SA banks and lenders may soon be able to use a finance-matching platform to source entrepreneurs looking for finance, if a new initiative piloted by SA fintech startup finfind proves successful.
Launched in October 2015, finfind is piloting a number of new initiatives which will help entrepreneurs to get better access to finance in South Africa.
Speaking to Ventureburn today, finfind CEO Darlene Menzies says these include an initiative which will allow banks and other lenders to source fundable entrepreneurs from the platform.
Currently entrepreneurs that access the site can complete a questionnaire and be told whether they qualify for funding or not and are then referred to one of 328 financial products currently listed on the platform.
These include everything from grants to debt finance, equity, invoice factoring and asset finance. SA startups looking for finance can tap at least 50 funds.
The pilot is being funded by Business Leadership SA and the Banking Association of SA
Until now the onus has been on entrepreneurs themselves to pursue those lenders the platform picks out. But Menzies says the new initiative, which the startup began piloting in February, will go a step further by providing financiers with matched leads of these fundable businesses.
The pilot is being funded by the Business Leadership SA and the Banking Association of SA.
Menzies says the initiative will also help provide banks and other financiers with valuable data on what kind of entrepreneurs are seeking finance, what finance they are after and what their challenges are with getting finance. Such data can help lenders to adjust their lending criteria to meet client’s needs.
She says following the hearings held last month in Parliament on transformation in the financial sector, two banks got in contact with finfind to ascertain how they might be able to work with the platform.
Nedbank is now testing a model where it pays a commission fee for every lead generated by finfind that results in the bank issuing a loan to an entrepreneur.
The Small Enterprise Finance Agency (Sefa) is also using the platform to source leads but these are not commissioned based, says Menzies.
Finfind is also looking to offer vouchers to entrepreneurs to fund accounting and business support from consultants. At present entrepreneurs must cover the cost of business support themselves from those accountants and consultants listed on the platform.
Menzies says since its launch finfind has received 56,000 users, two thirds of whom are based in Gauteng. The remainder are mostly based in the Western Cape and KwaZulu-Natal. Each user spends an average of about six minutes on the platform.
The percentage of visitors that access the platform is split evenly between those that enter the platform through mobile devices and laptop or PCs.
Less than half of those searching for finance qualify for a loan
In all 5600 of all visitors so far to the platform have completed the form requesting finance. Just less than half of these, or 2500, had the necessary collateral or documentation such as financials or a business plan in place to be eligible for finance from financiers.
Users that complete the questionnaire for finance are obliged to supply details such as their ID number and company registration number if they have a registered business. Menzies says this is to ensure that financiers are able to receive as many legitimate clients as possible.
In all three quarters of those that have completed the questionnaire for finance are involved in a business with an annual turnover of under R1-million.
Menzies stressed that the figure has been skewed in that applicants have mainly come through the Small Enterprise Development Agency (Seda) with which finfind is partnering. The majority of Seda clients are micro enterprises.
Finfind received venture capital funding late last year from Kingston Capital. Menzies however said she could not disclose the amount of funding.
Added to this the Department of Small Business Development is providing annual funding of R2.2-million to finfind. Menzies says the department is able to use the platform to tap valuable data on who is looking for finance and what their challenges are.
Feature image: Finfind CEO Darlene Menzies (supplied)