MoneyWorks raises R5mil from Imvelo Ventures.
The South African economy needs to create more industries while becoming more inclusive in order for it to achieve the growth goals much needed to recover from the economic shutdown caused by the covid 19 pandemic. Small businesses, the engines of economic growth and job creation of any economy globally, suffered the most during the shutdown; a Sasfin and sme.africa survey of approximately 1 000 small business earlier in the year found that 60% of these businesses may be forced to close. The unplanned shutdown decimated their markets, leaving them with no cash to sustain their businesses. Their recovery will require affordable access to finance, while not penalising them for their current financial health.
MoneyWorks a fintech start-up has revolutionised the traditional finance model by developing a creative approach to financing which moves the focus for credit worthiness to large corporates, instead of small businesses, when financing SME on their supply chain. The MoneyWorks Digital Supply Chain Finance Platform enables large business and Public institutions to have an early payment programme for the benefit of the SMEs in their supply chain.
The MoneyWorks model is able to reduce the cost of early payment financing to less than 2% of the invoice for the SME depending on the risk of non-payment of the corporate. Corporates are able to provide access to affordable cashflow financing to their SMEs without affecting their liquidity management or gearing their balance sheets. This type of financing guards against asset creep on ownership of small businesses and rewards them for doing business with reputable corporates. The shift in focus when looking for credit worthiness provides entrepreneurs with the respite they need as they focus on their recovery and growth while dealing with a contracting economy.
“At Empowerment Capital we look for investees with strong leadership teams who have developed disruptive models of addressing current challenges that will help meet head on the urgent need of transforming the South African economy, creating different industries, while ensuring that it becomes increasingly inclusive”, says Anton Baumann executive Director at Empowerment Capital and Imvelo Ventures.
“Affordable finance is essential for the sustainability of small businesses and our partnership with Imvelo Ventures means that we have a partner who has a proven track record in using technology to provide tailored and affordable products to the target market. Our digital platform enables corporates, who have registered with us, to quickly implement this early payment program for their SMEs. The platform is accessible 24/7 from anywhere which means SMEs can see their invoices available for financing as soon as they have been approved by the corporate and can be paid within 24hrs if they elect the early payment option, says Thandeka Zondi, the owner and founder of MoneyWorks.
Thandeka has experienced first-hand the challenges that entrepreneurs face when looking for finance in the current market. “When I started in 2018, I knew I would face some challenges in getting financing with the current prevailing financing models. So, I used my own savings and obtained an ESD loan to develop the minimum viable product. I believe that a credit model that recognises the talent and hard work that it takes for a small business to be included on a supply chain for a large corporate will change the SME story of failure due to cashflow challenges to one of success.