One of the questions that pop up around the subject of entrepreneurship is whether or not entrepreneurs are born or made. While there are ongoing debates around this subject, only a few entrepreneurs are confident enough to step up and call a spade a spade. Among them is Dov Girnun, who when asked about his entrepreneurial background wasted no time in saying “I come from a very entrepreneurial background, it’s in my DNA,” he said self-assuredly.
“The entrepreneurial make-up that drives people is different for every entrepreneur and depends on the industry, environment or market in which they’re trying to build their business. But certainly for me, the non-negotiable would be resilience and passion. You need to be thick-skinned, you need to be resourceful, and you need to have access to a network of mentors and capital providers.
“In my mind, not taking no for an answer and always finding a way, is where the success of an entrepreneur lies,” adds Girnun.
As a young boy, his first business venture was in high school, where he used to sell clothes at the back of his car in a taxi rank in Sandton.
“I used to sell all my family’s new clothes as second hand. I would sell a T-shirt for R10 with no concept that it cost my parents R300 to buy at the shops. It was a great business model in the sense that my cost of sales was zero because my stock was readily available in the cupboards and drawers at home – so whatever I was making was pure profit. I was very pleased with my jumble sale business venture but my parents, understandably, were not sold on that business model at all,” he says with a smile.
Fast forward to 2019, Girnun is now founder and CEO of Merchant Capital; a Johannesburg based fintech company that is helping South African SMEs to grow by providing quick, simple access to unsecured working capital.
"Funding for entrepreneurs to grow their businesses is probably among the top three challenges that an entrepreneur will face - certainly in the early stages of the business. So, my first word of advice for budding entrepreneurs is to know your business and unit economics very well, because any potential funder is going to challenge you and poke holes in your business model, and you need to be able to convince them that you have those particular questions covered.
Secondly, understand your weaknesses as a leader and build a management team that can plug in their strengths around you. A complimentary founding team is definitely one of the ingredients for success “explains Girnun.
Merchant Capital was established in 2012 in an effort to curb the high failure rate among small businesses caused by lack of funding. According to Girnun, Merchant Capital has developed technology that integrates into the back-end of a merchant’s point of sale terminal and collects a small fixed percentage off each transaction. This innovative collection mechanism allows their clients to repay in line with how they trade - collecting more in busier times, and less in their quiet times.
“The biggest impediment to growth as an entrepreneur is access to finance, so we really wanted to change that landscape for South African entrepreneurs. We founded Merchant Capital based on the challenges we had personally experienced as entrepreneurs growing up,” says Girnun.
Once 70% of the cash advance is repaid, the SME automatically qualifies for a re-advance on the same or better terms than the first, allowing the SME to further grow their business. For this reason, and a metric we are extremely proud of, 80% of clients renew with Merchant Capital.
The amount provided to the business is agreed on upfront and it never changes. It can take the SME three months to pay back, or it can take three years, the agreed amount never changes.
There are about 2.8 million SMEs in South Africa, of which a million are formally registered. In 2016, a Finscope study indicated that 40% of that million has access to finance, which leaves 600 000 formally registered SMEs looking for finance. They typically borrow around R100 000, which means there is an R60-billion funding gap. Merchant Capital was launched to capitalise on that gap.
“Access to finance is a big challenge entrepreneurs struggle within South Africa. The first reason is that banks generally loan to businesses with track records and collateral. It’s paradoxical in the sense that the business owners or entrepreneurs who need access to finance are typically in the early stages, in the 12 to the 24-month business cycle. This is when they need growth capital most. Without it, they can’t grow.”
“Further to that, there’s very little collateral available to new business owners initially, so if the banks want them to sign surety or pledge assets at that early stage in the business cycle, they don’t have that ability to do so.
So, there’s this funding gap between the businesses that actually require the funding in the early stages and those that traditional financial institutions are lending to,” adds Girnun.
Merchant Capital’s expertise lies in providing working capital solutions for businesses in various retail sectors including restaurants and hospitality, fuel retail, health and beauty, fashion retail, jewellers, hardware stores, supermarkets and many others.
Franchisee owners of Nando’s, Engen, Sorbet and Spur have benefited from Merchant Capital’s solution. Businesses use the funds for anything that will be additive to the growth of their business: to hire more employees, buy new equipment, refurbish their store, buy more stock and even for marketing.
What are the criteria for applying for working capital finance?
Merchant Capital’s finance solution is ideal for retail business owners who’ve been in operation for 12 months, who have a monthly average of over R30 000 in credit or debit card sales and/or EFT turnover of R150 000 per month. Business owners can apply digitally and are approved within 24 hours. They don’t need to pledge assets and there are no hidden costs. Merchant Capital then enables flexible repayment terms to be agreed upfront with the business owner; tailor-made to take their specific considerations into account.
It is one of the few finance companies that understands the daily hustles of entrepreneurs, chief amongst this, is the challenge to access funding. Given Merchant Capital’s track record and the many positive testimonials from previous and existing clients, it's crystal clear that this fast-growing finance company is passionate about the business of business, and is on a quest to better the state of entrepreneurship in SA.
To learn more visit www.merchantcapital.co.za
Vital Stats
Featured entrepreneurs - Dov Girnun
Key Players - Daniel Moritz, Ryan Cohen
Company name - Merchant Capital
Year founded - 2013
Turnover - Provided R1Billion to small businesses in South Africa
Start-up funding - R3Million