Fundamo Diaries — Keeping faith during dark times [Part 4]

The following article is part of a series of extracts from South African entrepreneur Hannes Van Rensburg’s upcoming book, “Cash In, Cash Out“. The founder and CEO of the fintech company Fundamo, van Rensburg recalls the events that have helped shape the world’s mobile banking industry as we know it as well as those leading up to the company’s exit to Visa for a whopping US$110-million.

In this, the final article in the series, van Rensburg recalls the time he was at a Christian outreach programme in 2007, and was forced to decide between two keen investors that would help save Fundamo from one of its darkest periods.

By late Wednesday afternoon, Craig Sacks [Chief Operating Officer of Fundamo] had phoned again. He was about to send me a letter of interest from S1 Corporation. This was good news; it looked as if things were moving in the right direction. Before he sent the letter, however, he needed to talk to me about another matter, which he thought would be best to discuss with me in person.

He told me that the acquisition of Fundamo would be subject to me resigning from Fundamo. S1 Corporation wanted Fundamo, but not me …

This was hard for me to comprehend. I was Fundamo. How could anyone even think they could start running Fundamo as an asset without me as part of the deal?

I stumbled over my words as I asked for clarification from Craig. Part of me thought, No way. Over my dead body will this happen without me.

We finished the conversation. At first I just sat there, dumbfounded.

If the transaction was going to happen at S1’s suggested price point, I stood to lose a lot of money. I would lose my salary income and not get a great return on the personal funds I had ploughed into the company. I would be sitting with no job and very little capital. It would be hard for me to recover from this.

Richard and Johan, the rēp consultants, were with me when I received the call, so I explained my personal dilemma. While this was a potential way for the company to survive, it was not what I wanted. Both of them looked at me and nodded their heads. They were listening.

Johan then told me that the first thing we needed to do was pray about it: to ask for clarity and guidance and seek the will of the Lord. We did. A calmness came over me. Through prayer, I realised that this company did not belong to me. The Almighty had given it to me to look after. It had been arrogant of me to think it would not survive without me. The opportunity to walk this journey had been nothing but a privilege. I should be thankful for everything to which I had been exposed. Thinking back on those few weeks in May, I am certain that if it were not for Johan and Richard helping me and praying with me, I would have acted differently – very differently. I would probably have fought the S1 deal with all my might. But what ultimately transpired was a much better solution for all involved.

After I had received the letter of interest from S1 later that day, I assessed the impact of the deal and formed my opinion about it before I contacted senior board members Hein and Johan. I told them a listed US company had shown interest in acquiring us. That I thought the price was really low, and that we should establish a small team to engage with S1 and see if we could negotiate a better deal for the shareholders. Under the circumstances, I said, we did not have much of a choice.

They agreed, and we established a small working group to explore ways in which we could expedite the transaction and extract the best value for the shareholders. There was an urgency on both sides to try to conclude the deal as quickly as possible.

It was Mark Shuttleworth’s call a week later that changed things, again. He wanted to conclude the investment we had discussed in Geneva urgently. He had a valuation in mind and a structure that would allow him to buy sufficient shares so that he would end up with about 30% of the company. Providing we could get the due diligence done and conclude the investment quickly enough, this could also solve our cash flow problems. Not only would we be capitalised properly, but attaching Mark’s name to Fundamo would benefit our business development efforts.

It was a better solution than S1’s proposed acquisition.

Once again, I met with Hein and Johan. They both preferred this option, but shared my concern that it might take too long to conclude. We decided we would engage nevertheless and see where it led us. We could tell S1, at least, that we now had an offer on the table premised on a much better valuation of the company. Hopefully, S1 would sharpen their pencils and adjust their valuation in response.

In the meantime, Adriaan managed to get a three-month extension on the repayment of our loan to Absa. While we were not yet out of the woods, we had options. It would require a lot of work (and luck – or divine intervention, depending on how you look at life), but we had a new lease on life. The disaster that had struck in early May had not killed us. Yet.

Where there is life, there is hope.

More Fundamo Diaries:

Fundamo diaries: launching the world’s first mobile money service in Africa [Part 1]

Fundamo Diaries — Building real solutions for big clients [Part 2]

Fundamo Diaries — Raising capital for an African startup [Part 3]

Cash in, Cash Out is available on Amazon, Exclusive Books, and the official book site.