Insyte Weekly: A Review of The Latest Entrepreneurship News

Tech Startup News

There is an astonishing $300 billion financing deficit for small businesses in Africa. Pezesha is an SME financing tackling this problem by providing access to working capital to small businesses in Africa. TechCrunch reported the startup raised $11 million during its pre-Series A funding round this week. Hild Moraa, the founder of Pezesha, states the funds will be used for expansion into Nigeria, Rwanda, and Francophone Africa. With a strong presence in Kenya, Uganda, and Ghana, a profitable business model and reputable partners, investors ought to be confident they will get a healthy return on their investments. [Source: TechCrunch]

Shoprite and FNB grab the headlines

As reported by MoneyWeb, Shoprite revealed its Money Market account is now a recognised bank account. Since Shoprite launched the account in 2020, it has grown to over 2 million accounts. Tymebank has 4 million accounts (1.2 million are active) and Capitec has 18.1 million active users. The account has no monthly fees and only charges R5 for a withdrawal. Speaking to MoneyWeb, Jean Oliver (Shoprite's General Manager) said the following “the development and rollout of the account has been driven entirely by customer needs. They wanted a straightforward account which allows them to be in full control of their money and does not surprise them with any hidden fees.” Account holders are not allowed to have more than R25000 at any time due to regulations. Therefore, the account caters to low-income earners. [Source: MoneyWeb]

FNB won Best Consumer Digital Bank in South Africa and Best Mobile Banking App in Africa. As cited in BusinessTech, “The FNB App has become a one-stop shop for millions of customers with record volumes of interactions,” said Giuseppe Virgillito, FNB Head of Digital Banking. [Source: BusinessTech]

What is the impact?

As history has taught us, incumbents usually respond to disruptive technologies by adopting said technologies and making their own competitive solutions. FNB and Shoprite are now different as the news suggests. Larger companies have enough financial capital and resources to compete against new innovative entrants. However, this should not discourage aspiring entrepreneurs: innovative new entrants can succeed because of being first-to-market as Capitec's growth shows. Nonetheless, I expect aspiring entrepreneurs to reconsider their strategies in the future. I expect strategic alliances between startups and larger businesses will become more common in the next few years. Arguably, Pezesha is profitable because it chose to create a platform to facilitate lending between institutions and small businesses instead of directly competing with financial institutions & banks.

Concluding remarks

What ripple effect do you think these stories will have on the entrepreneurship ecosystem? If you have any small businesses you want to see featured on Market Insyte Digest, feel free to email [email protected]