🧪 SA's Lesser-Known 40M Distribution Channel…

Hi there

Future of cargo? With 90% of the world’s goods transported by sea, the race is on to green commercial shipping. Currently in the lead? Huge cargo ships with wind-power sails. Deja vu anyone?

In this Open Letter:

• School’s in: SA’s lesser-known 40m distribution channel.
• SA spies hacked, a big week for FinTech funding & your Shrek royalties.
• Go big: 20 Years of informal economy hacking.
• Your bank tech: The results are in.
• Claimed your free Coffee yet? Share with 2 people and get coffee on us!

TRENDING NOW

For Whom the Bell Tolls

OK, so EdTech is still one of the more popular buzzwords in startups today. We spoke about advancing education in SA before and even learned how to build an EdTech startup from the ground up.

But set aside the drive to advance learning through tech for just a moment and consider just how many of our daily lives – kids, parents, teachers, service providers, people who live near schools – are impacted by plain old school.

There are about 26k schools in South Africa, with around 400k teachers and 13 million pupils. That automatically involves at least another 13 million responsible adults (one parent, grandparent, family member or guardian) directly, and probably another 13 million (second parent, partner etc.) a little more indirectly.

That’s almost 40 million South Africans.

Or should we rather say “captive audience”?

Building for school markets

Again, apart from the BIG and obvious learning/education/curriculum part of it, there are also many peripheral problems like the basic logistics and administrative issues around such a massive daily exercise.

Think: Schools have entire rooms just for storing the stuff kids lose on a daily basis. You have tuckshops, excursions, performances, sports days – a lot of unsafe money changing hands here! Not to mention the nightmare of coordinating communication between teachers, parents, student bodies, PTOs, and school boards – it’s endless.

Then there’s the arts and culture side of things, as well as extracurriculars and carpooling – so much to manage. And we’re pretty sure at least a few parents and families would love their little ones’ sports leagues presented and updated in beautiful and easy-to-follow digital formats.

Face it, there’s a lot of opportunity here, and it’s a potential golden market, because:

• It’s self-regenerating: new people join the school system every year.
• It’s economically active: by default, these parents have disposable income.
• It’s a captive audience: the school itself becomes the distribution channel.

Local teacher's pets

If you grew up pre-2000 you would know that one of the biggest pains faced by parents, kids and teachers alike is the circular that stays stuck in that bag the whole term and parents have no idea they have to participate in the entrepreneur day up until the night before.

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School-to-parent communication has been a challenge since school started. So back in 2010, some tech-savvy schools introduced a Java-based app that ran on desktop computers and provided parents with school communication.

The idea is simple — this app will run in the background and when connected to the internet will pull the latest news or information for parents to read. It worked like a charm. Bored-at-work parents would open this up and always be informed.

And whilst SaaS was still a foreign concept to South Africans back then, schools didn’t want to pay. So the creators of this app settled for ad revenue. Smart move, considering parents are spenders (or at least they have to be, coz kids need stuff).

Fast forward to 2019, and this app, d6 School Communicator has an array of mobile and web-based products that extend beyond communication. And they had more than 2’500 schools using their software — which equates to about 3 million parents.

These days they do make use of a SaaS model (among other things) to generate income and also offer fully-fledged school management solutions, but its power really lies in its customer base and distribution model. Established relationships with schools that have established relationships with parents… and you’ve got something worthwhile. The opportunity at hand was acknowledged when they raised funds in 2021 — from among others Knife Capital.

But they are not the only tech company solving challenges in the inter dynamics between schools and parents. Backed by Nedbank, Karri is a payment service for communities and organisations that specialise in schools.

It had its start trying to make schools safer by minimising the amount of cash students were carrying. Parents can use Karri to pre-order meals from tuck shops and more recently, introduced a Mastercard card that children can use to pay.

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This card is fully managed by the app on the parent’s phone and one can imagine whilst the use case starts at school, it quickly becomes a useful tool outside the school environment.

