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Fintech is a buzzword that tends to be applied to any financial company doing anything with tech in some way or another. LulaLend is a fintech company that actually uses the word in a meaningful way as it successfully meshes technology and financial services.
LulaLend is South Africa’s first and only online, automated short-term business funding solution. The company allows for prospective clients to apply for short-term business loans in minutes and have their request approved within hours.
The company is founded by Chief Technology Officer (CTO) Neil Welman (pictured top left) and Chief Executive Officer (CEO) Trevor Gosling (pictured top right). Ventureburn had a chance to catch up with Gosling to chat about this new venture.
Gosling comes from an investment banking background having worked at KPMG, Rand Merchant Bank, and Goldman Sachs, before co-founding LulaLend. He is the younger brother of Groupon SA co-founder, Wayne Gosling. Trevor Gosling says he was motivated by his older brother’s own actions to leave investment banking and pursue a startup of his own, 5ounces, which he successfully exited to Naspers in May 2013.
Like Gosling, Welman also came from an investment banking background, but was involved in development credit platforms at companies such as Barclays Capital, Royal Bank of Scotland, and Merrill Lynch. He is the head architect of the LulaLend system.
With both founders have strong banking backgrounds is there any wonder they decided on a financial-driven startup?
Gosling said the idea came about when trying to find funding and capital for his previous ventures. When going through traditional channels, such as banks, he found the process to be very time-consuming and difficult. The aim of LulaLend is to help Small Medium Enterprises (SMEs) with quick loans without trudging through the traditional channels.
The pair wanted to focus on something that could add value the economy and tackle a missing piece of the financial sector, which was easy funding for SMEs.
Having soft-launched in May, Gosling says the service currently has a 60% to 70% approval rating for applicants. In order for prospective clients to apply they need to have been in business for at least a year and have at least a R500 000 turnover per annum. The entire process is handled by the client through the LulaLend website and is double checked by staff once the request has been received to verify the details. LulaLend uses PayFast and SureSwipe as online and offline payment processors.
The funding model is based around quick loans with short pay-back periods. The company currently offers loan amounts from R20 000 up to R250 000, with the ceiling set to increase to R500 000 at a future date. A standard of six months is offered to clients in order to repay the loan amount, though if the client is able to pay back the amount sooner they save. The interest rate is calculated at 5% for the first two months and 1% for months three to six, which comes to an overall charge of 14%.
When looking to launch LulaLend, Gosling and Welamn had their own financial woes and struggled to find partners locally. The problems came down to South African investors being inexperienced with fintech and the lending business model and no one seemed to understand their model. The pair decided to look overseas where they found exactly when they were looking for, though have local investors as well.
For our mini interview with Trevor Gosling, have a listen to the podcast above.