Turning fintech start-ups into formidable businesses

In 2016 the three young founders of Fingertips, a mobile app that looks to help unbanked students make payments and send money to other students at any higher institution of learning using their student numbers as a proxy account number, ran into a problem as finalists in the Fintech Challenge with Nedbank.

They needed to partner with a bank in terms of the technical and regulatory barriers for building a financial product like Fingertips.

A conversation with Nedbank was key to unlocking what the next step could be for Fingertips, says Chris Wood, emerging payments and strategy executive at Nedbank.

According to the bank, Fica would not be an issue for Fingertips and advised the start-up on reinforcing security checks, talking to universities on the use of their data and e-merchants such as Zando on the viability of plugging in Fingertips’ payment system into their application programming interface.

Although Nedbank had been having such conversations with entrepreneurs for years, the format of the conversation was more intimate and insightful, with the banking experts telling them where they are in the business cycle and giving them tips and things to consider to move closer to their goals.

This inspired Nedbank and Stellenbosch University’s business incubation programme, LaunchLab, to invite budding entrepreneurs to events where they could deliver business pitches and receive advice on the way forward from banking experts of different backgrounds ranging from business, corporate technology to financial services.

One such event was held at LaunchLab’s offices in Stellenbosch on 18 September.

According to Wood, the objective of these events is to have value-added conversations leading to growth down the line.

The business model of LaunchLab is to “work with clients such as Nedbank and run challenges for them, then sourcing entrepreneurs from all over the country and putting the best in front of a panel of judges”, said Phillip Marais, CEO of the LaunchLab.

“Our clients will choose the ones that they like and we’ll incubate those on their behalf and we’ve been doing that with Nedbank for a few years.”

Marais said such events were exciting for them as they are all about creating coalitions and interactions between LaunchLab residents and different outside parties such as potential funders and business partners.

Since its inception, the programme has created more than 60 jobs, 16 black-owned companies and 15 women-owned companies.

Of the 100 companies that went through the programme, 50 have grown and left the LaunchLab, 20 have orbited – meaning that they have reached a point where their business model had been proven while others have exited before this stage but are still running.

The entrepreneurs who got to make their presentations during the most recent event were mainly involved in the fintech space with some exciting solutions to offer.

One of these was Sxuirrel, a peer-to-peer marketplace that brings together hosts and guests from within a community, to create local, unique and flexible storage solutions.

The app has been operational for three months with more than 250 downloads and 15 listings predominantly in the Stellenbosch area, with the goal of expanding to other markets. 

According to Michael-John Dippenaar, CEO and co-founder of Sxuirrel, “it is an affordable storage solution that allows you to find or list space easily, essentially turning your unused space into cash”.

They connect people with space, parking and storage to those who need it. The app holds a 49% conversion rate (the number of people that see, click and download their app) and high retention ratio, which are indicative of the need for this type of service.

Other start-ups that delivered presentations included Gift Drop, a vouchering, loyalty and gifting service using an integrated technology platform and Jobbo, which is trying to come up with a way to give work to independent painters and builders by building a system to locate, hire, pay and rate them.