How Matthew Piper and Karidas Tshintsholo Are Revolutionising How Small Farmers Access Markets
Matthew Piper and Karidas Tshintsholo tech startup, KHULA, isn't only winning awards for innovation – it's proving that two young entrepreneurs can find big solutions for even bigger problems.
PLAYERS: Matthew Piper and Karidas Tshintsholo
You don’t always hit your game-changing idea on your first take. In fact, most start-ups look very different after a few pivots and course corrections. If you have a real sense of purpose however, and know that ultimately you want to build your own company and hopefully change lives in the process, each of those adjustments will bring you closer to a sustainable business.
Matthew Piper and Karidas Tshintsholo (both 24), have learnt these lessons first hand. The business they launched together while studying finance at the University of Cape Town is very different from the business they’re running today, but it’s the lessons they’ve learnt over the past five years that have helped them to bootstrap an 18-month pilot project proving their business model, and find a solution to a systemic problem that will hopefully change hundreds — and eventually thousands and even hundreds of thousands — of lives.
Matthew and Karidas launched their first business, Money Tree, from their UCT dorm rooms. “We recognised the realities of South Africa and that financial inclusion is one of the biggest barriers to any kind of growth facing our country,” says Matthew. The business partners met through the Allan Gray Orbis Foundation, for which they had both been selected.
They wanted to start a business that would solve a real, endemic problem. As finance students, financial literacy seemed the best fit. “We were both studying finance and interested in investing, and the business actually started out as a hobby,” says Karidas.
“We wanted to share what we were learning in class and through our own research with anyone who was interested. We started a website and posted videos and content and shared it with other students.”
Once they had the platform up and running, the budding entrepreneurs strategised how they could take it to other universities and high schools. “We wanted to monetise what we were doing instead of just sharing insights,” says Matthew.
“So, we got our friends together and created a group of about 20 students from all over South Africa. Everyone went home for the December holidays, but universities go back a full month after schools.
“This gave us four weeks to go on a national roadshow, visiting 50 schools, sharing financial literacy lessons with their students and adding them to our network.” Next, the young entrepreneurs met with a printing house, and convinced them to print a magazine without an upfront payment.
“Our plan was to approach financial institutions who would sponsor the magazine, which was aimed at financial literacy for students,” says Karidas. But, the magazines arrived before the funding came through, and Matthew recalls writing his first exam and returning to boxes of magazines at his door.
“We started getting calls from lawyers and people wanting their money, but we didn’t have any funding. We needed to go all out,” says Karidas.
“We were calling everyone we knew and going to as many events as possible. At one of those events — hosted at the Reserve Bank — we met someone interested in investing in us.
“He put up our initial capital, which was how we were subsequently able to do more roadshows and build a network of universities and high schools. We ended up with an incredible network of ambassadors and a quarterly magazine, which ran for two years.”
LESSONS LEARNT AND CHANGES MADE
It wasn’t smooth sailing though. The magazine’s margins were low, and the young entrepreneurs were aware that the concept was a hard sell: Students didn’t have money and the corporates that were able to pay did so from CSI budgets. “CSI initiatives tend to be project-based, and we didn’t want to base our whole business model on them. We knew it wasn’t sustainable,” says Karidas.
Money Tree had also done some business with Government. “We waited 14 months to be paid.” By that stage, the business partners had moved from Cape Town to Joburg and had dropped out of UCT.
They wanted to focus on their business full-time, but they knew the model needed some serious work and adjustments. Although they would start studying part-time again to finish their degrees, they first gave their business their full attention to pivot it.
So, freewheeling everywhere because they couldn’t afford fuel — or food or rent — Matthew and Karidas took their business to pieces and examined it from every angle.
“The first decision we made was that we weren’t going to pursue any more Government projects,” says Matthew. “We wanted to remove the bad stuff from the business and keep the good stuff, and we needed to be brutal about which was which.” The magazine had to go — it was a lot of work for low margins with no clear revenue model.
The ambassador network that Money Tree had built up on the other hand had a lot of value. “We had two ambassadors at almost every university campus across South Africa, including SRC presidents and the heads of societies — all influential people on campus,” says Karidas.
“We packaged that network and started approaching banks. Banks were always on campuses trying to speak to students, but they didn’t have our network. We built a relationship with the Banking Association of South Africa with their start saver programme and closed a deal with Old Mutual.
“We currently run the biggest funding show and education programme across South African universities.” The deal wasn’t the ultimate game plan, but it brought money into the business, helped the entrepreneurs pay rent and salaries, and gave them the breathing room to start seriously thinking about what they wanted to achieve.
“We started thinking about our long-term play. Financial education is good, but we were still relying on the budgets and current strategies of banks,” says Matthew. “Instead, we started focusing on what had always been our core, and that’s financial inclusion. This is our highest value, and we wanted a business that solves this challenge for South Africans.”
While they were mulling over this problem, Matthew and Karidas secured a spot on an Ennovate programme to Israel. It was on that trip that they were exposed to the fact that Africa has 60% of the world’s arable land, and yet still spends billions importing food.
“There are many inefficiencies in agriculture,” says Matthew, “and yet half of Africa’s population is dependent on small-scale subsistence farming.” Determined to learn as much as they could, the partners approached Due Crisp to conduct a project in Pretoria. “We’re just finance guys,” says Karidas.
“We needed to understand how agriculture works — and we were shocked. When you actually take the time to look at it, the problems are glaring. There are so many emerging farmers in South Africa, and yet they’re excluded from the market. They can’t fill big orders, and so they have no access to market.”
Suddenly, Karidas and Matthew had a problem they could solve — and they knew the solution would be found through technology.
