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Bridgement is a FinTech company offering simple finance to South African SMEs, providing them with the opportunity to grow their operations, take on bigger projects, and bridge any gaps in their cash flow. Daniel Goldberg – the company’s CEO and co-founder – unpacks why he started Bridgement; how it supports SMEs and entrepreneurs; what differentiates Bridgement from other lenders; and what is next for the company.
Goldberg initially pursued a degree in Engineering at university. However, halfway through this degree he co-founded a social platform (and recruitment agency) for university students and their lecturers.
Daniel completed his engineering degrees (electrical and bio-medical) and then went into management consulting. After his stint in consulting, he founded DocFox, a RegTech/FinTech company. The company allowed financial service providers to automate processes to reduce drop-off, combat fraud, and remain compliant.
It was during his time at a management consulting firm, that Goldberg was exposed to how banks work, and the inefficiencies present in their operational processes. This informed his decision to enter into FinTech and start Bridgement.
Goldberg identified SME finance as the first problem he wanted to solve. He noted two root causes:
- Banks often find that servicing a small business is costly to them, and therefore tend to fund larger enterprises instead.
- Due to their nature, SMEs often lack the data required by banks to enable them to make credit decisions.
Although traditional invoice finance is a great way to service SMES, it has never been a favourable or even suitable option. This begged the question: How do you innovate on invoice finance? Which is where Bridgement came in.
How does Bridgement support SMEs?
Bridgement offers simple, quick, and innovative invoice finance to SMEs. The company recently hit a record, granting an SME finance 1.5-hours after their application. Support like this is made possible through a combination of:
Bridgement has built smart technology that integrates into the accounting and software packages that SMEs use, which lends itself to a simpler application process. An SME can connect their accounting package, which then inputs their financial records, removing the need for physical documents. An algorithm then analyses the quality of the trade history to assess and grant a facility. This tech also integrates with third party services, credit bureaus, and social media.
As indicated above, Bridgement’s innovative IP leverages new data that hasn’t been used before to make data-informed assessments around finance. This includes data gathered from social media.
Bridgement’s machine learning models are continually being trained to be able to accurately assess exactly what a given SME need, and how much finance they need. Once finance has been provided, the models also continually assess an SME, allowing Bridgement to be proactive about their funding.
In addition to the above, these models have also proven to be valuable from a fraud detection standpoint. Bridgement’s algorithms can detect or build models of what a real business looks like. According to Goldberg, this has allowed the company to offer better rates to SMEs, as the models prevent fraud and bad debt rates.
What about early-stage entrepreneurs?
Bridgement offers invoice finance and revolving credit facilities to registered companies that have been trading for longer than six months. That being said, Bridgement still supports entrepreneurs in the ideation phase, or those who do not meet the necessary requirements for finance.
For entrepreneurs who don’t meet the requirements, Bridgement provides information on the various options for finance available to them, including various government grants and funds.
When reflecting on funding options for early-stage entrepreneurs, Goldberg commented that the venture capital space in South Africa is not developed enough to support these entrepreneurs. However, Bridgement has had a lot of success working with angel investors. Many types of SMEs are capital-intensive. Goldberg recommends that entrepreneurs turn to angel investors (not just limiting it to one). Family and friends, in particular, are one of the best places to start.
How can SMEs grow their businesses digitally?
As the world continues to digitise, cloud technology gives SMEs the ability to access and manage all of their information at any point in time, noted Goldberg. Such software and technology reduces certain manual and repetitive work for SMEs.
Apps like Receipt Bank, for example, automate the collection, processing, and publishing of receipts and invoices. Said receipts and invoices are immediately posted to the individual’s accounting package. These apps also do a good job of allowing integration with other third-party apps, thus better catering to a host of SME’s needs.
Leveraging accounting packages, as well as apps like Receipt Bank, allows SMEs to focus on building their business rather than time-consuming administrative tasks.
What makes Bridgement different?
Goldberg observes that, often SMEs don’t understand the true cost of the finance they’re getting. Bridgement keeps their pricing as transparent as possible, only charging one fee per advance. There are no application fees, ongoing fees, or any other hidden costs. SMEs can therefore understand what it is that the finance will cost them.
Goldberg went on to add that SMEs often don’t want to get locked into a long-term “contract”. When they accept finance, agree to a term, but don’t need said finance for the whole term, most lenders either charge a penalty or make them pay the full amount in a shorter term. Bridgement takes the approach that good behaviour should be rewarded. As such, they do not charge a fee when an SME wants to settle early, rather, they give a discount on the remaining portion outstanding.
Bridgement is all about removing barriers and simplifying access to finance for SMEs. It is because of this that they will be increasing their funding limit from R1-million to R5-million.
In addition to short-term finance, Bridgement may begin providing longer term finance in the coming years. However, Daniel Goldberg’s big, hairy, audacious goal (BHAG) for the company is for Bridgement to become an SME digital bank.
For more information, contact:
Tel: 087 551 0513