This is the view of Karl Westvig, founder of Retail Capital, a leading South African provider of alternative business funding to the SME sector.<\/p>\n\n\n\n
\u201cIf it\u2019s just about capital, chances are as soon as that capital comes under pressure, the relationship will sour.\u201d<\/p>\n\n\n\n
\u201cWhen we sought out an investor to take Retail Capital to its next phase of growth, we didn\u2019t necessarily need capital, but access to improved distribution capabilities to fast-track our customer acquisition and revenue growth.\u201d<\/p>\n\n\n\n
In 2019, Crossfin acquired a stake in Retail Capital through a strategic investment. Westvig says the partnership with Crossfin started just as the business had embarked on an effort to move from a high-touch business \u2013 where a substantial on-the-ground sales force would manually sign up customers \u2013 to a low-touch business, which used data and digital on-boarding.<\/p>\n\n\n\n
\u201cWe had started conversations with a few payment acquirers, including Crossfin-backed iKhokha prior to the partnership with Crossfin, with a view to reaching customers and prospects in a more scalable manner.\u201d<\/p>\n\n\n\n
\u201cBy plugging our lending platform directly into the acquirer, we were able to get transaction details of merchants, and provide pre-qualified offers in-app. This was a game changer for us \u2013 today our business is about 90% low-touch in terms of customers funded.\u201d<\/p>\n\n\n\n Crossfin is a leading emerging market fintech investment group with a portfolio of high growth and established cash generative businesses.<\/p>\n\n\n\n Shortly after Crossfin came on board as an investor in Retail Capital, the world came to a standstill due to COVID-19. Westvig says the impact of the pandemic was immediate and devastating.<\/p>\n\n\n\n \u201cAbout 90% of our customers couldn\u2019t do business, and since we only collect revenue when customers trade, nearly all our revenue disappeared overnight.\u201d<\/p>\n\n\n\n During this time, the benefits of having active investors on board became clear.<\/p>\n\n\n\n \u201cWe had some tough conversations during the early days of the pandemic, and realised it would take us six to nine months to start getting the business back on an even keel.\u201d<\/p>\n\n\n\n \u201cThroughout this period, the Crossfin team were hugely supportive, bringing different companies within its broader portfolio together with opportunities for collaboration and shared value generation.\u201d<\/p>\n\n\n\n Retail Capital was sold to Tyme Bank at the end of 2022, with Westvig shifting into a new role as the executive responsible for Business Banking and Consumer Lending.<\/p>\n\n\n\n For entrepreneurs that are considering seeking investors, Westvig recommends they do careful background checks.<\/p>\n\n\n\n \u201cIt\u2019s easy to support a business when things are going well, but you also need to know your investors will support you through the hard times.\u201d<\/p>\n\n\n\n \u201cDo your reference checks and make sure you know how they behave when things get tough. With Crossfin, we saw how the team dealt with some difficult situations with other portfolio companies, and their hands-on support with helping entrepreneurs get through challenging times.\u201d<\/p>\n\n\n\n \u201cThat type of support is simply invaluable to a growing business.\u201d<\/p>\n\n\n\n Westvig highlights the benefit of having decisive investors in the room when vital discussions are taking place over the future of the business.<\/p>\n\n\n\n \u201cSome of the more institutional investors were not always the key decision-makers, and had to confer with other people in their fund before a decision could be made.\u201d<\/p>\n\n\n\n \u201cThis can be very frustrating to an entrepreneur who wants to get things done quickly and capitalise on opportunities before they disappear.\u201d<\/p>\n\n\n\n \u201cIn (Crossfin co-founders) Anton and Dean, we found a more active and decisive shareholder, who could make decisions with speed and clarity.\u201d<\/p>\n\n\n\n A successful relationship and partnership with investors also depends on the entrepreneur and the qualities they bring to the business. For Dean Sparrow, CEO at Crossfin and Retail Capital board member representing Crossfin\u2019s interest at the time, a few key qualities stand out.<\/p>\n\n\n\n \u201cKarl brought an incredible ability to build and empower an exceptional executive team to the business.