Local investment app Franchas introduced Franc Business, a business-to-business (B2B) offering, after raising R8 million in seed funding.
The funding included investment from Pan-African-focused venture capital firm 4DX Ventures.
Franc was launched in 2017 by engineer and former head of digital innovation at Discovery Health, Dr Thomas Brennan, and Sebastian Patel, an actuary with 17 years of experience in financial services.
They coined the idea out of frustration with the complexities and barriers of investing in the stock market, and concern at the poor rate of investment among South Africans (less than 8%) outside of retirement products.
The mobile app allows users to invest in money market (Allan Gray Money Market Fund) and exchange-traded funds (Satrix 40 ETF). Users can invest as much as they want, when they want, conveniently through the mobile application.
The latest funding will, in part, fund the fintech company’s B2B initiative, which enables companies to offer quality investment products to their own customers, using Franc’s application programming interface (API) and licence.
“With Franc, consumers can start investing within minutes of downloading the app, and can, if needed, extract their funds within a few days of requesting a withdrawal through the app,” says Brennan, who is Franc’s CEO.
“The advantage of Franc Business is its simplicity and low cost. As a B2B play, we provide a single API, which gives us the ability to integrate with client platforms quickly and easily.”
Despite the headwinds of COVID-19, the company says it has seen many South Africans take to the app as a first foray into investments and savings for a rainy day.
In 2021, customer growth was over 400%.
“Franc Business clients can help their customers to start saving or investing immediately, without the hassle of regulatory red tape and lengthy technical development,” states Patel, who is Franc’s COO.
According to Patel, Franc Business is targeted at any platform that has a store of value or partners that want to enhance their existing product offering like short-term or life insurers, neo-banks, HR/payroll providers, buy-now-pay-later and early wage access providers.
Commenting on his company’s decision to invest in Franc,Peter Orth, managing partner at 4DX Ventures, notes: “We’re passionate about expanding the opportunity for everyone to save and invest, as it’s a critical component of being able to build wealth over time. We think Franc has an excellent vision for how they will accomplish this in South Africa, and we’re excited to support them.”
The Allan Gray Money Market Fund provided a return of around 4.5% over the last 12 months, while the Satrix 40 ETF has returned 12% interest a year on average, over the past three years and 10% on average, per year over the past five years.
“Given consumer awareness of the need to save and the exponential growth in the digital adoption of financial services products, our view is that the time is most opportune for the Franc Business savings and investment solution as a value-add in the market,” Patel concludes.
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