From left- Ettienne Myburgh (Easy Equities), Mbulelo Mpofana, Carly Barnes (Easy Equities), Shane Curran and Ignatious Nkwinika.

Based in Johannesburg and founded by Shane Curran, Mbulelo Mpofana and Ignatious Nkwinika. InvestSure is a new insurance product that insures listed shares bought on participating trading platforms, against losses arising out of the deceptive or misleading acts of management of the company. The insurance is offered on shares listed on the Johannesburg Stock Exchange (JSE), with plans to insure shares in global markets in future. Investors can insure their shares as they buy them, as well as insure their existing portfolio. This product is a world first innovation, developed in South Africa and supported by global partners. In this interview with  Alaba Ayinuola  of Business Africa Online. Mbulelo Mpofana- Co-Founder & COO at InvestSure talked about the inspiration behind InvestSure, how they got funded and the future for their brand. Excerpt.

Alaba: Kindly tell us about InvestSure and the gap it’s filling.

Mbulelo: InvestSure is an insurtech startup that has developed APIs that enable share trading platforms to sell their unique insurance product. InvestSure has developed a world-first insurance product that provides shareholders protection against losses in the share price which are caused by management misleading and deceiving shareholders. The product is currently available on Easy Equities.

In the wake of the Volkswagen (VW) emissions scandal we noticed that the share price had dropped significantly, yet there was no recourse to investors who had invested in the company not knowing that VW weren’t all they made out to be. After that multiple similar events around the world prompted us to think that investors should have some kind of protection for these events.  Management fraud presents a difficult to manage and asses risk for investors (even sophisticated investors). It is often caused by deception on the part of trusted managers who are much closer to the business on a daily basis.

There was simply no accessible, simple and cost effective product to allow investors to protect themselves from the risk of being blindsided by management of the companies they invest in. We also think this product can make investing more accessible by simplifying the decision process and allow people to invest with more confidence, knowing they have this “sleep easy” cover.

On the tech side InvestSure provides a set of APIs that trading platform developers can use to integrate their insurance product seamlessly into their websites and applications. Once InvestSure’s technology is added to a trading platform, it enables users to easily buy insurance on their shares with a single click. The full process from buying to insurance to settling claims is fully automated.

Alaba: What was your startup capital and how were you able to raise it? 

Mbulelo: Entrepreneurs often talk about needing a bit of luck; we had our right at the beginning. We were very fortunate to partner with Hannover RE from a very early stage; the Africa region MD liked the product idea from the get go. They agreed to incubate and fund the founding team until we actually launched through their specialist insurance subsidiary Compass Insure. Compass is the insurer behind the product and is now also a shareholder in InvestSure. We also won R1-million at a pitch event run by AlphaCode, Merrill Lynch South Africa and Royal Bafokeng Holdings. The initial funding from Compass formed part of our recently announced R9.6m funding round.

Alaba: As a startup, what are the challenges and how are you overcoming them?

Mbulelo: We have been fortunate in many respects to have secured support from a multinational insurance giant at idea stage so our set of challenges are of a different nature than most innovative startups. For us the challenges included:

1.  Navigating the internal processes of our partner companies; these can result in long delays and take up a lot of the founders’ time.
2. Linked to the above, the other big challenge was the B-2-B aspect of the business, established companies move much slower than we were able to, especially on the IT and decision making sides, and this created some frustration for us as well as increasing time to market (and cash spent before getting to market).
3. Managing the at time conflicting objectives of all partners and stakeholder to make the business relationship worthwhile for all parties, especially with a unusually low cost product like ours.  The insurance industry is still used to high distribution cost models.
4. Client education, we’ve tried to make the product quite simple but there are still misunderstandings we find in terms of people getting what the product does, the value in it and how it’s different to things like put options.
5. Awareness, spreading awareness of the product on a tight budget is always a challenge!

Alaba: What advice would you give potential entrepreneurs who intend to start a business or invest in Africa?

Mbulelo: There is a lot of advice from much smarter and successful people than me out there! I’ll stick to specifically insurtech were I have more experience and less has been said about.

