Local fintech automates, streamlines traditional business valuations
A little over a year after its commercial debut, local fintech start-up Worth.Business is already eyeing expansion into international markets, according to co-founder and MD Johann de Lange.
Worth.Business has brought to life an online platform of the same name, to streamline and automate business valuations.
A business valuation is a process of assessing a company and its financial worth, for a variety of reasons, including sale value, establishing partner ownership, taxation and even divorce proceedings.
Due to the complex nature of traditional valuation services, which often leave a large margin for human error, the idea behind Worth.Business was to bring an innovative approach to this process for financial professionals, says De Lange.
Using automation and cloud technology, the online platform enables users to calculate business values and produce streamlined, accessible and accurate valuation reports, with a quicker turnaround time, he states.
“Worth.Business streamlines and automates the process of business valuation, and that is why we developed this system. It allows anyone with basic financial understanding or accounting background to do valuations themselves. We took the difficulty out of it and made it really easy for anyone with that background.”
According to the co-founder, development of the platform started in 2015, but the process went through a period when it stalled. A beta version was launched in September 2019, with the commercial launch taking place in April 2020.
Since then, the public response has been quite positive, especially because online business valuations are very new to the market, he explains. “Not only is the concept of online valuations new but the concept of doing valuations yourself is very new. With that in mind and South Africa being quite a small market, we are quite encouraged with the take-up.
“Of course, the global market is where we are heading to and we expect the numbers to really build from there. We’ve only been available commercially in South Africa over the past year, which gave us a good opportunity to steady the product and technology, but we are planning to go international. We are wrapping up our development to go international from July/August this year.”
De Lange notes valuations are critical for impending mergers or an acquisition, and for audit purposes or monitoring the value of the business for shareholders.
Larger businesses tend to do valuations more frequently as part of their corporate governance; however, smaller businesses often tend to overlook them, he adds.
“The consulting fee for an independent valuation…the smaller valuations would go for R10 000 or so, but this would be something very basic and a lot of the time not really good quality. Good quality starts from R50 000 into the hundreds of thousands; it’s quite expensive to get a quality valuation report.
“That’s why a lot of SMEs just ignore it and do a crude estimation. This is not the best way to go, especially when it comes to planning tax or negotiating the best value. It’s a lot of money to spend upfront, so it’s understandable that they avoid that cost.”
Worth.Business currently offers a freemium account, which will change in the next few months, notes De Lange. “If you want to produce a report, the freemium account will produce a sample report on your behalf. However, if a financial consultant wants to produce their own report, it will require subscription.
“There are two tiers of subscription at the moment: the basic subscription for R349 per month and the professional subscription, which is R849 per month.
“The basic subscription offers a basic report and calculation, while the professional version is a 21-page report, depending on type of method used. The professional version also has extra features that users can utilise.”
Looking to the future, De Lange anticipates the popularity of online valuations will steadily build in a few years, and become the norm.
“At the moment, it’s still the exception and people need to get used to it. But just as we saw with COVID, behaviours can change very quickly. We think that businesses will move more towards utilising cloud-based platforms to do things. It will be quite the norm and standard in the future.”