10 Takeaways from Fintech Fest Cape Town
What we learned from Quona and Royal Park’s first Fintech Fest in South Africa
On February 21, Quona and Royal Park Partners teamed up to host Fintech Fest Cape Town, the first in a series of events focused on bringing together fintechs, investors and corporates for collaborative discussions and networking. The day’s agenda included a market update from Royal Park Partners followed by a panel discussion focused on fundraising in the current climate, featuring some of Africa’s most notable founders, including Guy Futi (Orda), Kiaan Pillay (Stitch), Clay Hayward (Ukheshe), and Wayne Stocks (Smile Identity).
A second panel discussion—this one on corporate/fintech collaboration—featured Muhammad Nana (Mastercard), Buhle Goslar (JUMO), Dom Collett (RMIH), and Shirley Maltz (Home Choice).
More than 150 people joined the live event, so we thought we’d share some key takeaways.
1: Investor priorities have shifted.
The investor emphasis on revenue growth and international and product expansion that we saw leading up to 2022 has changed, with a new focus on strong unit economics, sustainable profitability, product-market fit and management track record now driving investment decisions.
2: Private valuations are, in general, back to pre-COVID levels.
Royal Park Partners’ research indicates that, while seed/angel rounds have shown resilience with 3% YoY growth in valuations, valuations in general are down (YoY change for Series A, -5%; Series B, -39%; Series C, -50%; Series D+, -24%).
3: Good companies are still being funded, and there are levers founders can pull to maximize fundraising success.
Effective fundraising requires an intentional process and preparation, good timing, investor research, flexibility, and relationship management.
4: Fundraising relationships take time.
Relationship building is critical for fundraising, but founders can’t expect to build the trust needed in this current climate in just a few weeks or months. It’s critical for founders to start building the relationships they’ll need 1–2 years down the line, right now.
5: Fintechs are responding to market dynamics.
In line with shifting priorities from investors, fintechs are no longer placing as much of a focus on launching in new countries, but rather going deep in a large market that they know well. They’re also prioritizing understanding their unit economics and path to profitability.
6: Valuations are stabilizing.
Valuations have been under pressure across most sectors, impacting later stage companies more than earlier stage ones. The result is that some founders have to contemplate flat rounds or even down rounds while the market remains depressed. Many founders are looking to increase runway, and reduce burn as a result.
7: There’s a need for multiple scenario plans.
Fintechs need to demonstrate careful planning of multiple scenarios in terms of business performance (revenues and costs) and funding sources.
8: There is more evidence now of successful partnerships than ever before in Africa.
This goes beyond South Africa, where corporate collaboration and M&A has always been an anomaly on the continent — we’re now seeing productive partnerships in Kenya, Nigeria, Egypt, and elsewhere.
9: Fintechs looking to partner with corporates need to make sure they’re solving a real problem for potential partners.
If fintechs cannot clearly demonstrate the value-add they’ll bring to a corporate partner, the conversation will not progress. It’s important for fintechs to do their research and have the relevant conversations needed to be able to articulate the pain points they can solve.
10: There’s a season for everything in corporate collaboration.
The commercial fintech/corporate model may not be right from the beginning, but if partnership is a priority, it’s important for fintechs to make it easy for the corporate to say yes and adjust their business model or technology to fit in with the corporate partner.