Franc Financial App Allows Anyone to Become an Investor

Updated on 3 May 2021

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Franc Financial App Allows Anyone to Become Investors
Franc co-founders Sebastian Patel (left) the COO and CEO Thomas Brennan.

Startup Franc was started in 2017 with the goal of building an easy to use app that would allow South Africans, regardless of income or financial experience, to become investors. The investment app allows South Africans to invest in leading cash and equity funds in just a few minutes.

The company was South Africa’s first pure robo-advisory business and was bootstrapped until Dec. ember 2019. In July 2020, it announced it had raised $300,000 in seed funding and is currently looking to finalise the round. Since launching, Franc has won Best SA solution at MTN App Awards (2019), Voted best Financial App by Stuff Magazine (2020) and Best South African start-up at Seedstars (2018).

Franc was co-founded by Sebastian Patel the COO and CEO Thomas Brennan.

A year of growth

Franc grew it’s investor numbers by around five times in 2020 and the start-up’s ambition is to maintain if not double that growth in 2021. At the time, February 2020 was Franc’s best month ever in terms of customers onboarded, new investors and number of deposits received, but recently, March 2021 beat February in all those metrics including January’s previous high of money invested through the platform

Patel and Brennan share their origins story and the challenges of launching a fintech startup.

When, how and why did you get started?

Thomas and I attended university together around 21 years ago Thomas is an engineer and I am an actuary who has always worked in financial services. Following UCT, Tom received a PhD from Oxford and conducted research at MIT. He returned to South Africa in 2015 and began working for the product development team at Discovery. It was in that role that he grew frustrated with how difficult it was to create new financial products and just how few South Africans actually had savings or investments. – Sebastian Patel

I had spent my career firstly in investment banking and then subsequently working for a local investment company so have always had a good understanding of finance and investments. It was because of this I often had friends and family asking me for advice regarding what they should be doing with their money. When Tom told me his idea regarding Franc, it made a whole lot of sense. – Dr Thomas Brennan

What makes Franc stand out from its competitors?

For us, the main barriers regarding retail investing in South Africa centre around product complexity and minimum investment requirements.

Investing products can be overwhelming which causes customers to be intimidated before they even get started. To minimize complexity we narrowed the investment choices available on the app to just two funds – the Allan Gray Money Market and the Satrix 40 ETF. Our aim is to make investing as easy and uncomplicated as possible.

Many investment products in South Africa have minimum investment requirements and typically require you to put down a lump sum to start, often greater than R10,000. These barriers prevent a vast majority of people in the country from investing which is why we designed Franc to have no minimum requirements for investment – a person can invest from as little as R10 a month if they choose.

Franc has democratized investing by making it simple and easy for all South Africans to finally be able to start investing within a few minutes right from their phones.

What are the biggest challenges you have faced as a fintech start-up and how have you been able to overcome them?

There have been three primary challenges. The first has been around regulation. We were the first pure robo-advisory investment business in South Africa and it took a while for us to get a license. As a start-up we were under increased scrutiny.

The second challenge is that South Africa’s startup ecosystem is still in its early days. The ecosystem is obviously getting better by the day and will develop over the next few years but there is a lack of early stage capital available, especially for consumer focused businesses. A lot of people see the need for what we are doing, but are put off by the challenges we face.

The third – consumer trust, South Africans are very wary of new financial services products, usually we find this is because they have been burned in the past by unscrupulous schemes that are not legitimate or have been fleeced by some of the bigger names.

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