South Africa-based AirAdvance is a fintech startup that provides those offering accommodation through Airbnb easy access to capital, using a confirmed Airbnb booking as collateral for a cash advance. AirAdvance’s founder, Jozette Chetwynd-Palmer, answers our questions.
1. Give us your elevator pitch in 100 words or less.
AirAdvance provides cash advances for Airbnb hosts, based on their confirmed future bookings.
2. How did you finance your startup?
A mixture of bootstrapping and angel investment. My main angel invested early on, in the post-ideation and pre-revenue stage which helped a lot. I also used revenue from my other businesses until AirAdvance was able to fund itself.
3. If you were given US$1m to invest in your company now, where would it go?
Marketing and taking the company international. We have people signing up and requesting advances every day from around the world, despite not even marketing in those countries. We have product/market fit and customers are really keen to use us. So our aim is to grow AirAdvance in South Africa, and then expand to the larger markets once we’ve proven the model.
4. What risks does your business face?
As we provide cash advances to customers, the major risks are fraud and customers defaulting on their repayments. To date we’ve managed to avoid both of these through our risk algorithm, which looks at a variety of factors such as financial and social risk metrics.
5. So far, what has proven to be the most successful form of marketing?
Direct marketing and word of mouth. We’ve tried social media campaigns and AdWords, but due to a mix of advertising constraints and risking copyright infringements, we were unable to convey the message of what AirAdvance does. What we’ve found though is that our customers have been really happy with us and share the news with others in the Airbnb community.
6. Describe your most exciting entrepreneurial moment.
Building and running the pilot version and giving out 24 cash advances, all of which were repaid and made a profit for us
7. Tell us about your biggest mistake, and what have you’ve learnt from it?
Spending too much money and time on the tech development and outsourcing the development. We constantly had bugs and needed to make changes, and as the scope increased the time it took to launch the second version of the site kept growing and growing. We solved it by making the back-end processes as manual as possible so that we could just get back into the market quickly.
8. In addition to your own industry, name one untapped business opportunity in Africa.
Providing skilled outsourced labour to the EU and UK. For instance, call centres in India but with a higher calibre of skill sets available