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Sebastian Patel explains the idea of making investing accessible for all South Africans

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Founded in May 2018 by Sebastian Patel and Dr. Thomas Brennan, Franc was born out of the idea of making investing accessible for all South Africans. The co-founders believed that too many institutions had made investing overly complicated, had high minimum investment requirements and charged exorbitant fees – something they wished to change. Franc is not trying to reinvent investing, but rather make it simple – by identifying leading cash (Allan Gray Money Market) and equity (Satrix 40 ETF) funds and educating their customers around the importance of investing as well as how to be better with their money.

1 – Franc has shown through year on year growth that it is a successful start-up – when would it be safe to say that the business is out of an ‘incubation’ phase?

Like with many startups out there, there is still a very long road ahead of us.

We are proud of our success thus far and that we are still around but building a long term investment platform is a challenging mission and one we are working very hard to succeed in doing. Things can always be improved and therefore we can never rest on our laurels, there is still so much more to do!

2 – How did Franc raise angel / Seed Financing and how has that boost been beneficial in helping Franc grow?

We raised seed funding of about $440,000 from local and international investors. This funding has assisted the company with both its operational and marketing expenses so has been used to enhance and develop product as well as acquire customers.

The company is looking to raise a further $200,000 in seed funding before raising a larger round next year.

3 – Franc’s biggest challenge(s) in the market?

There have been three primary challenges. The first has been around regulation. Franc was the first pure robo-advisory investment business in South Africa and it took a while to get a license. Secondly, given that South Africa’s startup ecosystem is still developing, there is a definite lack of early stage capital available. A lot of people see the need for what we are doing, but are put off by the challenges. The third is consumer trust – many people are wary of new financial products given they have unfortunately been taken advantage of previously.

4 – As a start-up, what is it that motivates the Franc team?

We are motivated by our mission to get more people investing and for them to become better with their money. Many South Africans have been excluded from being able to access (and understand) quality investment products and this is one of the reasons the wealth gap has just gotten larger and larger.

5 – Who are Franc’s core investor base? What interesting trends have you found among SA investors?

Our customers are generally 20-40 and obviously smartphone users who are reasonably tech savvy. Some of the persona subsets are:

  • Young Millennials/Older Gen Z’s with their first job who are not quite sure how or where to invest, don`t have a ton of money and are still finding their footing financially.
  • Busy High Earners: They want to grow their wealth but are too focused on their career and other things to spend the time creating and executing complicated investment plans. They want to invest and not have to put too much effort into it.
  • Older Millennials looking to start a family or having just started a family wanting to prepare for their children’s future.

6 – Franc’s employees work remotely from across the country. How does remote working benefit or hinder the Franc team?

Although many companies had to adapt to a radically new normal last year, the Franc team had already embraced remote working and were set up this way. The team is generally split between Cape Town and Johannesburg but there are also some team members in Durban and Wilderness.

When allowed, we do try to meet in Johannesburg for an office once a week for an office day though.

In terms of the communication platform – Franc uses Google’s GSuite for Business  and Slack for internal communication. Using GSuite is great for team collaboration given that multiple people can contribute to documents at once.

7 – What advice would Franc give to other aspiring entrepreneurs / start up’s in SA?

It’s difficult out there! Before you go out trying to raise or spend money on your idea or business  – try to prototype your idea/concept in a low cost way even if it is very manual at the beginning. If you get traction then you know you have something. If not then at least you haven’t blown your life savings. There are so many free and open source tools to be used to validate ideas.

Then if you get going make sure you have the right people around you.

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