In this Founders Spotlight hear about how to manage the plethora of advice you get as a founder and what really matters, the challenges to scaling in a laggard industry and why you should always expect the unexpected and roll with the punches!
So tell us a bit about yourself, who you are, your role and your company.
I'm Richard Dana, the founder of Tembo Money. I worked at EY for ten years before setting up a travel company. Later on, I joined Founders Factory as their CFO. Tembo spun out of Founders Factory in 2020, and the idea for the company actually came about from my personal pain point. I struggled to get on the property ladder, and I realized I wasn't alone in this. That's when I decided to start Tembo Money to help people like me have an easier time buying their first home.
My parents had a place in London, which they bought in the 60s for very little money. They didn't have a lot of cash to hand over. So I started thinking, is there a way that we can share assets across the family more effectively to try and help me and my siblings get a leg up onto the property ladder? That's really where it all started, and I guess the rest is kind of in progress.
What was in place when you spotted the problem versus what you're doing now?
I believe the fundamental issue of affordability for people purchasing homes has been deteriorating progressively. In fact, since we founded the business in 2020, the situation has worsened. The Help to Buy program has ended, there is a cost of living crisis, and interest rates have increased. These factors have made it even more challenging for homebuyers.
Currently, at the beginning of 2023, affordability is at its lowest point for an entire generation. Regrettably, the problem we're attempting to resolve continues to worsen. However, this also means that the opportunity for our business is even greater.
You're relatively young as a business, you’re two and a half, three years in. Where are you now in terms of your business journey, your growth, fundraising, and team size?
Our team has grown to about 30 people, and we've managed to raise around £5m. A part of the business is owned by Aviva. Based on our projections we're still experiencing growth at a rate of 15-20% per month. Right now, we're shifting from a B2C approach to a more B2B-focused strategy, partnering with big financial services firms to help them support their customers with affordability challenges.
What drove that shift from being B2C now to B2B?
In terms of scaling more quickly and efficiently, I feel that people still have a strong connection to their traditional financial service providers. By partnering with them, we can contribute to the innovation, technology, and improved customer experience that startups are known for. On the other hand, they have customers, loyalty, and financial resources. So, by working together, we can create a truly effective and mutually beneficial partnership.
What's the key value driver, then, for the corporates that you work with?
The relevance of our solution really depends on the type of corporation. For example, let's consider wealth managers. They often face the challenge of managing intergenerational wealth. In fact, nine times out of ten, when a client passes away, the wealth manager loses control of the money. So, if they can build a relationship with the next generation of wealth owners, they'll actually safeguard their business going forward. That's one aspect.
On the other hand, when it comes to the so-called Bank of Mum and Dad, wealth managers are losing significant amounts of money each year. People are withdrawing funds from their investments to support their children, grandchildren, or other relatives in buying a home, funding education, and so on. Our product can help reduce that outflow of funds, which is a major benefit for wealth managers.
How do you feel like the industry can be set up better to innovate?
Yeah, that's a good question. The main challenge is finding the right people to talk to. Once we're in there, they like our offering and it works really well, so that's a positive aspect.
We have three different verticals, including a consumer-focused one, which means we have various distribution channels. Since we're a small team without anyone specifically dedicated to business development—just me and our marketing director—we don't have the capacity to reach out to all these potential clients and sell to them. But we've actually had a really good hit rate when we've approached them. I think it's around an 80% success rate when we actually get to meet people.
The wealth management sector isn't the most innovative by nature. It's an industry built on relationships, trust, and people wanting a reputable brand to manage their money and wealth.
However, challengers—startups and scale-ups—are entering the market and posing a threat. So, there is some innovation happening, but it may not be as widespread as in other industries. Whether that's the neo banks or the free trade platforms, it's a different proposition, but they are posing a threat to existing wealth managers and the wealth management industry and so they will have to start innovating to actually keep that with them.
What challenges do you have as a founder in scaling the company and driving the revenue opportunities?
It really comes down to time. We're still trying to fine-tune our proposition and figure out how it best works with wealth managers.
When pitching to senior people in these companies, I need to be the one presenting, as it helps shape our approach. So that's what we need to do for now.
We've also targeted some bigger players because getting one big player on board can provide the same business as 50 smaller ones, which is fantastic. Plus, once you have a few big players on your side, it becomes easier to attract smaller ones too.
So that's been our approach, but currently, we're still in the learning phase. We're focusing on understanding how everything works and integrating our services with five or ten partners. Once we've done that, we hope to hire someone who can help roll out our solution more rapidly.
Given your diverse background, you started at EY, you had another startup, and you then became the CFO of Founders Factory. You must have met and seen a number of different founders over the years so what challenges and advice could you give them?
I think my first piece of advice would be not to listen to too much advice.
It's funny, but everyone has an opinion, whether it's your board, investors, team, or customers. The most important thing is to come up with your own viewpoint, because everyone's opinions can differ, and they often conflict.
That being said, and to somewhat contradict me, my advice would be to practice patience.
Sometimes businesses like Uber seem to suddenly burst onto the scene, but in reality, they've been around for years before gaining widespread recognition. It's the same with our business; it takes time to get off the ground and build those relationships. If you're working with large companies, they won't just sign up with a three-year-old startup right away, as that could backfire. They need to get to know you. There's often a lengthy process, with one to two-year lead times for building contracts. So, it all comes down to patience, which might seem at odds with the urgency of managing cash flow and wanting to move fast.
But in the end, the reality is you need to be really patient.
What have you learnt going through those procurement cycles, through big corporates? What sort of things do they look for and make sure that you are the right part for them?
So the easiest part is actually selling the proposition. The customer benefit is straightforward and pretty much taken care of. The next step is dealing with all the internal processes, like risk management, legal, procurement, data protection, and so on. These aspects pose significant risks for big corporations, and they have large teams dedicated to handling each of those elements. As a result, it takes quite a long time, especially for your first big partner, because there's a lot of stuff you might not even be aware needs to be in place.
However, once you’ve sorted that out and gone through it once, the process does become quicker. It's just a substantial undertaking that takes a good amount of time to navigate.
Final question, what keeps you up at night when you're running your business?
Most recently, the most stressful thing was probably my bank, Silicon Valley Bank, potentially going bust. We had all of our money in that bank, and when you are a startup, you usually don't think about the risk of your bank going under. There are so many other risks to consider, and it didn't even feature on our risk register, which is unbelievable.
So that was definitely a significant source of stress over the past week or so. But in most weeks, there are highs and lows – you just have to ride through them and keep pushing forward.
It's a bit of a random approach, but I try not to get too excited about the wins or too down about the lows. I aim for a balanced perspective because the journey can be quite wavy, and that's just life. Staying measured in your reactions helps prevent getting too emotionally drained, which can be really tiring in the long run.
Want to tell your Founders Story or learn more about Tembo or GrowthBuilders, then get in touch with stephen@growthbuilders.io