CREATING A PROOF OF CONCEPT
“If we’ve learnt one thing about agriculture, it’s that it’s impossible to solve one specific problem — everything is interlinked,” says Matthew. “Our main aim is to give farmers access to market, and we’ve developed a platform and app to help them do just that, but we can’t work in isolation.”
As a result, the entrepreneurs have partnered with the University of Johannesburg and the City Of Joburg and will continue to look for other partners who are as interested in solving this systemic problem as they are. In the meantime however, they have launched their new business, KHULA, and self-funded and bootstrapped their pilot programme, proving their concept and solution.
“The farmers’ app can be downloaded on any phone that has whatsapp capabilities,” explains Karidas. “Most phones that can be bought for R100 or R200 work, and in our initial research we realised that farmers are pretty tech savvy.”
Farmers go to the app store, download the app and sign up. They then need to provide all their details: Who they are, where they are geolocated, what they grow, and when they expect to harvest different produce. Matthew and Karidas then do a site visit to verify them and accept them onto the platform.
“Our pilot has been mainly focused on Gauteng and the North West, but we’ve driven 17 hours to Jozini,” says Matthew. “Some of these farms are incredible,” adds Karidas.
“One of our farmers in Magaliesburg has this incredible farm in the middle of a dump site. You can’t even believe it’s there. No one knows about them though — which is exactly what we’re trying to solve.”
Through their partnerships, the system has been tweaked and honed throughout the proof of concept phase. “UJ has a farmers’ school that meets every two weeks, and they became our focus group for the app’s beta version,” says Matthew. “We had a focus group of 300 helping us fine-tune the look, feel and usability of the platform.”
The business has also partnered with government. “Government needs data on emerging farmers, but they collect it through extension offices, and it’s often old and irrelevant by the time it’s collated — our data is real-time, so this could make a huge impact to them.”
Key to the success of the platform is the ability to link farmers with customers, which is where KHULA’s key focus has been. “We have 104 farmers on the platform, and 26 customers, including Rocomama’s, Munching Mongoose and the Michaelangelo,” says Karidas.
The solution is simple: Farmers can click on product and show exactly what they currently have available and what they will be harvesting and when. Customers can then either browse the produce, follow their favourite farmers, or put in orders that farmers can then elect to fill.
In some cases, multiple farmers might fill a large order, which is one of the key solutions the aggregated platform offers, giving small-scale farmers access to large customers. In addition, KHULA has one of the biggest organic offerings available, and the platform offers complete transparency.
“Our customers love knowing exactly where their produce is coming from, and the fact that they are supporting small-scale local farmers,” says Matthew. “The entire system is geolocated, so you can put clear parameters in place. If your carbon footprint is important, you can select farmers within a 10km radius for example.”
The platform has also revealed how much high-end produce is locally available. “Elderflowers are niche and typically imported, and yet there are quite a few farmers in Joburg who grow them,” says Karidas. “Through KHULA, there is now supply and demand for this product.”
The market incentivises farmers to update their data weekly because they see orders coming in. “If they don’t update their data they aren’t able to contribute,” says Matthew.
CREATING SYSTEMATIC CHANGE
During the pilot phase Matthew and Karidas handled packaging and collections and deliveries — going so far as to don jerseys and jackets and turn their Polo into a refrigerator with the aircon cranked up to ensure fresh deliveries.
Today they have partnered with a delivery and logistics service company on an uber-type basis. “Mospa Logistics has 30 trucks, but at any given time, ten are in the parking lot,” says Matthew. “We’ve created an app that triggers a pick-up when needed. The whole system is designed for a just-in-time service for both the farmers and our clients.”
In fact, the entire business is focused on finding solutions — for their clients, farmers, and in streamlining their solutions. “We need to mitigate the risk of non-delivery to ensure our clients are satisfied with the platform. We have had instances where a farmer has disappeared on us and we had to deliver, so we went out onto the network and another farmer in the area could fill the order. It’s important to have a large network to ensure this is possible.”
The solution is also based on a win-win-win model. Farmers, clients and KHULA all need to benefit from the platform. “From our side, we need to provide value. This means giving the farmers access to market, but also providing real value to our clients,” says Matthew.
“We have different types of clients and farmers, and it’s important to classify the produce they offer and are looking for. For example, Rocomamas chops up their jalapenos, so how they taste is far more important than how they look. The Michaelangelo on the other hand requires tomatoes that look perfect, while Spaza Sun is concerned with edible produce that is available at wholesale prices. These gradings and classifications give an added — and valuable — dimension to the platform.”
The pilot project has performed so well that in 2017 a large telco offered to purchase the platform for R5 million, but the entrepreneurs turned them down. “This is our business, and we want to see how far we can take it, and how many lives we can change,” they say.
In fact, the more time they spend in the market, the more solutions they are finding to endemic problems. “Emerging farmers often aren’t bankable because they don’t have track records,” explains Karidas.
“Our system tracks everything; we send out invoices, collect payments and make payments to our farmers, which means they have banking records and a guaranteed market. This, in turn, makes them bankable.”
1. There is nothing more important to a start-up’s success than word-of-mouth. Build your network — the more people who know about you and what you’re doing, the more people will share your story. This is particularly true if you’re solving a need. We would also suggest only relying on word-of-mouth at the beginning and not marketing — this will tell you if you’re on the right path. If no one is talking about you, you might need to adjust your business model.
2. Partnerships lead to more partnerships. Most communities are small; the more you’re doing, the more people will hear about you. Every one of our partnerships grew from a previous partnership.
3. Start by solving a problem. We didn’t start with an app — we started with an idea. We used paper to record everything and called farmers directly to get them onto our books. We had already traded close to R50 000 before we built the app, and by then we had some experience and knew what the app needed to include.