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Fintech is one of the fastest growing startup sectors in the world. A number of SA startups have secured multi-million rand investments of late, including in i-Pay, WiiGroup, Entersekt and Luno.
While a number of insurance and financial services companies are involved in funding fintech startups — venture capitalists, accelerator heads and banking heads are also getting stuck in.
Ventureburn lists five dealmakers that entrepreneurs in the fintech sector should have a conversation with. Here they are.
Disruptive technology that is 12 months ahead of the competition. That is one of the things that venture capitalist Clive Butkow looks for when he picks tech startups to invest in (see this story).
His Kalon Venture Partners — a registered Section 12J Venture Capital Company picks tech startups to invest in (see this story) — already backs fintech startup i-Pay, which Ventureburn lists among eight Gauteng startups to watch in 2018 — see here and here).
Philip Kiracofe — together with Zachariah George — heads Startupbootcamp AfriTech (initially named Startupbootcamp Cape Town). His accelerator is deeply involved in supporting African startups many of which are in the fintech sector.
The names of the 10 startups selected for the second cohort — which kicked off yesterday and will end in November– were announced in July.
Each of the 10 startups will be provided with €15 000, office space, access to over a 100 mentors and a network of industry partners, investors and venture capital firms.
The initiative’s first cohort were able to secure 32 agreements with large companies. In January investment platform EasyEquities put a crowdfunding startup investment offering, which was to help source funding for the 10 startup’s involved in the inaugural Startupbootcamp cohort, on hold (see this story).
Dominique Collett, the head of Johannesburg based fintech accelerator AlphaCode, says the accelerator aims to create a pipeline of fintech firms in which Rand Merchant Investment Holdings — which runs the programme — can invest in and grow (see this interview Ventureburn had with Collett last month).
Since it was established in 2015 AlphaCode has also assisted 15 black-owned businesses through its AlphaCode Incubate programme with support as well as R13-million in funding. In July AlphaCode launched a new call for applications. The call closed on 31 August.
Collett says probably the biggest challenge for black-owned fintechs is understanding and navigating the legal and regulatory framework in South Africa.
The Incubate programme solves this by partnering with legal and regulatory experts and helping businesses understand what licenses they may need, applying for those licenses and staying abreast of an ever-changing regulatory environment.
Llew Claasen heads Newtown Partners, a seed-stage venture capital firm he founded with SA entrepreneur and Civic founder Vinny Lingham.
Last year the firm invested an undisclosed sum into Wala, a Cape Town-based blockchain-enabled fintech platform.
The startup last month clinched the $100 000 grand prize in the 2018 Zambezi Prize for Innovation in Financial Inclusion. The prize is run by the Massachusetts Institute of Technology’s (MIT) Legatum Centre for Development and Entrepreneurship and the Mastercard Foundation.
Newtown Partners ran two ICOs last year — including one in June 2017 for Civic which raised $33-million (read more here) and another to fund the Augmentors game, which allows those that play the game a chance to buy rare creatures using in-game currency.
Claasen is also executive director of the Bitcoin Foundation. He is a much quoted expert on cryptocurrency. In July Claasen said the current lack of liquidity in the cryptocurrency market means it is harder for tech startups to raise funding via initial coin offerings (ICOs) from investors.
SA bank and asset management group Investec is currently looking to invest in three or four early-stage SA fintech startups, Investec Emerging Companies spokesperson Akash Maharaj confirmed in July (see this story).
Investec would utilise Crossfin’s angel funding arm, Blue Garnet Investments to make the investments in the selected startups.
In the same month the bank invested an undisclosed amount in Retail Engage‘s Bonsella loyalty and rewards programme. Maharaj would not disclose the details of the equity investment deal.
*Correction (7 September 2018): We incorrectly reported that Kalon Venture Partners had invested in blockhain startup The Sun Exchange in 2017.
The fund’s head, Clive Butkow alerted Ventureburn that in the end the investment did not come off. “We did invest the R1.6 million as a loan to be conveyed to equity as soon as we had Sars (SA Revenue Service — Ed) approval which unfortunately was declined,” he said.
He said the fund is still trying to find a way to invest in The Sun Exchange “due to some of the legislation not being clear”.