Stokvel investment app wins Seedstars World SA
Franc, a mobile app that allows stokvel members to invest in money market and exchange-traded funds (ETFs), scooped the top award at the Seedstars World South Africa finals, held in Cape Town recently.
Now in its fifth year, Seedstars World is a global early-stage start-ups competition for emerging markets and fast-growing start-ups. Held in partnership with online payment gateway PayFast, the competition identifies the best seed-stage entrepreneurs and provides them with an opportunity to win up to $1 million, and network with investors and mentors from around the world.
Franc, launched by former head of digital innovation at Discovery Health, Dr Thomas Brennan, says it is SA's lowest-cost investment platform.
The Johannesburg-based app aims to help SA's traditional stokvel (a savings or investment society) to go digital by providing free access to high-performing, low-cost investments on a mobile phone.
As part of the prize, the start-up will participate in the Seedstars Summit, which takes place in Switzerland, in April 2019.
"I am overwhelmed and honoured for this recognition. We're very aware of the quality of companies that have come before us," explains Brennan, founder of Franc Group, which developed the app.
"The win has filled the team with confidence and motivation to crack on. There's still lots to do. We're also very grateful to Seedstars, the judges, PayFast and also humbled by the other great companies that pitched alongside us."
Seedstars Summit consists of a week-long training programme that provides national winners with the opportunity to meet global investors and mentors. The final day of the summit is dedicated to pitching in front of an audience of more than 1 000 attendees, with the possibility of winning up to $1 million in equity investment and other prizes.
Over 70 start-ups applied, and seven competed for the title of the "best start-up" in SA.
Franc was launched in July by Brennan and his founding team: Nicolas Oldert (CFO), Kyle Welsh (CTO) and Matthew Biller (COO).
The app allows members to invest in money market and ETFs for R5 a month.
ETFs are listed investment products that track the performance of a group or shares, bonds or commodities.
The stokvel has long been SA's favourite way for a group of people to save and invest.
According to the National Stokvel Association of SA, there are over 11.4 million individual stokvel members, belonging to over 811 000 groups. Collectively, stokvels are said to contribute about R49 billion to the national economy annually.
Franc says it brings increased value and wealth creation to stokvel members, with no minimum contribution required and the flexibility to withdraw their money anytime.
"SA has one of the lowest savings rates in the world. For the vast majority of South Africans, accessing investment opportunities is expensive and difficult. This is something that we want to change with Franc," explains Brennan.
Franc's two investment options include the Allan Gray Money Market Fund, which has returned an average of 7.87% interest over the past year, and Satrix 40, an ETF which grew 66.46% over the last five years.
"Financial services usually offer complex products with high fees, which reduce the value for the consumer, especially over the long run. We have removed all the barriers and only kept what really works. No more dealing with brokers, no more paperwork, and no more complicated fine print. Everything is done through the mobile app."
Franc's two investment options, adds Brennan, were selected because of their credibility and low costs. The Allan Gray Money Market Fund charges 0.29% per annum, while the Satrix 40 charges 0.25% per annum.
"Stokvel members can choose between the lower-risk Allan Gray Money Market Fund, or the higher risk Satrix 40 ETF, or a combination of the two. These fund management costs are deducted by the fund managers and investment returns to members are net of these management fees and portfolio costs."
Franc is available in the Apple App and Google Play stores.