On Tuesday evening, Rentoza held an audio session to discuss the recent Series A funding round. Hosted by Brandon Peterson of Reframe.io and Ventureburn, the panel included Rentoza’s own Avinesh Reddy, CEO, and Avinesh Ramdhani, CCO. Joining them was Polo Leteka and Pyi Maung of Aletheia IDF, Sam Tennant of Edge Growth, and guest panelist Diskon Otieno of Tech-ish.com.
The discussion roved across a range of topics, from the funding journey itself to Rentoza’s business model, while touching on the state of funding on the African continent and the impact of Amazon’s impending move into the South African market.
Here are the highlights.
What Makes Rentoza Different
Once introductions were out of the way, the discussion kicked off with a question about Rentoza’s development from an ecommerce subscription platform to a subscription retailer, as well as the ethos that drives the business.
“We are premised on the principles of access, affordability, and independence,” said Avinesh. “And we entered this space really trying to drive financial inclusion.”
He went on: “We believe that our purpose as a company – and corporation – is to drive inclusion by providing assets of high value to all South African consumers, and that means that we don't follow a traditional credit model when it comes to opening up these items that we consider essential goods, which could be anything from a fridge, a microwave, a laptop, or even a smartphone.”
In his response to the question, Aviraag largely echoed this sentiment, while touching on the broader societal trends in South Africa and the continent. He spoke to the structural inequalities that beset the vast majority of consumers, which is often perpetuated by credit and lending practices premised on archaic assessment methods.
Delving into Rentoza’s response to these challenges, he said: “Ultimately, what we aim to do with this subscription service is to provide these assets to consumers and businesses to enable them to live progressive lives and achieve their aspirations. Because we're looking at approximately 15 million consumers in the country that actually don't have enough savings, they don't have a credit record, or they have a bad record.”
This is where Rentoza’s non-credit verification comes to the fore, as we’ve created “our own way of assessing customers, we've been able to provide these goods to these individuals, and propel them in their lives.”
Funding the Journey
Following a brief look into Rentoza’s product make up and strategy, the conversation moved to funding – specifically, what made Rentoza an attractive investment.
Here, Polo stepped in, first noting that gender is a key guiding factor in Alitheia IDF’s investment strategy.
“We found that there was a very strong gender lens component within the business, which is very important,” she said, before touching on other factors. “We also invest in essential goods and services. So it fit that mandate, but I think perhaps, very important was the team. The management team was very strong, very knowledgeable.”
Polo also spoke to the advantages of technology for scaling, both in South Africa and beyond: “Importantly, the scalability is not just within South Africa, we know that the the challenge of financial inclusion is – whilst it's here in South Africa – it's actually much more pronounced beyond the South African borders, across the African continent.”
“You know, we've got a population of more than 1.3 billion Africans beyond South Africa, who still have challenges in accessing goods and services due to lack of access to capital. For us, this was a very strong financial inclusion story.”
Later in the discussion, Pyi touched on another point: “We look for good founders, for a good track record, and for a company that’s scalable. But growth at all costs is not the approach that we like to take. We need to be efficient, we need to have a fit for purpose team, and make sure that the problem that we’re trying to solve is being solved efficiently by the company and the founders we’re backing.”
The Credit Alternative
Part of the discussion turned on Rentoza’s application of the subscription model to products, including the development of the verification process.
Aviraag explained the thinking: “If we had taken the approach of a credit provider, we would have ended up in the same situation as every other credit provider, and continued the current landscape into the future. So we took a different approach."
“We have our own assessment we’ve developed over the years that enables us to gain insights into the future payment behaviour of the customer, which is not credit based. By doing that we’ve been able to give customers that would have traditionally been declined access to these products.”
He went on to discuss the subscription model itself, which allows customers to experience much greater flexibility. Particularly, he highlighted that customers are able to change their subscriptions easily – upgrading, downgrading, or cancelling them – with no penalty or lock-in period.
“We are solving, firstly, the access problem, and we are solving the ability of the customer to have agility and flexibility in the products they consume.”
Indeed, it was emphasised that even products such as buy now pay later are still simply a part of the broader credit ecosystem, albeit reskinned. In this view, product subscriptions truly stand apart, especially through the lens of Rentoza’s non-credit verification system.
Embracing Circular Flow
Coming off the back of a question from Dickson, the conversation turned briefly to circular flow as it applies to a business like Rentoza.
Here Avinesh stepped in again: “When it comes to our products and services, we certainly hope they don’t perish. Actually it’s about circularity.”
“We want to back the products that we know we’ll get multiple cycles out of in terms of revenue generation. And likewise, for a customer, they know that it's an item that they want for a period of time and they actually are looking for an underlying construct of impermanence.”
“Impermanence is the consumer trend that's becoming prolific from an ecommerce perspective,” he finished.
This, as much as access, underpins the ethos of Rentoza. It’s seen in our tagline – commitment is messy – and in our offering itself. Get what you need for when you need it. After that, it’s OK to move on.
The evening’s discussion touched on a host of vital and relevant points, not just to Rentoza and its funding, but on the broader context of an African continent in a moment of transition. To hear the full discussion, including a conversation concerning Amazon’s expected arrival on our shores, listen to the recording on Rentoza’s X (formerly Twitter) page here.