Funding made simpler

Through digital technology, SMEgo users can apply for multiple funding opportunities with a once-off application process.

Serial entrepreneur and lecturer of business strategy at the University of Cape Town, Rowan Spazzoli, has always been aware of how difficult it was for SMMEs to secure financing.

He felt driven to do something about this after reading the results of a survey by Phaphama Social Enterprise Development Initiative on the impact of the Covid-19 lockdown on SMMEs.

Of the 233 entrepreneurs who participated in the survey released in April, 95% said they could no longer afford to pay their employees; 50% didn’t think their business would survive the lockdown; and 93% didn’t have any other income sources.

While various helplines were available, 86% indicated they didn’t know where to access emergency funding. The funding application process was also identified as being too complex and time consuming.

Spazzoli explains that business owners must complete and submit heaps of forms and documents for every application they make. To address this, he and Louis Buys, a friend from university with experience in venture building, started working on a solution to streamline the process.

“We did a trial run in April, asking five entrepreneurs to go through the application process, but ended up with 15 applications, which encouragingly showed that we managed to create a system that worked well enough for entrepreneurs to recommend it to others,” Spazzoli says.

The solution, SMEgo, officially launched in mid-August, and now has 13 listed funders and over 2 000 registered users. By end-November, it had facilitated 53 major funding dispersals and matched 250 businesses with smaller funds.

The simplification

The platform’s technology determines which of the listed funding opportunities would be suitable for the applicant and highlight any outstanding documentation and information that would be required to make an application at these institutions.

To apply for funding via SMEgo, applicants need to complete a high-level questionnaire consisting of ten questions regarding their company. Thereafter, the companies can apply for multiple funds at the same time, which can take less than two hours to complete, depending on how organised the company is.

While 70% of SMEgo’s traffic comes from mobile phones, it’s easier to apply by using a computer.

“The idea behind the questionnaire is to generate all the information and capture all the documents required to make a blanket application to different financial providers, and to save this information to streamline future applications, so entrepreneurs do not have to prove themselves every time they make an application,” Spazzoli says.

Qualifying criteria includes tax compliance, that the business has been in existence for longer than six months and a minimum annual turnover of R400 000.

This is a first iteration build. In future, we’d like to open the solution to also assist businesses with smaller turnovers and start-up funding, and perhaps throw it open for social enterprise development funding.
Rowan Spazzoli, entrepreneur and lecturer of business strategy at the University of Cape Town.

“Our main priority now, however, is businesses that are struggling to survive the impact of the Covid-19 lockdown, with the aim to help every business get the funding they need,” Spazzoli says.

SMEgo benefits funders, by allowing them to list available funding opportunities on a single platform and reducing their administrative burden by ensuring forms are completed correctly, and that they receive applications from quality leads.

"People tend to think there isn't a lot of financial support available to SMMEs. The truth is that many financial services [companies] struggle to meet their targets due to difficulties in finding businesses that match their investment criteria," he says.

SMME owners can view applications on an online dashboard, but are contacted directly by the financial service providers (FSPs) when an application is approved.

The future

SMEgo has worked diligently to create a highly automated solution. The company also employs a core operations team of three people, who encourage and help entrepreneurs to complete their application.

Constant contact and support for Adri Williams, the managing director of the Khayelitsha Cookie Company, for instance, ensured that she was approved and received funding to help pull the company through these tough economic times, according to Spazzoli.

The Khayelitsha Cookie Company, which lost 70% of its business due to the shutdown of airports, was the third company to successfully be approved for funding via the platform.

SMEgo makes money by receiving a referral fee from financial service providers; the service is completely free to SMMEs.

Spazzoli’s vision is to turn SMEgo into “the LinkedIn” for SMME owners, where they’ll be able to update their business information and link up with mentors and FSPs who would be able to take their business to the next level. By doing this, he hopes to breathe new life into the economy.

“The National Development Plan envisions that by 2030, nine out of ten jobs will be generated by SMMEs, but this won’t happen if they don’t receive proper financial support,” says Spazzoli.

Read more
This article originally appeared in the 17 December edition of finweek. You can buy and download the magazine here.

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