Rand Merchant Investment Holdings recently announced its funding of Merchant Capital as the first Diamond member of AlphaCode. Merchant Capital is an alternative funding provider for South African SME businesses that are struggling to access retail capital for growth. They have developed an innovative repayment process bringing new efficiencies to the industry. The startup was founded by CEO Dov Girnun in 2012.
Girnun says that Merchant Capital’s vision is to become the leading provider of disruptive financial services products to SMEs in emerging markets. To that end, he believes that RMI brings a wealth of experience to the table.
Speaking at the official launch of AlphaCode in September, Girnun explained that as entrepreneurs themselves, the founders of Merchant Capital understand first-hand how difficult it is to attract growth capital for new businesses.
“It’s a hugely underserved market in South Africa - and in all emerging markets,” he said.
“So we provide a very easy, frictionless product for SMEs to grow their businesses.”
Girnun said that Merchant Capital integrates into the point of sales terminals of merchants and collect small percentages off transactions. Along with his business partners, Girnun focuses on putting clients first and making it easier for them to apply for, and repay, growth capital.
“So in a restaurant, for example, we’d have no fixed repayment terms for a loan, but every time a customer swipes their credit or debit card for a transaction [in the restaurant], we take a small fixed percentage,” he explained.
“The repayments of the loan fluctuate with the cyclicality of the business. So it’s a genuine partnership with our clients - when they have a good weekend or month, we collect more. But in slower months, we collect less. It’s a partnership that works well and we’ve also simplified the application process because we want the business owner to be focused on what they do best.”
Asked about advice he has for aspiring entrepreneurs, Girnun suggested, “Start small, test, iterate and fail fast.”