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Pretoria-based citizen engagement platform GovChat has secured an investment facility from JSE-listed firm Capital Appreciation, that will allow the start to tap up to R20-million in funding from the listed company.
GovChat said in a statement earlier today (28 May) that Capital Appreciation, which invests in fintech businesses, made the investment through its enterprise development fund — which in terms of the BEE scorecard allows companies that lend to black-owned or black-empowered firms to score BEE points.
The startup’s platform enables citizens to connect and communicate with national, provincial and local government representatives in South Africa in real-time, through chatbots, Whatsapp and via USSD.
The startup did not disclose what percentage stake the listed firm would take in return for the equity investment, which will be paid in tranches, contingent on Govchat meeting certain tech development milestones (details of which the startup did not want to disclose).
GovChat, which is currently being used by just under half a million South Africans, has raised about R30-million in funding since launch
GovChat was founded in 2016 and launched last year by CEO Eldrid Jordaan (pictured above, left). Just under 500 000 South Africans currently use the platform.
GovChat’s key clients are the Government Communication and Information System (GCIS), the Department of Co-operative Governance Traditional Affairs and the Independent Electoral Commission (IEC).
Jordaan explained in the same statement that the funding will be used to expand the scope of the platform and for the startup to move into new markets outside of South Africa.
GovChat head of media relations Lea-Anne Moses told Ventureburn today that the startup plans to expand to Ghana, Nigeria, the Democratic Republic of Congo, Zimbabwe, the Gambia and parts of South-East Asia.
“Throughout the course of the year, we will announce news regarding dates of specific country launches and roll-out,” she added.
It’s not clear how exactly the platform generates revenue.
She said to date GovChat has raised about R30-million in funding. “We’re now building our big data science and analytics team and exploring various monetisation models,” she pointed out.
Eyeing digital payments
GovChat announced in the same statement that it plans to expand beyond its core rating, reporting and messaging platform to introduce “inclusion initiatives” that it said incorporate transactional digital payments.
It plans to with the support from Capital Appreciation, scale its digital payments technology, which will include among others a 0% transaction fees for SA small busineses.
Capital Appreciation chairman Motty Sacks (pictured above, right) said the JSE-listed firm is “excited” to have allocated a portion of its enterprise development fund to GovChat.
Added Sacks: “The team is ambitious, the objectives are bold and we think that the impact can be substantial. We look forward to being part of GovChat’s exciting journey”.
Featured image left to right: GovChat founder and CEO Eldrid Joordan and Capital Appreciation non-executive chairman Motty Sacks (Supplied)