How Michael Jordaan inspired Investsure, the ‘world’s first cover for investors’

Sometimes in the SA tech ecosystem all it takes is two words to get someone’s attention. Sometimes those words are someone’s name — someone called Michael Jordaan. At least this was the case for one of the founders of insurtech startup Investsure.

The Johannesburg based startup last month launched what it claims is the “world’s first” insurance cover for investors, via local startup EasyEquities‘ investor platform.

So, then where does Michael Jordaan — the famed venture capitalist and former FNB head — fit into all this?

Chat bots and Micheal Jordaan

Explains one of the startup’s founders Mbulelo Mpofana: “The idea for Investsure came to one of our co-founders, Shane Curran, after listening to a talk on investment chat bots by Micheal Jordaan.

“Shane agreed (with Jordaan) that artificial intelligence would be better than humans at going through all available information in order to come to a rational and informed investment decision,” says Mpofana, who together with Curran and Ignatious Nkwinika launched the company last year.

Last month after a two-month testing phase, Investsure launched its insurance cover for investors on investment platform EasyEquities

Last month after a two-month trial the three made the offering available to users on the South African investment platform EasyEquities.

Says Mpofana: “You don’t know what you don’t know. So what happens when the world finds out about what management was hiding? From this the idea was born”.

Investsure’s offering, Mpofana explains, covers losses in the share price which are caused by allegations of management misleading or deceiving shareholders, where the allegations cause a significant drop in the share price of the accused company (greater than 10%).

The cover equates to 0.56% of the value of the shares being covered (56c per R100 share value) for a full year’s cover.

“The product can be easily purchased on the Easy Equities trading platform when buying a share (optional, you do not have to buy the cover), or you can insure shares that you already own on the platform,” says Mpofana.

InvestSure provides a set of APIs that trading platform developers can use to integrate the Investure Investment Indemnity product seamlessly into their websites and mobile applications.

Once InvestSure technology is added to a trading platform, it enables users to easily buy insurance on their shares with a single click. The full process from buying insurance to settling claims is fully automated.

‘Growing risk’

Mpofana points out that in the last six months alone a total of 16 JSE-listed companies faced accusations of wrong doing which had a negative impact on the respective company’s share prices.

Of these 16, he further explains that Steinhoff, EOH, Ecko Polska, Capitec, Ayo Technologies, AEEI, Resilient, Greenbay, Nepi Rockcastle, Fortress B, Pembury, and Erin Energy experienced losses greater than 20% following the events in question.

“Capitec, Resilient and its related companies (Greenbay, Fortress B and Nepi Rockcastle) as well as Steinhoff were all targets of activist short sellers. This a growing global phenomenon where people ‘expose’ potential issues in a company for a profit,” he says.

World first?

When asked by Ventureburn to back up his startup’s claim that the product was a “world first”, Mpofana said the company had carried out “extensive research and not found a similar product”.

“We have worked extensively with Hannover Re, the world’s third largest reinsurance company. In fact this product was presented to and approved by the global executive board before it could be sold,” he states.

“Hannover Re is represented in all major insurance markets across the world and no one on their board, each member has over 20 years’ experience and have oversight over multiple nations, or anyone else within the organisation is aware of such a product having been developed elsewhere.”

‘Funding in the millions’

Without disclosing just how much capital the startup has raised, Mpofana says the Investsure’s funding “runs into the millions” and that it was not raised through “typical startup funding rounds”.

“Compass Insure has funded us and we have loved working with them. We are in the process of raising capital for expansion and will be happy to share that story when it happens,” he says.

Last year Investsure was one of four startups that each won R1-million at a pitch event run by Merrill Lynch South Africa and Royal Bafokeng Holdings.

Read more: Merrill Lynch, Royal Bafokeng awards R4m to four black fintech startups

Investsure is now looking to get its product on other trading platforms in the South Africa and internationally.

“As a world first product and with the support of our partners we will look to take the product to larger international markets if the underwriting proves to be reasonable and the demand is as expected,” says Mpofana.

So, if Michael Jordaan is reading this — what is he then thinking? Mpofana and his co-founders are probably dying to know.

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Featured image (from left to right): EasyEquities’ Ettienne Myburgh, Investsure COO and co-founder Mbulelo Mpofana, Easy Equities’ Carly Barnes, Investsure co-founders Shane Curran, and Ignatious Nkwinika (Supplied)