-merchant’ — they manage the risk with us, vet us, take us through a rigorous process, and then allow us to aggregate sub-merchants under our umbrella.”

There was just one catch — for any of this to work, Yoco needed a partner bank that would agree to them aggregating merchants. “We moved to Joburg, moved back in with our parents and spent a year lobbying our partner bank,” says Katlego.

Consider what that took — ex-management consultants who had been earning impressive salaries had to return to their childhood homes so that they could focus on building their business and securing the trust of a partner bank.

“Our backgrounds had taught us how to gather information, package it and present it in such a way that we could build credibility quickly and effectively,” says Katlego. “We also knew what we didn’t know, which in this case was the payments space.”

To fill that gap, the team built an advisory board and approached the ex-head of Visa Sub-Saharan Africa to join their board for an equity stake in the business. “LinkedIn gives anyone access to the experts in every field, and networking plays a part as well. We were asking the right questions, and ended up with a few introductions to the same person.

“From there, you just need a strong value proposition. This was a vital component for us. Not only did he coach and advise us on the payments space, but he had a strong network, and it helped convince the banks that if we could convince him that we knew what we were talking about, we were worth meeting. The same was true of funders. You need a strong team, and that includes domain expertise, which at the time we didn’t have.”

There was a challenge though: In order for Yoco to secure a licence from a partner bank, they needed to show they were capitalised, but to secure funding, they needed a licence from a partner bank, as this was core to their business model.

“It was a bit of a conundrum,” says Katlego. “We solved it by approaching investors and getting firm commitments based on the licence. With that, we could secure the agreement with our partner bank, which in turn enabled us to trigger the draw-downs with our investors.”

The entire process taught the team how to de-risk the business at every stage of the journey. “We learnt to always think in milestones, and each milestone increases the value of the business. For example, securing the licence was a stage of value. By the end of 2014 we had moved back to Cape Town and were certified by Visa and Mastercard. We launched our first early beta with 20 merchants. The next milestone was our first transaction.

Related: Is Venture Capital Right For You?

Securing funding

yoco-funding

The fact that Yoco’s founding team had four members with varied and successful backgrounds dramatically increased the business’s chances of securing funding, but they still needed to learn some lessons.

“In mid-2016 we went on our Series A road show, and it was a choppy start. First, we realised that we were thinking globally, and those were the conversations we were having, which didn’t match up with the conversations local VCs were having with us. You need to all be on the same page, and 
we weren’t.”

Once the team realised this key point, they started looking at international investors, but things still weren’t going smoothly.

“We started recognising that part of the problem was the way we were approaching the whole funding process,” says Katlego. “We’d just had an investor meeting that didn’t go well, and we weren’t feeling good. We knew we needed funding — our runway was almost out and our current funding model wasn’t sustainable.

“Instead of focusing on investors, we looked at ourselves. What were our objectives? What were we looking for? We ended up with six key objectives.”

These were:

  1. Completing an investment round that gives us at least 12 to 18 months runway
  2. Working with an investment partner who has experience growing a fintech business
  3. Working with an investment partner that backs the team, and understands that one of our core strengths is our ability to operate autonomously
  4. Taking on investors who have respect for our existing stakeholders, who had walked a long path with us when very few believed in what we were doing
  5. Arriving at a fair deal, with terms negotiated in the right spirit
  6. Having the Yoco founder group, organisation, and stakeholders coming out feeling energised and ready for the next phase after the round. The wrong terms and conditions can have the opposite effect, crippling our sense of self-belief and achievements to date. Something not to be trivialised for an organisation that is looking to win.

It was a powerful exercise. From that moment onwards, the team walked into meetings knowing what they wanted, which in many ways levelled the playing field. “We had more confidence and we asked more questions, which lead to richer discussions with potential investors. We could also walk away if we saw a key objective wouldn’t be met, which saved everyone time.”

Through this process, Yoco secured Series A funding from Velocity Capital in the Netherlands and US-based Quona Capital 
for $3 million in new capital and a further $1 million in secondary buyouts, allowing some early angel investors to exit.

Since launch, Yoco was run based on formal governance and structures, which also played a big role in securing investment. “When a business is run pristinely and the due diligence is based on well-organised numbers and data, investors have comfort that their money will be managed properly. Our advice is to run your business clean from day zero. Keep good books and don’t put any other expenses through the business. We learnt this lesson from a real estate developer who told us to always be ready for the exit. She didn’t mean selling the business, but rather that if someone took a look, within moments you could produce whatever they want to see. I can’t stress enough how this has helped us.”

Related: Venture Capital 101: The Ultimate Guide To The Term Sheet

Understanding your pitch

Yoco raised $16 million in its Series B fund, which closed in 2018, and although it was the same process, the focus of the pitch was very different. “Series A is often about survival. Series B is about how big this thing can become.

“During our Series A roadshow, a big part of our pitch was proving that there’s a market for people who want to accept cards, and that there was a new way to reach this market that is not people intensive.

“In the Series B round, we could show that we’d been able to grow our base to three times its size with continued good economics and a healthy, good payback. We also showed that the market is ready to be taken with the right type of capital.

“The message was simple: We’ve figured it out and we think we can win with additional capital. There’s a huge opportunity to build an entire SME operating system, bringing payments, software and capital into one home that can essentially look after a small business and build an ecosystem around them. This in turn allows third parties access to our distribution network.

