Factoring is a financial service, where future payments from your buyers are sold to a third party, the factor for cash.

After working as a Policy Advisor to the Minister of Trade and Industry in Rwanda and witnessing all the problems facing small and medium-sized businesses in the country, Olivia Bryanne Zank decided to found her FinTech startup BeneFactors Ltd. BeneFactors Ltd is a factoring company providing tailored working capital solutions to firms in Rwanda.

Olivia’s startup got into the top 12 best startups from emerging markets at the Seedstars Summit 2019 and has just closed the second round of investment. We talked with Olivia to find out how life is going after the competition, what has changed, how the team is doing and what are the goals for this year.

Why did you decide to start your business in Rwanda? What triggered you to launch a business in the financial industry?

Several different things came together at the same time. On the one hand, I was frustrated by my work in the Rwandan government. At that time, I worked for the Ministry of Trade and Industry that had a lot of good ideas, a lot of drive, solid strategy and policies, but when it came to the implementation stage, I did not have the feeling that things were moving forward. The gap between policy-making and implementation was quite big.

On the other hand, I always had a personal interest in finance and giving access to finance for small and medium-sized businesses. I felt that some of the projects or ideas I was generating sitting within the public sector were better suited for the private sector. Both reasons came together, and I thought ‘Why not?’.

I have a couple of friends who are running their own businesses. I could see that it's a lot of work, but the idea of starting a company is not that crazy to me. It was the combination of different factors, but mainly, it was the feeling that the change might take forever if I stayed where I was.

How did you come to the idea of BeneFactors? How did you validate it?

That came up from different places that helped me narrow down the focus. One good friend supported me at the beginning with some knowledge and advice because he was familiar with how factoring services work in the US. He runs a logistics company in Rwanda, and he had used factoring before, but couldn't find a factoring house in Rwanda to run his business smoothly, and he felt stuck. It’s something that prompted me to research this area more in-depth.

One day I stumbled upon the report from a factoring project run by the Mexican Development Bank, which was a huge success. I got some inspiration from it on how can I shape my product. I realized that some of the factors that underpinned the project's success in Mexico were also present in Rwanda. When I was working for the Ministry, I remember facing angry suppliers who were asking for their payments, because the Rwandan government is known as one of the worst payers in the country. They do pay eventually, but it might take a year or more to get your money. This is very difficult for small companies. All those things came together, and I saw factoring as low-hanging fruit.

In terms of validation, I piloted the product with three businesses run by my friends. This gave me the idea that I was onto something that the larger market would like.

Could you please tell me more about your business model? How do you generate the profit?

First, clients come to us with an unpaid invoice. For example, you deliver the furniture to a corporate office; your client accepts the delivery and says that they will pay in 30 days. For the small company, it can be quite challenging to wait for a month as they have to pay salaries and taxes and process other orders.

What we can do in this situation is that we can take over that waiting period for those small businesses. They would come to us, give us that invoice; we will do our checks and verifications; and if they pass, we disburse 70% of their money upfront. We then keep the remaining 30% until the invoice is paid, and deduct our fees from this balance.

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When we talk about financial services, there’s always a question of trust. While your business is aimed at helping to bridge the gap that was created by the lack of trust in the country, how do you make your potential customers trust you and use your service?

We had to make very conscious decisions from the beginning so as not to position our business as a crazy new startup that will turn everything on its head and create losers or a sort of too-good-to-be-true pyramid scheme which can make some partners nervous and suspicious of us. What makes us different from other startups is that we have, for example, a pretty strict dress code, we always come officially dressed at the meetings, and we don’t market ourselves as disruptors but that we offer a complimentary service. We don't have casual Fridays or anything like that. In some ways, it’s quite an anti-startup culture. Being intentionally more corporate has been necessary for us to generate trust.

We also leverage the trust that comes with being officially recognised as a credit institution in Rwanda, which gives us loyalty amongst smaller businesses who are afraid of scammers. The most important thing, of course, is to be reliable and trustworthy, so we put a lot of emphasis on always delivering on our promises.

What was the biggest challenge you and your team faced on your way?

At different times there were different things. As a startup, fundraising and getting enough visibility was initially a challenge for us. I was amazed by how many investors there are in East Africa, especially in FinTech and financial services that are willing to hear your ideas, but we had to prove ourselves to get funded.

If you have numbers and stories that can prove them, there is always available funding, but when you start, of course, you have no traction. During the first year, everyone kept telling us: “This is interesting; there is a market; we can see the need but come back when you have a couple of years of experience.” We had to work really hard on hitting our numbers during the initial bootstrapping period before we saw more trust and interest from potential investors and VCs.

The second challenge I would say was to find a way to streamline our operations and manage risks without getting bureaucratic. One of the things that we found out very quickly was that our clients value speed more than anything, and we had to streamline our due diligence process in order to meet their expectations. Initially, we promised our clients five working days as the maximum time to get their money. Today, we are bringing that number down to three days. Our ultimate goal is 24 hours or less.

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What do you find unique about the entrepreneurial ecosystem in Rwanda?

Rwanda doesn't get a lot of visibility as an entrepreneurial ecosystem compared to the places like Nairobi, Johannesburg or Lagos, which is perhaps natural given the small size. I've been living in Rwanda for four years, and I’ve been running BeneFactors Ltd for two years already, and I can definitely see how the ecosystem is evolving.

There is a ton of opportunities here, and there are plenty of projects happening at the moment, lots of unexplored territories. Some of them are more profitable than others; most are nice lifestyle businesses rather than venture ideas. The government is encouraging investment in infrastructure, digitalization, and making the data accessible, which opens more opportunities all the time. Rwanda’s uniqueness lies in the fact that the government investment and policy keeps opening up new opportunities for the private sector, even if the market is small by comparison.

How do you define impact, and how do you envision BeneFactors’ role in shaping the entrepreneurial landscape in Rwanda?

We are part of the ecosystem, and we are trying to participate in its development as much as we can. I am mentoring a few startups; they can learn from me, and I can learn from them as well. Having these one-on-one conversations with other entrepreneurs is something that I always try to engage in as much as my time allows. I hope that people can follow our journey and see that it is possible to build a company that grows quite rapidly in Rwanda.

For us, having an impact means creating more jobs and stabilising those that already exist. Our services offer cash flow stability to small and medium-sized enterprises that risk going bankrupt due to liquidity issues. There are millions of jobs in such companies that we help stabilise and create more by giving the owners/managers time to breathe and focus on growth. We’ve seen a lot of our clients growing tenfold within the first year of using our services. Having more working capital means lower transaction costs, higher turnover and higher utilisation of their existing capacity. This translates into jobs for people and communities that really need them.

What are you most proud of in terms of your activities for the last two years? What have you achieved so far as a company as a team?

Recently, we hit the milestone of having disbursed more than one million dollars to our clients which is a considerable amount and something to be proud of. On a more personal note, I am happy to be able to create something from scratch to coach and train my team members, and see them grow their skills and open their mindsets. My proudest moments are when someone from my team comes back to me saying that what I designed was not the best idea and suggests improvements; we make changes together and it becomes something better than I created. The idea that I started is bigger than me.

What are your plans for the near future? Are you planning to scale or add new services?

We have just closed our second fundraising round, which we raised purely to expand our portfolio in Rwanda. That is what will keep us busy for the next 4-6 months. Also, we are thinking of having our next equity round at the end of the year, which will allow us to develop new working capital products and potentially, expand into other markets. At the moment, we are exploring new financial opportunities and are open to discussion with interested investors and institutions. For now, Rwanda still has plenty of growth opportunities for us, and we haven’t fully saturated the market here, so we have plenty of work to do.