On building the future of fintech and empowering startups and small businesses in Africa with Olivia Zank, founder of BeneFactorsFeatured
I spoke with @oliviazank, the founder and CEO of BeneFactors, a Rwandan factoring fintech. She has spent over a decade in the ‘missing middle’ finance space in East Africa, having started her career in the medium-sized credit market in rural Kenya 2011-2014. She then joined DFID, and later the Rwandan government as the Policy Advisor to the Minister of Trade Industry and East African Community 2015-2017. There, she led the technical development of the Rwandan governments’ strategy on private sector development, authoring the flagship Made in Rwanda Policy; the Private Sector Development Strategy 2018-2024 and the Special Economic Zone Policy. It was this work that made her realize that there is a gap in the market for factoring services in Rwanda and beyond, which led her to found BeneFactors ltd. in August 2017.What is your advice for non-technical founders in building an MVP and hiring a technical team/CTO?Ahh this one is hard. It took me 18 months to find our CTO, and lots and lots of hard work. On the other hand, wearing the CTO hat myself for the first 2.5 years of our existence made me much better at supporting our CTO on strategy now. I didn’t want to hire technical people without a technical leader in place who I trusted so we waited. Lots of work built up, landed on my desk, and the systems we used internally were slow, frustrating and very much the bare minimum we could get away with! The team had to do a lot of repetitive work because I didn’t have the skills or time to automate it… So the first advice is that you can do a lot manually. Unless your product is deep tech, you can get very far with excel, low-code environments and manual work. Tech is just a tool, and you can achieve a lot without the perfect tool if you have another one that is ok-ish. Airbnb has a famous story of how they managed photographers - first just the founders had a few phone numbers; then they hired an intern to handle the phone numbers; this intern then build a giant excel sheet for keeping track of hosts booking photographers and who did the jobs; then only after a couple of years did they automate the booking process. Up until that point, it was just an intern with an excel sheet in a company so quintessentially “tech” as Airbnb. In terms of hiring a CTO as a non-technical founder it’s tough. I was lucky enough to already know our CTO but it took me 18 months to convince him to join! During that time we spent a lot of time together, over lunch, over coffee, discussing work and life in general. When the CEO isn’t technical, the CTO has a lot of responsibilities so it’s not only about their technical skills, it’s about whether you trust them with you baby, your startup. During those 18 months I interviewed many other candidates, but Clement was the only person I could imagine trusting with such a fundamental responsibility, and who I could see myself working with. So in conclusion - wait it out for the right candidate. You can do a lot manually, you probably don’t need fancy custom-made software from day one. If you do, check out Zoho or Appsheet for low-code systems you can build as a non-technical person; it’s not more complicated than intermediate excel. In fact, the biggest challenge is knowing what to build, not how, so while you look for the perfect candidate, spend the time figuring out what is it that you can’t do with excel, what actually is needed? Try building it yourself in e.g. Appsheet. Then your CTO is set up for success when he/she joins. What were your most surprising learnings from raising VC internationally? VCs are people too! Haha, I didn’t realise how much of VC decision making comes down to personality and chemistry. Sometimes you just don’t jive with a VC partner and that’s ok. When we started I thought it was all analytical and technical decision making, but it’s anything but. Especially at the early stages, the investor has little if any data to go by and they will make their decision based on how much they trust you and your ability to figure it out. How did you make sure your voice was heard in rooms/team settings where you were one of the more junior/younger people?Be prepared. I’m the youngest on our management team; everyone else is better qualified and more experienced than me, and that’s exactly why I hired them! But I’m the person who has spent the most time thinking about the problem, the market and how to build a company in this space, so what I don’t have in years I have in preparation. I also used to do all of their jobs so I have first-hand experience of what their challenges are, even if they are much better at solving them. Then you also want to ask yourself, why is it important to be heard here? Is it my ego that wants to be recognised or do I actually have something to contribute? If you don’t, then you’re better off listening and learning. If you’re prepared well enough, you will ask the smart questions which will get you recognition over time. How do you hire people with more experience than yourself?As discussed above with the CTO experience, any senior hire is part skills, part trust. If I have to choose, I’d choose trust over