\u201d<\/p>\n\n\n\n \u201cHis experience in the alternative funding industry also helped refine and optimise Retail Capital\u2019s strategic positioning, allowing it to adapt dynamically to challenges and opportunities facing the business.\u201d<\/p>\n\n\n\n \u201cThis was clearly illustrated during the pandemic which put immense pressure on Retail Capital\u2019s business model, and again when Karl and his team capitalised on the pent-up demand from SMEs for funding post the pandemic.\u201d<\/p>\n\n\n\n Sparrow says the shift within Retail Capital from a high-touch to predominantly low-touch business was perfectly executed.<\/p>\n\n\n\n \u201cKarl and his team executed a fundamental shift in the business in a relatively short period of time, allowing the business to thrive despite the immense challenges brought by the pandemic.\u201d<\/p>\n\n\n\n \u201cIt\u2019s not often one can say a vision and related strategy was executed this well.\u201d<\/p>\n\n\n\n For Anton Gaylard, co-founder and CXO at Crossfin, the opportunity to work alongside founders and entrepreneurs that share Crossfin values and respect his team\u2019s input is extremely rewarding.<\/p>\n\n\n\n \u201cWe go to great lengths to vet the teams we choose to back to ensure they have a proven track record and the ability to collaborate with the businesses across our broader portfolio.\u201d<\/p>\n\n\n\n \u201cKarl\u2019s ability and wealth of experience in addition to a proven track record with previous successful exits made him an invaluable asset to anyone he engaged with over the past few years.\u201d<\/p>\n\n\n\n \u201cHis unselfish mentoring of other founders and teams across our portfolio has also brought immense value to our group.\u201d<\/p>\n\n\n\n Given the success of the relationship, Crossfin recently invested in Retail Capital International (RCI), which was born out of Retail Capital SA and leverages the company\u2019s experience across multiple SME industries.<\/p>\n\n\n\n RCI aims to build opportunities outside South Africa, specifically addressing the global SME funding gap in markets that remain underserved by traditional lenders.<\/p>\n\n\n\n \u201cRCI aims to become a SaaS partner to lenders across the globe, offering expert guidance on the user experience for merchant funding and empowering partners to maximise their conversion rates with relevant technology and support,\u201d explains Gaylard.<\/p>\n\n\n\n \u201cSo, in a way, our journey with Karl and his team continues.\u201d<\/p>\n\n\n\n Click here to learn more about Retail Capital<\/a><\/strong><\/p>\n\n\n\n If you want to build a successful, scalable business and gain access to a healthy ecosystem of potential partners and collaborators, the investors you choose \u2013 and their approach to engaging with challenges and opportunities \u2013 is critical.<\/p>\n","protected":false},"author":57,"featured_media":724822,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10459],"tags":[11957],"class_list":["post-724816","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-industry-news","tag-retail-capital"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/724816","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/57"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=724816"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/724816\/revisions"}],"predecessor-version":[{"id":724824,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/724816\/revisions\/724824"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/724822"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=724816"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=724816"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=724816"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/test.businesstech.co.za\/news\/wp-content\/uploads\/2023\/10\/Crossfin-holdings-2-1024x1024.png\")
<\/a><\/figure>\n\n\n\nInvestor support critical to weather pandemic storm<\/strong><\/h3>\n\n\n\n
![\"\"](\"https:\/\/test.businesstech.co.za\/news\/wp-content\/uploads\/2023\/10\/Crossfin-holdings-image-2-1024x1024.png\")
<\/a><\/figure>\n\n\n\nVet investors carefully<\/strong><\/h3>\n\n\n\n
What investors look for<\/strong><\/h3>\n\n\n\n
![\"\"](\"https:\/\/test.businesstech.co.za\/news\/wp-content\/uploads\/2023\/10\/Retail-Capital-employees-1024x576.jpg\")
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