INTERVIEW: Changing the Face of Investments in South Africa with Franc

After working in Discovery’s R&D lab and being exposed to a broad spectrum of financial services, Thomas Brennan – CEO of Franc, a digital startup that makes investing easy for everyday South Africans – couldn’t understand why only 5% of the country was investing, despite being top in the world for the search term ‘how to invest’.

Brennan quickly realised it was likely because of financial barriers, product complexity and limited access – he saw an opportunity to create a simple investment app giving access to leading cash and equity funds without minimums or limitations.

Since launching, Franc has won Best SA solution at MTN App Awards (2019), Voted best Financial App by Stuff Magazine (2020) and Best South African start-up at Seedstars (2018). It has now also been selected as one of 20 start-ups for the fifth edition of Google for Startups Accelerator Africa programme.

ITNA’s Jenna Delport had the opportunity to chat to Brennan about being selected for the Startups Accelerator programme as well as the future of Franc. Here’s what transpired:

What does being only one of two South African startups selected for the Google Accelerator Programme mean for Franc? 

Firstly, there’s a kind of prestige that comes with it. In this game of startups, you constantly have to put yourself ahead of the pack – especially if you want to attract investors.

Next is the learning opportunity that it will give to us directly. The programme is structured in such a way that there’s a combination of workshops and masterclasses that are lead by Google experts. So whether we’re learning about technology in products or in marketing, advertising etc. it’s knowledge from mentors, seasoned entrepreneurs and exclusive employees.

And the last thing is that we’re getting great value in terms of what Google is providing for effectively free.

Again, considering only two South African startups were selected for the Accelerator Programme — what does this tell you about the local potential for entrepreneurs — especially in comparison to countries like Nigeria and Kenya who each have upwards of two startups? 

I think on a simple level, the ecosystem in South Africa has a far better developed corporate sector than both Kenya and Nigeria – which means people who have the right skills know they can fall back into a really good job if need be. So why take the risk of going solo? I think fundamentally everyone does that sort of risk-cost-benefit analysis.

Also, another thing is that there’s a greater amount of people getting into the startup environment with not a lot of support. I think the governments in Nigeria and Kenya have been a little bit more proactive in terms of providing that support by sponsoring things like incubators hubs etc.

What have been your biggest struggles as a startup? 

One of the biggest things has to be around securing capital because investors can get anxious, they want to protect their money and their existing portfolios. So attracting investors can be tricky.

Then in South Africa, there’s a very specific pain point around collecting money or rather the cost of collecting money ie bank fees. The difficulty comes in when you want an early low-value investor, let’s say someone who can only invest R50 a month, to spend 10% of that on a debit order – the chances of that investment actually breaking even will take a long, long time.

A big investment firm might look at that and think that it’s not worth their time because the money they’d make from the investor wouldn’t justify the amount needed to pay for the collection.

This shows us how people living in middle to low-income brackets are barred from accessing investment products – but it’s a problem we want to solve. That’s why we’re now looking at a potential partner who only charges 0.3% in the payment space – making more affordable for a low-value investor to come on board.

Where would you like to see Franc in the next two years?

Without a doubt, I’m very passionate about changing the face of investments – so I would like to see more people invest. And for people that are already investing with Franc, we want them to invest more.

So simply, our two primary objectives in the next two years are to grow our user base and to help the people that are already on an investment journey to increase their investing goals.

From a target perspective, we’ve been growing at about 20% per month since we went public in September last year which means we’re sitting with around 500 investors. But within the next two years, I would like us to be sitting with around 10,000 investors on the platform. And at the same time, I’d like to help people effectively double the amount of money that they’re investing on a monthly basis.

Edited by Jenna Delport
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