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iKhokha's Lessons In Launching a South African FinTech Local start-up iKhokha now has a secure foothold in a tough industry, but getting there wasn't easy. Launching a fintech company in a country like South Africa brings with it a unique set of challenges. Here are the founders' lessons and tips for building a business in Africa.

By GG van Rooyen

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Sarah Schäfer

Vital Stats

  • Players: Matt Putman, Ramsay Daly and Clive Putman
  • Company: iKhokha
  • Founded: 2012
  • Visit:
  • About: iKhokha is for anyone needing to accept debit and credit card payments from home, work or even on the go. The service can be accessed through a dedicated iKhokha device and smartphone. The company recently also started offering cash advances to entrepreneurs who make regular use of iKhokha.

As a fintech start-up operating in South Africa, iKhokha has climbed a mountain. It has had to devise a prototype of a complex device, navigate stiff regulation, raise money for growth, and educate potential customers on its offering. It was not an easy journey, but the company is now in a good position.

Not only has iKhokha secured substantial funding, but it has also partnered with significant brands such as MasterCard and Game (Massmart). How did it get there? These are the lessons that the founders learnt while launching a fintech start-up in Africa.

1. Look global, think local

Looking for a business idea? It's never a bad strategy to try and find international ideas that can be brought to South Africa. The founders of iKhokha came up with the idea for a local point-of-sale (POS) solution when they saw Square in the United States.

Even though South Africa and the United States are two very different markets, an American idea can be transplanted successfully to Africa. However, it's important to remember that each territory offers its own opportunities and challenges.

A fintech start-up in the US often faces intense competition, but it benefits from greater access to investment and a much larger potential market.

2. Size of the market

Compared to many overseas markets, South Africa is fairly small. It's important to keep this in mind when launching your business. What does your business model look like? What sort of scale do you need? Also, what's it going to cost you to acquire each new customer?

"You have to remember that in a smaller market like South Africa, the cost of customer acquisition is going to be higher. You can't compare it with the United States. You are going to work harder and pay more to sign up users," says iKhokha marketing director Ramsay Daly.

3. Local regulations

Local regulations can complicate a business idea. For instance, iKhokha must deal with the Financial Intelligence Centre Act (FICA). Each new customer must go through the FICA process, and while this isn't an insurmountable hurdle, it does add a layer of complexity to the business.

When launching a company, especially a fintech one, it's important to consider the regulations involved.

4. Can you build a prototype?

Co-founder Clive Putman had a background in engineering and technology, which helped a lot when the first iKhokha prototype was built, but even with this advantage, getting it done wasn't easy.

"Don't underestimate the time and money you'll need to invest when creating a protoype. Chances are, it will take much longer and cost much more than you initially thought," says iKhokha managing director Matt Putman.

"Also, think about the long-term. How do you scale things? How do you produce 10 000 of these devices at a reasonable cost? Don't develop the technology yourself if it is already available."

5. Getting funded

"Finding an investor is never easy," says Matt. "In our experience, both seed funding and growth funding are available, but there is a big gap between the two. So, it can be hard to find the money necessary to scale your business. Be careful of the terms.

"Don't give away equity cheaply just before you take the business to the next level. Make sure you find a partner who wants your business to grow and succeed. We were lucky enough to join up with Capital Eye Investments, which was interested in a long-term partnership."

6. Partnerships are important

When you're a new company, gaining the trust (and business) of customers isn't easy. When you're a fintech start-up that wants to process transactions, it can be especially difficult. So, how do you win the trust of potential customers?

"Education is important. You need to explain your offering to customers, and also show them the benefits of using it," says Matt.

"Another way you can improve your credibility is through partnerships. We partnered with MasterCard and Massmart, with our devices being sold through Game stores.

"By aligning ourselves with brands that people know and respect, we show that we can be trusted. Of course, it can be hard to establish these partnerships when you're a new start-up, but don't assume that larger companies won't be interested in you. Know your own value and have the courage to approach established businesses."

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