skills. Nothing is more toxic than low-trust people in your team, especially in management positions! Ask yourself - would I trust this person with my life? With my money? With my children? If you can’t answer yes to those questions, they’re not right. If it is a subject matter you really don’t know much about, that can work in your favour too, since a very experienced person should be able to explain to you the most complex parts of their job in very simple language. If they can’t, they probably don’t have the skills you need to compensate for your lack of knowledge. Always reference people, especially managers. Ask their former superiors, peers and (most importantly!) juniors, how they were as a colleague. You learn a lot about a person by asking their reports for a reference. How do you ensure a social impact focus when running a for profit business? I believe the first principle is always “Do no harm”. At a minimum you have to ensure that you’re not negatively affecting third parties - except competitors of course :) For us impact came naturally from the problem we are solving - lack of access to working capital finance for SMEs has a huge negative impact on societies, so solving it is positive. As a startup you have to keep laser focus on the single problem you are solving and if that problem is not a social mission, you will struggle to get off the ground in a meaningful way; you just don’t have the luxury of focusing on more than one thing at a time in the early stages, so if the company’s primary objective isn’t around solving a social problem, I don’t believe you will succeed at doing so. I also believe that in order to make it sustainable you have to be profit-first, impact second. If you go out of business, your impact will be zero, so the only way to have an impact is to stay in business and that means running your company like a company, not a charity. That has to be baked into the company’s DNA from day 1. What is your advice for navigating regulated industries/businesses and working with regulatory bodies? The thing to look at is really just marketing 101 - who is the person making the decisions? How does the world look from their perspective? What are the metrics they are being evaluated by? What are the goals and pains they are dealing with on a daily basis? Can you somehow be useful for them? At the end of the day, you’re dealing with people, not buildings. So find those people, and help them. Not in an ethically wrong way, but make their lives easier by being proactive in sharing information, and understanding their anxieties so you can propose compromises that work for everyone. And expect to wait a lot, be patient. Don’t fall into the trap of thinking “they just don’t get it” - you most likely don’t get them either! What is your founding story with Benefactors? I was working with the Ministry of Trade and Industry in Rwanda, as an Adviser to the Minister. Our overriding concern was to create jobs and exports for Rwanda, supporting private sector growth in a country that desperately needs opportunities for youth, income-generating activities and taxes for the state. I believe that there is entrepreneurial talent and potential in a place like Rwanda, but the issue is that the business environment is really tough on a low-income person trying to start a business. Entrepreneurship in developing countries is several multiples harder than in a developed country - for starters the environment around you is poor, and people have low purchasing power. You can’t just find a decent tax advisor, so you get fines for non-compliance. There is low trust in the market due to a lack of standards set, so people don’t know if what they are buying is legit. But most importantly, the financial sector in a place like Rwanda is under-developed. When a financial provider isn’t good at their job (risk assessment) they get hesitant to lend money. We fought this over and over again while I was working in the Ministry - the commercial banks were the only players in town and they didn’t trust their own risk assessment systems and as a result they were really hesitant to lend money. That chokes off any entrepreneur who can’t get even an overdraft or credit card to pay for inputs upfront. Lots of ideas are stillborn because of a lack of working capital.So I decided to change that. I was frustrated listening to bankers tell us that these companies were not bankable, not trustworthy when I could see there was a whole segment of would-be entrepreneurs who had a product, willing buyers, technical know-how but zero liquidity to bring all these things together. So I looked at working capital products and left the civil service to see that this problem is solved. And prove a few bankers wrong in the process! What are you most excited about moving forward?We’re now 3 years old and have proven that there is not only a market for independent finance providers, but also a whole host of services needed on top. Rwanda, and most of Sub-Saharan Africa is growing fast, there is just so much to do on the continent. We’re excited about being part of the continent’s growth, delivering services to SMEs so they can rise faster, grow more and provide jobs for communities. We’re really just removing barriers to let people flourish.