Our advice for anyone trying to create a new product is to partner with an established player. This allows you the time to focus on the product design and development, rather than trying to deal with the insurance regulatory mine-field. You can always change direction once the product is established. It also allows you much easier access to flexible capital,  accessing their networks and relationships, instant credibility enhancement and tapping into internal expertise to name a few. I’ve found that more and more companies are seeing value in partnerships with disruptive innovators.

Investors in South Africa are much more profit focused and will look for shorter break even time frames over and above big opportunity. It is therefore important to manage costs down.

Alaba: What’s the future for InvestSure and what steps are you taking in achieving them?

Mbulelo: There is a ton of scope for us to grow in South Africa, we are looking to do this by increasing our penetration rate on Easy Equities (our first platform partner) and we are keen on signing up other trading platforms as well which will increase our accessible market.

We are also keen to take advantage of the uniqueness of the product by taking it to other markets; initially we are looking at Australia and the UK as markets with similar regulation and business culture as SA.

Alaba: How is your business contributing to the development of Africa?

Mbulelo: We are embracing the idea of “community” in the startup scene and engaging with many other founders as well as people who are interested. We have also actively sought to use our network to create opportunities for other startups e.g. at least one other startup has secured funding from our shareholders through our initial intro; quite a few others are in talks with them.

Alaba: What’s your view on the development of Africa InsurTech ecosystem?

Mbulelo: I think it’s small but high quality even compared to the US and UK. I see a lot of innovation around the intersection of hardware/devices and insurance in Africa and I think we can be a player in that space. I also think it’s growing especially as more corporate become open to collaborating and funding insurtech startups. Insurance has a very bad image and many insurtech’s are creating a fairer and more transparent version of doing things which I think will appeal to consumers more and more over time.

Alaba: How do you feel as an African entrepreneur?

Mbulelo: I’ve always wanted to be an entrepreneur so this is a dream for me. From an African perspective, I’m proud we could create something that has surprised even the global executives of a company like Hannover Re and bring a new insurance product to the global insurance market. Africans continue to innovate and create value though new products and business models so it shouldn’t be a surprise to people but for some reason it still is! Hannover Re South Africa itself is seen as the innovation sub for the group which is testament to the unique thinking and creativity in Africa.

Alaba: How do you and partners relax and what books do you read?

Mbulelo: Sports is a consistent passion across the team for sports, I more watch than play these days but Shane plays soccer like 2 or 3 times a week. We also like to travel and spend time with family. We tend to read a lot of business related books. I also like to read about politics and historical figures.

Alaba: Please teach us one word in your home language and your favorite local dish?

Mbulelo: Nkululeko- which means freedom in isiZulu, Freedom Day in SA is coming up on Saturday 27 April. Can’t pick an outright favorite but will mention two- Putu with Amasi and I also love Biltong.

Alaba: What’s your favorite holiday spot in your country?

Mbulelo: It changes over time but current would say rural KZN around the town of Port Shepstone and further down the coast. It’s really beautiful and still quite natural in parts. I also have family around those parts.

Also Read SMEs: Before you sign that deed of guarantee | Morenike Okebu

Bio’s:

Shane Curran- Co-Founder & MD

Shane is a Chartered Accountant (CA(SA)) who originally saw the opportunity to approach Hannover Re Group Africa with an idea for a new insurance product. He believes that investing in shares is crucial to enhancing one’s wealth over the long term, but that certain risks could seriously harm that long term wealth growth. In his personal time he enjoys soccer, reading, holidays and spending time with friends and family.

Mbulelo Mpofana- Co-Founder & COO

Mbulelo teamed up with Shane to develop this unique insurance idea after gaining 6 years insurance experience, covering most technical areas of the industry including actuarial, capital management and risk management. Mbulelo has an enthusiasm for entrepreneurship and loves finding pragmatic and practical solutions to challenging problems.

Ignatious Nkwinika- Co-Founder & CTO

Before designing and building InvestSure’s tech from scratch, Iggy gained over 14 years of experience as an IT Solutions Architect including over 6 years in insurance. He is passionate about technology development and finding innovative solutions within the insurance industry.

Visit InvestSure today!