Nkazi Sokhulu is the co-founder and CEO of Yalu, a digital insurer that’s looking to disrupt South Africa’s multi-billion rand insurance industry with its innovative credit life insurance offering.
Credit life insurance covers your debts in the event of your death, disability or retrenchment – Yalu is hoping to make credit insurance “more affordable and transparent”.
“We’ve built a platform whereby you can take out credit insurance online in under five minutes, a straightforward process, no documentation (needed). It’s simple: we do all the heavy work for you in the background,” Sokhulu said in a Investing Matters interview.
The black-owned insurtech has been hailed as a startup to watch, largely for managing to attract investment from Public Investment Corporation (PIC) — which oversees government employees’ pensions.
Sokhulu is a University of Cape Town finance graduate and obtained his MBA from Columbia University in New York. He together with Yalu co-founder, Tlalane Ntuli, has extensive experience in the insurance industry. They are both former Old Mutual managers. He has also worked in a number of countries as a management consultant at McKinsey.
It’s going to be harder than anything you imagine or will plan for: customers won’t be easy to convince to be early adopters, (and) competitors will go out of their way to frustrate your efforts
Before Yalu, Sokhulu was one half of the duo who started the life insurance company, FNB Life, within the FirstRand Group and received R200 million in capital backing from the group to launch.
In the same interview Sokhulu shares that the Yalu journey has not been easy, in particular raising capital.
“It’s been painful and humbling, I think is how I’d describe it. We had to take the plunge; we had no funders. We had to leave our corporate jobs and basically we had to go knee-deep into debt just to keep it going in order to find those funders and I think that we found those funders eventually. They saw the level of dedication where there is no guarantee, and we’ve found that people really do sit up and listen.”
Below Sokhulu offers how they overcame their funding challenges, and other lessons he has learnt along the way.
As a young entrepreneur, the biggest issue you always face is a credibility deficit; no matter how much experience you have. Adrian Gore was 26 when he received R10m from investors to start Discovery. But even though I was privileged enough to have been one of the two people who started a life insurance company within one of the largest banks in South Africa, investors were not initially convinced I had the skill and determination to start and run an insurance company.
You can’t wait for money before you start the business: even if you do not have the money, figure out what technology platforms and services you need to use to make your dream a success and get agreements in place with those service providers.
There are a myriad of legal and compliance issues you won’t necessarily think about when trying to build your business and product offering, so do not skimp on getting sound advice from experts who have experience in your field.
You do not need a perfectly working technology-based beta model before you demonstrate your idea to potential investors: having a well-laid out design on a few pages of the end-to-end customer journey will do just as good a job in demonstrating how your technology platform will work.
It’s going to be harder than anything you imagine or will plan for: customers won’t be easy to convince to be early adopters, competitors will go out of their way to frustrate your efforts to bring change to whatever industry you want to bring change to and rallying people to work for your small outfit will be difficult when you can’t offer the perks of well-established businesses.
Mistakes will happen, plenty of them. Don’t hide them, don’t run away from them: deal with them in an open and honest way
Having a purpose that has nothing to do with making money or that self-obsesses over your conceptualized solution. It is what makes going through all the difficulties you face, easier. You need a purpose that will stand the test of time.
Clarity of said purpose will draw people to you. We would have not progressed in starting Yalu if we didn’t have staff who joined us with no promise of pay for an indefinite period and if we didn’t have service providers who were willing to help us build with no guarantee of being paid in full. One thing that stood out for why they all took a chance on us was that purpose they could all get behind.
You can’t do this alone: having a partner or two is crucial to bringing your idea to life and they will bring skills and drive that you simply do not have on your own. Those partners will be your source of strength when you need it most and you will enjoy your triumphs all the more when you have people who fundamentally understand your journey. It also has the added bonus of investors taking you more seriously: if you can’t convince another living soul to join you, can they really believe that customers will follow suit?
Mistakes will happen, plenty of them. Don’t hide them, don’t run away from them: deal with them in an open and honest way as they come, and learn from how they happened so that you do not repeat them.
Distribution, no matter how smart you think your business or product is, remains king. Digital-only offerings are and will remain limited in reach for a long time in South Africa, so do not be afraid to explore more traditional channels of product or service distribution in your own unique way that still shakes things up.