After the incredibly successful FinTech Africa event in Cape Town on 20 October 2015, our reporter Ebrahim Moolla spoke to Patrick Schofield, CEO of crowdfunding platform Thundafund. They spoke about the event, the role crowdfunding can play for FinTech and his take on social entrepreneurship.
- Check out our FinTech coverage with many new interviews and features
- Find our about the African FinTech Awards, 13 October 2016 in Johannesburg
- Read the full report about our Cape Town event in October - Think globally & grow up
What is your view of the FinTech Africa event held in Cape Town in October?
"I was initially sceptical, but it was definitely worthwhile. From that conference directly, I've had a bunch of people contact me, wanting to know more about what we are doing. The profiles of people who were in attendance were impressive."
Tell us about your Thundafund.
"Thundafund is a crowdfunding platform that specifically looks at helping people in the startup space raise capital. Crowdfunding is growing in the financial services sector, but interestingly enough, in terms of regulations, we play in the "pretail" space - pre retail. If you position your business as an investment platform, you attract the attention of the Financial Services Board and other institutions. The danger is that they start looking into whether you should be registered with them. One has to be careful because it is a new model, however, you are not looking at getting a financial return, which means you are, in essence, pre-buying and selling. It means we can operate without getting tangled up in financial regulations."
What does social entrepreneurship mean to you?
"Thundafund is very much in the social entrepreneurship space. In simple terms, it means business with a purpose. There's a synergy between recognising that the profit motive isn't everything and that you can create sustainable and successful businesses that have as part of their mission and mandate creating a positive impact on the world. You're not negating profits. The two exist hand in hand."
Is there scope for social entrepreneurship in FinTech?
"Absolutely. With the socialisation of the FinTech space, banks like Absa are looking at creditworthiness not just in terms of ratings, but also social profiles. They are saying that the person is as important as their financial standing and want to make a positive social impact on the world. The very fact that social entrepreneurship funds are being set up is telling. Social entrepreneurship is moving from the fringe into the mainstream. To not recognise this would be pretty short-sighted on the part of the news guys on the block."
What are some of the challenges that new FinTech businesses face in South Africa?
"The venture capital available is very limited and the returns demanded are frankly ridiculous. Raising capital for new FinTech businesses in South Africa is really difficult. Venture capitalists are looking for unrealistic guarantees and controlling stakes. In the States and Europe, it is very different environment. Because global boundaries are becoming more fluid, a lot of guys are going to have to develop their technologies outside the continent. It means that we are going to have a lot of difficulty competing against products that are developed in Europe and the States. Airbnb and Uber are fantastic examples of this."
Are there any FinTech companies that you admire?
"Kickstarter is a great crowdfunding platform. The impact they've had in driving new product development is absolutely phenomenal and it is exactly the kind of thing we should have in South Africa. If I had my say in terms of the Department of Trade and Industry's capital investment, I would be putting hundreds of millions into crowdfunding in the country. It is such an effective tool for testing new products and markets. I admire Wealth Migrate - I like that it is being developed here and overseas. Kiva is very interesting. It is a lending platform and social enterprise that offers loans at very low rates - often at zero interest - but with high repayment rates."