“There’s an overarching need that we’re plugging into. SMEs lack access to tools, capital and payment acceptance. It’s a big gap that we want to solve, and we’re open to partnering with anyone who wants to help solve it. It’s an open commerce ecosystem.

“Our next step of growth was to democratise access to software, because software is where the magic happens. Our app allows small businesses to manage their business finances through what is essentially a mini ERP for micro enterprises and SMEs. We are making a deep investment into building this out, because we believe it’s where the stickiness and value of our product lies.

“Customers came to us for a card reader, but they’ll stay for a much wider service offering, including access to capital and a platform that they can run their businesses from. Up until this point Yoco has signed up innovators and early adopters. Now we’re taking the brand to the mass market.”

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Lessons Learnt

Danie Venter Saw A Gap In The Informal Segment And Grew Within Just A Few Months

Stoffelberg Biltong is a FMCG start-up that attracted the interest of Secha Capital. Here’s why.

Nadine Todd

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In 2014, Danie Venter lost his business. He owned a Spar supermarket, but the business wasn’t doing well, and he knew his only option was to sell it back to the franchisor. While his wife, Nikki, continued to run the store as the sale was finalised, Danie turned his attention to something else: Sourcing and selling fresh chickens to the informal segment in Mamelodi and surrounds.

“I needed to find a way to pay the bills, and I recognised how under-serviced the informal sector was,” he explains. “Only frozen chickens were available to a community that didn’t have microwaves to defrost them. I knew there would be a market for fresh chickens.”

Danie was right. Within a few months the business had grown so big he was supplying chickens to other retailers in the area, and he approached Oom Stoffel, the owner of JC’s Meat Traders, to expand his product offering.

Over the next 18 months a friendship developed, which led to inevitable discussions around an industry they both knew well, and eventually settled on the idea of packaged biltong.

“It’s a fragmented market and none of us could think of a single brand of packaged biltong that we loved. Instead, we had local butcheries or suppliers that we bought from. We recognised there was a gap for a quality packaged biltong brand, and started working on it.”

From planning and designing the product and packaging to market took three months. Before the business launched though, Danie’s life changed forever. He was declared legally blind as a result of a condition called Optic Neuritis, and approached his business partner to say he could no longer participate in the venture.

“Oom Stoffel refused to accept the fact that I couldn’t participate in the business. His area of expertise was the product — the abattoir and ingredients — but mine was the trading side of the business. Together we could really make this brand work, and he didn’t believe my eyesight (or lack thereof) would get in our way.”

Oom Stoffel was right. Danie’s wife reads him his emails at night, but most of his business is done the old-fashioned way — over the phone or in person. Despite challenges, Stoffelberg Biltong launched and soon started securing a footprint.

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Leading a market

The business has a number of verticals and strategies to ensure cash flow and build cash reserves, but the primary vision and mission is a market-leading packaged biltong brand.

For example, Stoffelberg supplies other biltong outlets. While this may seem like Danie and Oom Stoffel are supplying their competitors, the reality is that in many respects, biltong is price sensitive and most retail stores will change suppliers from week to week. This results in a level of inconsistency when it comes to quality, the exact opposite of what Stoffelberg stands for through its branded products.

“We’re consistent, while most of our competitors are not. It’s a big, fragmented market. The current market leader only holds 6% of the market. We believe it’s important to build our brand, but we’re comfortable supplying others at the same time. It adds to our revenue stream, and more importantly, our positive cash flow.”

Going forward, the team at Stoffelberg also plans to open retail outlets and already has a kiosk. The company is also investing in continuous research and development.

“When everyone is offering the same products, you need to differentiate yourself. We want to think outside the normal verticals. When you own the entire value chain you can be innovative. If we want to try something, like chilli packets in biltong bags for example, we can do it and get immediate feedback. We’ve also launched a natural range with no preservatives or sugar for consumers with allergies, diabetes, or who just want a more natural product.”

Stoffelberg is a premium product, from its packaging to the product itself, but because of the vertical integration and the fact that the business holds the entire value chain, the brand remains competitively priced.

“Our goal is to reinvigorate a fragmented market,” says Danie. “That takes focus, brand building, a premium product and constant research and development.” It’s also taken an investment equity partner in the form of Secha Capital.

Equity deals

Within a year of launching, Danie received a call from Brendan Mullen from Secha Capital. “We weren’t too keen to discuss investments at that stage, primarily because we didn’t want to give away equity in the business,” says Danie. “We were supplying some Spar stores and we’d already begun chatting to Shoprite Checkers.

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Brendan continued to reach out and we realised that if we wanted to grow the business, there could be value in accessing capital to fund the growth we were experiencing.”

The initial meeting with Brendan revealed that although both Oom Stoffel and Danie are subject matter experts, there was a clear marketing gap that Secha Capital could help fill. In addition, as an FMCG and Agri-focused funder, Brendan and his partner, Rushil Vallabh, came with a network and connections that would be beneficial to the business as well.

“We had one of three game-certified abattoirs in the country, and we were Halaal, HACCP and export certified, but we needed to invest in a drying room and other facilities necessary for large-scale biltong production. Once we understood our needs and the value Brendan and his team could bring to the business from a growth perspective, the deal made sense. Giving away equity if it results in growth is worth it. But you need to make sure you’re selling to the right partners who add value beyond a capital contribution. It’s not just about the money.”

“Look for opportunities in fragmented value chains, where there are no clear brands in that specific section of the market. Find that, and you can find a slice of that value.”

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