Get instant cash back when you spend with ‘Thank U Cash’
Announcing our investment in ‘Thank U Cash’!
140 Character Pitch
‘Thank U Cash’ rewards you with instant cash back when you pay with cash or card, online or offline.
Website
Team
- Madonna Ononobi, CEO and Co-Founder, CEO. She’s a serial entrepreneur having held leadership roles in 3 companies. Previously was the CEO/Co-Founder at MyAds. She has experience in Media, Procurement and working with SMBs. She has an Undergraduate degree in Economics and Masters in Public & International Affairs.
- Simeon Ononobi, COO and Co-founder. Previously was the COO/Co-Founder at MyAds. He also founded SimplePay, one of the earliest online payment gateways in Nigeria. Prior to SimplePay, He ran a company that built web apps for corporates and brands.
- Suraj Supekar, CTO and Co-Founder. He’s a full stack developer, competent in developing web & mobile (iOS & Andriod) apps. Previously was the CTO/Co-Founder at MyAds and worked at Huawei and Microsoft as a Technical Project Lead
How we first met
I met Simeon for the first time in 2016 — he was still running MyAds then. So when he reached out in late 2017, that he was working on something different, I was intrigued and wanted to learn more. He sent a deck, asked to meet and we set up a meeting at my favourite coffee shop (definitely a trend). I remember he came to the meeting excited to demo ‘Thank U Cash’ with some plastic cards and a white card reading device that I had never seen before. I’m usually excited when a founder’s product vision aligns with an opportunity thesis of ours. We (Microtraction) had thought about different loyalty products for SMEs and merchants but what ‘Thank U Cash’ was trying to do was a unique solution to a series of overlapping and adjacent problems. I encouraged him to apply to Microtraction and that’s how our journey together started.
Problem
Africa is becoming increasingly digital but its SMBs are being left behind. Customers needs and wants are evolving. As a result, SMB merchants aren’t able to keep up and are struggling to retain previously loyal customers. Paper-based or Card-based loyalty solutions are cumbersome for the customer, as each merchant has to issue their own scheme. Global software solutions are not localized for the African market paired with prohibitively expensive pricing for most merchants. These products usually lack the customer analytics and business insights merchants need to grow their business and don’t provide a cost effective way to acquire new customers.
Banks on the other hand have a mandate to drive a cashless policy but the economics of POS terminals mean they can’t profitably give a POS terminal to SMBs that earn less than N1.5m ($4,200) a month. This effectively locks out a huge percentage of SMBs who do not earn the required minimum and therefore can’t accept card payments. These SMBs are then excluded from financial and value added services like POS loans, which they need to scale their business.
Solution
‘Thank U Cash’ is a multi-merchant rewards platform with analytics for merchant growth. It enables merchants offer cash back as rewards to encourage loyalty from customers. Customers can pay with cash or card, offline or online at any merchant that accepts ‘Thank U Cash’. They get cash back and save as much as 50% each time they spend. Any cash back earned can be spent at any merchant in the ‘Thank U Cash’ network, either online, in-store or on the ‘Thank U Cash’ app.
In return, merchants gets a dashboard that gives them insights into their customer spending habits with data analytics and insights to grow their business. With its in-built CRM, they are also able to push targeted offers and coupons via SMS, in-app notifications or Email to their customers to further improve retention.
‘Thank U Cash’ also increases how much banks earn on average per transaction if the merchant and/or customer is on the ‘Thank U Cash’ network — the added benefit is that banks can now give SMBs that make as low as N300,000 ($830) a POS, which unlocks and makes available value added services like POS financing for the merchants.
Market
What made us excited about the market
In Nigeria. There are 45.1m unique individuals with bank accounts and 7.4m corporate accounts with majority of them being SMBs (caveat being most SMBs will have more than one bank account).
POS usage in Nigeria is on the rise, POS transaction value for the first six months of 2018 hit N1.01 trillion ($2.8 billion) across 177,045 active terminals. For context, transaction value between 2012–2017 was N1.4 trillion ($3.8 billion). The volume of POS transactions has grown at a CAGR of 123% between 2012 and 2016.
With only 170,000 POS deployed, there is still a lot of growth to come in the market over the next decade. ‘Thank U Cash’ has the ability to address affordability and non-consumption for POS, making it more accessible to lower earning merchants due to improved economics for Banks & PTSPs.
The Team
Why we believe in/backed this team
This is the second product that Madonna, Simeon & Suraj have worked together on (Third for Simeon & Suraj who have worked together professional for 5 years). We see this as a positive indicator that they would stick together and have learnt how to work together cohesively as a team.
In the last couple of months; they have used their complementary skills to shared responsibility amongst each other. With Madonna leading Customer & Merchant relations, whilst Simeon handles Product and Banking/PTSP relations with Suraj taking charge of the technology.
They’ve shown an amazing aptitude to be iterative and adapt their product to customer feedback and insight. We believe teams that are have tight and super-fast iteration cycles with product/technology stand a much better chance of hitting Product-Market Fit. The ‘Thank U Cash’ team personify this.
Product
Although I have focused mainly on in-store POS transactions, ‘Thank U Cash’ is an omni-channel product i.e. A customer is able to get cash back whether they pay offline with Cash or Card and also when they pay online as well. This makes their addressable market a lot larger than the current transaction volume of POS.
The true innovation of ‘Thank U Cash’ is in it’s product design. They’ve built a cash back ‘protocol’ that organises and incentives all the stakeholders in it’s network. From the customers, to banks and PTSPs/Payment Gateways, to the merchants themselves. Customers get cash back and save money, Banks/PTSPs/Payment Gateways earn more money per transaction, Merchants have cheaper acquisition costs and higher retention. ‘Thank U Cash’ works because it’s able to create value for every player in it’s network and with the potential to create strong moats due to network effects it can create
Competition
‘Thank U Cash’ will most likely face direct competition from a new entrant i.e. startups or incumbents who decide to build a competitive product. It’s existing stakeholders do not have the incentives to build their own network from scratch as the true value of the network comes from not being siloed and it’s interoperability between it’s various groups/types of stakeholders.
‘Thank U Cash’ is a really interesting product from a concept point of view, but most times product innovation is not enough, nailing down distribution (customer acquisition) and continuous product iteration is needed to win a market, become and stay it’s market leader.
Traction
When we started talking to the ‘Thank U Cash’ team, they had just launched and had about 13 merchants at the time with a couple hundred customers but we could see that the early users were using the product as designed. There were still a lot of challenges that we identified and/or the team was upfront about but we knew the team were solid enough to make iterations needed to make this work. It was more of a calculated bet on the team and the problem space they were trying to crack.
Conclusion
In the future we see ‘Thank U Cash’ evolving as a platform or extending it’s APIs and collaborating with other developers and companies. As a result of data from it’s omni-channel transactions we see potential for value-added-services to be built on ‘Thank U Cash’. They could work with partners to offer invoice financing to merchants. They could also use customer transaction data to develop personalised credit solutions in the future because they they know their transaction history and spending habits.
At Microtraction, our long term mission is to accelerate Africa’s transition to a sustainable and developed economy. We do this by investing in entrepreneurs who leverage technology, capital and innovation to try and solve some of the largest problems on the continent. If you are working on solving one of these problems, we should talk!
Thanks to Dayo Koleowo and Adaobi Adibe for reading drafts of this.
Until Next time….
Semper Fi,
YB
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