Bulls n Bears Entrepreneurship Zone :: From the dream of a cashless Africa to a constantly expanding startup: The Zoona story

[Bulls n Bears]

Founded in 2009, the Zambian startup Zoona is now in full expansion. Like
all venture capital-backed startups, Zoona has been through its fair share
of ups and downs. Its founder Mike Quinn gives us his personal account of
these decisive steps.

In February 2012, I wrote a lengthy essay called “My Mobile Transactions
Story” which detailed my startup journey from stumbling upon founding
entrepreneurs Brad and Brett Magrath to closing a $4m Series A venture
capital investment. I shared many of the challenges we overcame to achieve
that milestone. It’s now six years later and that story is due for an
update.

In the beginning there was Brad and Brett, two entrepreneurial brothers
from Kitwe, Zambia, who dreamt of a cashless Africa where companies, small
businesses and consumers conducted all of their business via mobile
transactions. Brett was in his early thirties, married in Cape Town after
quitting his cushy job at JP Morgan in London, while Brad, several years
older, was married in Zambia and looking to get off the corporate ladder.
They tried a few ventures that all started out promising but left them both
broke and nearly broken.


The dream of a cashless Africa


One night in Lusaka, Brad was out with an American colleague from USAID
talking about his vision when the spark occurred. He sent Brett the
‘now-famous’ text message that he had an idea for their next venture and
that it was going to be big. A few months later, the brothers had a $200,000
grant from USAID to launch a pilot to digitise cash payments in the cotton
sector. At this time, it was common to see trucks full of cash with armed
guards carrying AK-47s driving down horrible rural roads. An international
cotton company invested in the brothers, they applied for and received a
Bank of Zambia payments’ licence, and they set up a company called Mobile
Transactions.

While this was happening, I was completing my MBA at Oxford where I was a
Skoll Scholar for Social Entrepreneurship. I had previously spent 2.5 years
as a volunteer in Ghana and Zambia with Engineers Without Borders Canada and
completed a MSc in international development at the London School of
Economics. I was hungry to get back to Africa where I wanted to be an
entrepreneur and have an impact but I was too broke and saddled with student
debt. I first convinced my fiancé to take the plunge and move to Zambia with
me on a whim, and then an early stage investment fund to buy me a plane
ticket to search for entrepreneurs to invest in. I sent one email to an
American colleague from USAID I knew from my volunteer days (thankfully the
same one who knew Brad!) and the day after I arrived in Zambia, I was face
to face with Brad and Brett and hearing their inspiring vision.

A year later I found myself asking my retired parents in Canada to mortgage
their house and wire $100,000 dollars into a Zambian bank account to save
the company from bankruptcy and become a partner in the business. With an
ultimate leap of faith, they said yes, after which Brad and Brett made me
CEO to lead the company into the next phase. My first move was to convince
my MBA colleague Keith Davies to quit his investment banking job and cash in
his pension to join us as our CFO. The future was bright.

Only it wasn’t – not yet, at least. A few months later we had burnt through
all of our cash (again) and lost a major contract that was the source of
most of our revenue. We were left scrambling again, but managed to raise
some convertible debt to survive a little longer and also buy out our
corporate shareholder. We finally had some runway and took advantage of it
to raise a Series A investment. We signed a $4m term sheet with Omidyar
Network and Accion at the end of 2011 and closed the deal in February 2012
with feelings of great relief and accomplishment.


We were inspired by the exponential rise of M-Pesa


As Nelson Mandela once said, “After climbing a great hill, one only finds
that there are many more hills to climb.” He couldn’t have been more
correct. If the beginning was about not running out of cash, the middle was
about how to build a business. Our agriculture payments’ product had failed
as the demand for cash was too high from small-scale farmers and we had not
yet cracked the supply side. Meanwhile, we were inspired by the exponential
rise of M-Pesa in Kenya and pivoted into building a franchise agent network
to allow Zambians to send and receive money within the country. But unlike
M-Pesa, we didn’t have a customer base, a distribution network or a brand to
launch from, and had to start from scratch.

What we did have, though, was purpose and perseverance. We selected young
entrepreneurs as agents, treated them as our core customers, and invested in
the most promising ones to expand to more outlets. We also rebranded from
the functional “Mobile Transactions” to the meaningful “Zoona”, which
translates to “It’s real” in Zambia. Our model spilled into Malawi while we
built a customer service and technology centre in Cape Town to support both
markets.

The results started to show. We started achieving exponential growth with
new customers turning into repeat users and agents expanding to more and
more outlets. Some of our top agents grew to employ dozens of people and
transact with over a million dollars per month. We also achieved the
milestone of a million active customers and turned profitable as a group.
Once again, the future was bright.

But then came the great Zambian currency crash of 2015. The copper price
slid downwards following a sharp reduction in demand from China, which hit
the Zambian economy hard. The currency depreciated by half in a three-month
period, and so did our revenue while our expense base in Cape Town was
fixed. This led to a difficult period of consolidation, but we managed to
pull through it and raise a $15m Series B investment led by the IFC in 2016
to start growing again.

Since then, we have scaled up our team, invested in preserving our
entrepreneurial and purpose-driven culture, and expanded our agent network.
We have also developed new products, including pay-outs of international
remittances from South Africa with Mukuru as a partner, airtime and utility
payments, and our own mobile wallet and digital storage product for
customers to keep their money safe. Our customer base has reached 2 million
active users who transact over $60m per month at our 3,000 agents, and we
are poised for our next phase of growth.


I’m more passionate than ever to fulfil Zoona’s mission


Where will my Zoona story end? Once the problem is solved. There are
currently three billion people in the world who lack access to or who are
underserved by the formal financial service sector. I’m more passionate than
ever to fulfil Zoona’s mission of helping communities thrive and achieve our
wildly important goals: build products and services that improve people’s
financial health and well-being of one billion people; unleash emerging
entrepreneurs to create profitable businesses that create one million jobs;
prove that a purpose-driven business can be a global model for growth and
impact.

Zambia and Malawi are our starting points where we want to go deep and
fully prove our model. Once we do, we plan to expand to achieve Brad and
Brett’s original dream of a cashless Africa. As we say at Zoona: Let’s make
it real.—Howwemadeitinafrica 



A Zoona outlet in Zambia.

 

 

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