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Views Article – Sharenet Wealth

Share Picks, South Africa

Get Your Slice Of The Technology Pie

The digital revolution is disrupting almost every sector out there – with portmanteaux words such as Fintech, EdTech, AgriTech, TravelTech, GreenTech and HealthTech fast being incorporated into everyday language. FinTech, the industry that is changing the way we bank (as well as every traditional concept of financial services) was valued at a startling $867 billion towards the end of 2016 (Global Landscape Report, VBProfiles) and this year there is much talk that EdTech, heralding the creation of a new education and learning world, will overshadow it with predicted growth of 17% per year by 2020, numbers which investors are unlikely to ignore.

While venture capitalists may be clambering to get into these markets, the scene can be a bit trickier for regular investors as the vast majority of companies in these tech sectors are private start-ups. Here is a round-up of some FinTech and EdTech companies trading today that are scoring highly in “top 100” lists and may be well worth keeping an eye on…

Square

This San Francisco-based FinTech company was founded in 2009 by Jack Dorsey who founded Twitter. Square specialises in payments, and offers a full point-of-sale service ranging from accepting credit cards and tracking sales to small-business financing.

It features on KPMG and H2 Ventures’ list of the top 100 FinTech Innovators and, while share prices have seen a year-to-date decline, its solid product offering and strong management team may present an excellent opportunity to buy low and sell high as savvy investors wait for these stocks to bounce back. (NYSE: SQ)

Xero

Xero targets small businesses as its customers with cloud-based, easy-to-use accounting software that connects people with the numbers they’re looking for, regardless of location or device. They’ve been in operation for over a decade and are now the largest cloud accounting business outside the US.

While the innovative nature of this platform is unquestionable, the share prices have also dropped amidst an overall slow market. Motley Fool (www.fool.com.au) contributor Owen Raszkiewicz said on 11 May 2017: “Xero is a special type of company that requires a special type of investor. It does not make a profit, so don’t expect a dividend, and it does not measure success in regulatory profit. Notwithstanding the risks – there are plenty – it is a well-run growing business with an incredibly high margin and sticky product. Therefore, while I couldn’t call its shares a bargain in the conventional sense, I would be a happy shareholder over the ultra-long-term.” (NZE: XRO)

Lending Club

The world’s largest online credit marketplace, also coming out of San Francisco, Lending Club facilitates personal loans, business loans, and financing for elective medical procedures and education. The peer-to-peer lending platform enables borrowers to obtain a loan, and investors to purchase notes backed by payments made on loans. The company raised $1 billion in what became the largest technology IPO of 2014 in the US, although it experienced difficulties in 2016, with concerns over the CEO’s disclosures and his subsequent resignation. The current share price hovers around $5.7, well below the year high of $15 but still above the low of $3.44. (NYSE: LC)

Wealth Migrate

To add some local flavour, this online marketplace that allows users to directly invest in a property suggested by the website itself was the only South African company to feature on the ’established 50’ Fintech Innovators list. Founded by Scott Picken and Hennie Bezuidenhout in 2009, it was listed as one of the top United States Real Estate Crowdfunding Platforms by Huffington Post in 2014.

Zoona
South African-based mobile payments startup Zoona was included on the list as one of the most intriguing ’Emerging Stars’ – exciting FinTech companies with bold, disruptive and potentially game-changing ideas.

Zoona’s core service is to help people send and receive money when they most need to do so, providing technology, capital and business support to emerging entrepreneurs in Africa, enabling them to start their own businesses as Zoona agents. Through its current network of 1500 franchise agents in Zambia and Malawi, the firm has signed up more than 1.5 million customers who have sent and received approximately $1.2 billion over the network. Zoona is listed on the London Stock Exchange.

EdTech big players

With money flowing into the sector from multiple sources, and educational institutions accepting the introduction of new technologies, EdTech innovation is going to accelerate in the coming years, with Forbes identifying ten companies that they predict will drive this innovation forward, each in its own niche of the market.

These include Udemy, an open, online marketplace where anyone can upload and sell a class; Andela, which runs intensive programming courses in Nigeria and Kenya; DonorsChoose, the only big crowdfunding platform focused exclusively on education and featuring projects started by public school teachers; Coursera, providing real college courses online to anyone, for free; Kramer, a wireless system that enables live collaboration between groups of students across any device; Story2, a web app that helps high school students create compelling essays step-by-step; ExecOnline, which partners with top business universities like MIT’s Sloan UC Berkeley’s Haas, to offer university curricula online to corporate clients; Kaltura, a video platform that streams, stores, distributes, monetises and analyses video; Voxy, an English-teaching program designed to impart real-world language skills to students and professionals and Blinklearning, offering a textbook content treasure trove, enabling department heads and teachers to build customised lessons and entire textbooks with content from over 30 publishers worldwide.

These EdTech companies are currently unlisted, but this will no doubt change as growth takes place over the short-to-medium term. For prospective investors into the burgeoning tech space, now is the time to identify key players, keep up to date with their movements, and position oneself to strike when the opportunity presents itself.

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nicole

Nicole Cameron

Nicole Cameron is a features writer with over twelve years’ experience, focusing primarily on the business market with a niche focus on entrepreneurship. She has written on a variety of topics for Sharenet and is excited to be focusing on women in finance in her new monthly column “Femmes in Finance”. She holds a Business Science degree from UCT and is passionate about reporting on the events and people that make up the local business landscape.


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