Schooling-related opportunities are abundant because the system creates so much friction for all role-players. Build an innovative solution to solve some of these challenges and you have a distribution channel like no other.

IN SHORT

👑 Leading Lady. Mary Vilakazi will become FirstRand’s CEO, and as its first female leader is set to usher in a new era of female leadership across the group’s portfolio of businesses including RMB, FNB, WesBank, Aldermore Bank and Ashburton Investments.

🤐 No Comment. South Africa’s State Security Agency (the SA version of the CIA) was “allegedly” hacked just days before the BRICS Summit held in Jozi in August. But if you’re wondering why no one in SA has heard about it, it would seem like government’s official policy might be to keep it under wraps.

🪡 FinTech Funding. Mere hours after Tuesday’s Open Letter dropped featuring SA Fintech Stitch, it was announced that their Series A round was extended by an additional $25 million from Ribbit Capital. Elsewhere in local FinTech funding news: Revio raised $5.2 million in funding, while Peach Payments raised $30 million.

🧌 Swamp Money. Everyday investors can now get their hands on shares to the music rights of the Shrek movies for less than R200 via the trading platform, Public. The nearly 89’000 shares will pay dividends quarterly, generated from the revenue each time the movies are streamed or aired.

🤦‍♂️ Flag Facepalm. In 1 week, The Boks and Proteas could take the field without the South African flag on their jerseys at their respective World Cups. This after the SA government failed to meet the deadline to comply with the 2021 World Anti-Doping Code (Wada).

THE THREAD

Inside Track: How to Hack SA’s Informal Economy

Looking to tap into SA’s R425bn township economy? Then this week’s 30-minute podcast is for you. We spoke to serial founder and veritable informal economy expert Luvuyo Rani of Silulo Ulutho Technologies, who has been setting up technology centres in townships and under-served areas for, like, 20 years. It’s gold…

The Highlights

1. Long-term thinking
Having been one of the first movers to try and bring internet into townships, Luvuyo realised early on how important branding and visibility are in this market.

He explains here how they had to constantly push to be the first to deliver new tech to the market. And how they’d have to work (even at a loss) when malls and big brands started encroaching onto the local township space – driving up rental costs and ousting small local businesses. Particularly, how they had to take the high costs on the chin, just to be the local brand whose shop could stand next to a big brand in a township.

2. Localisation is King

As Luvuyo explains, even townships within the same metropole are vastly different. So localising yourself is key. They always made sure to employ local people, engage with local radio stations and media, and work with stakeholders in the area to make them feel a part of what they were doing.

Slowly but surely, the local entrepreneurs and even community leaders started getting involved and on board with what they were doing. To the point where today they can franchise.

3. Go where the need is

For years, and perhaps even now, the story to many entrepreneurs in SA is to go one of two places – either Cape Town or Joburg – to build a business. But Luvuyo realised early on that it wouldn’t work for them.

They needed to bring internet infrastructure to those who didn’t have it, so they went the exact opposite, to the Eastern Cape. And, because the market was being ignored by all the main players, they were, apart from easy access to the general public, able to get meetings with school principals, heads of departments and even government department officials in the area.

It’s amazing insights – and if you’re keen on the township economy, this 30-minute podcast is probably the best investment you can make.

Or if podcast app is your vibe, catch them here:

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THE RESULTS

So when we asked how keen you are on open banking, a cool 58% said they can’t wait for it to really take off…

🟨🟨🟨⬜️⬜️⬜️ 😡 Hell no (26%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🧐 I don’t do my own banking (0)
⬜️⬜️⬜️⬜️⬜️⬜️ ₿ IDC, crypto is the future of “France” (5%)
🟩🟩🟩🟩🟩🟩 🦾 Can’t wait to hook up apps and never bank again (58%)
🟨⬜️⬜️⬜️⬜️⬜️ 🛋️ I store cash in my couch – like a president (11%)