Hi there,

Wow, so multitudinous-parent babies are a reality now. Shortly after we learned the world’s first baby with DNA from 3 parents had been born, the hospital involved said it was already baby number 5. It’s all legal, though, as part of a special programme in the UK to combat a rare mitochondrial disease.

In this Open Letter:

• More cash: A better funding solution for SA?

• World’s best olive oil, unlicensed car radios & AI milkshakes.

• AI girlfriends & cringe beer: 5 Things in AI right now.

• Making Purple: Building a world-class Fintech in SA.

TRENDING NOW

Fractional Ownership: A Better Way to Fund in SA?

It’s all about mitigating the risk with manageable shares…

In the early 1600s, shipping merchants made the biggest profits on goods with unpredictable market values. You could net up to 400% profit by delivering the right stuff at the right time.

It was dangerous and costly, though, expensive and at high risk – both in money and human lives. That’s why The Dutch East India Company was constantly devising innovative ways to fund their voyages.

One such answer was Fractional Ownership – instead of raising a lot of capital from a few people, you raise smaller amounts from a lot of people. It allowed The Dutch East India Company to raise large amounts of funds from a wide array of investors (sharing the risk), while also allowing these investors to share in the expeditions' considerable profits (if they made it back alive).

Modern Stock Exchange Limitations

Today, the Johannesburg Stock Exchange (JSE) trades on average more than R20 billion worth of shares daily, embodying the concept of fractional ownership on a grand scale. However, the number of companies listed on the JSE has been declining in recent years, meaning we have fewer options than ever.

It Makes Sense – Yet It's Complicated

Fractional ownership means you don’t have to be rich to invest. More people can take part with less money. And sharing the risk should also make it safer (less risky) for almost anyone to invest.

OK, so why hasn’t it taken off at a large scale in SA? We have the volume (of people), but not the same average income as some other countries. So fractional ownership should be hotcakes over here.

Well for one, controls are not that easy. Listed companies are strictly regulated, to prevent, among other things, what happened with Steinhoff. But let’s just call that an exception.

Bring fractional ownership into an unregulated environment, and you introduce a lot of risk to people who might not have the investment savvy to know better. But that’s where the blockchain can play a role. In addition, advancements in AI could make reporting and auditing more transparent.

The Rise of Modern Fractional Ownership and/or Fractional Participation

Whilst it’s not mass-scale yet, there are a few interesting fractional ownership/participation projects currently in SA.

• The best known of these are EasyEquities. They offer fractional ownership of shares – buy a portion of an expensive share for just a few rand. (Psst check out this week’s podcast below where we chat to Carel Nolte from Purple Group about this very thing.)
  

• And then there are infrastructure investments like SunCash. It’s also fractional – you buy single-unit solar cells that are part of a massive solar projects at school etc…fighting load shedding one cell at a time!
  

• A new one is Neighbourgood, which has been buying, renovating and operating buildings in and around Cape Town. For just R100k you can have fractional ownership in a big development like apartments, housing and co-working spaces.

Stokvels are also a form of fractional ownership – perhaps SA's best example thereof. These community-based savings groups feature members each pooling a fixed amount (say R100) per month and then taking turns using the pooled lump sum (each of 12 people gets an R1200 payout, once a year).

But stokvels mostly operate on cash, so attempts to build digital products for this have been foiled by transaction fees. But perhaps once PayShap becomes free to use, we might see tech entrepreneurs truly unlocking the potential of fractional ownership in South Africa for likely the biggest market of them all.

Have you come across cool fractional ownership products or platforms? Hit reply and let us know.

PS None of this is financial advice, always do your own research.

IN SHORT

🥇 Meta-Jitsu: 38-year-old Mark Zuckerberg took his lockdown hobby to the next level, proudly sharing he competed in his first jiu-jitsu tournament and won some medals.

💸 Big money: Payments FinTech Lesaka Technologies turned some heads this week when it posted a 337% YoY revenue increase, mostly due to informal economy investments, such as Kazang payment solutions.

📻 You got jokes, eh? Looks like the viral memo supposedly by the SABC announcing a motor vehicle license, was a hoax. In a media statement, the SABC said they had “not released any statement regarding car radio licences”. So, guess it’s not off the table completely?

🏆 WWCD. Two South African entities took home top honours in their respective industries' prestigious awards. WhiskyBrother won the Global Multiple Outlet Retailer of the Year at the 2023 Icons of Whisky Awards, while De Rustica Olive Estate Coratina won both the ‘Best in Class’ and the ‘Absolute Best Olive Oil’ at the EVOOLEUM Awards.

🥸 “Cannot be trusted”? WhatsApp and Google investigating a bug that caused a Twitter engineer’s Android microphone to be accessed by WhatsApp while he was sleeping. Elon Musk obvs had an opinion about that.

🥤 Robo-shakes: You knew it was coming, and here it is. US fast food chain Wendy’s is working with Google to develop an AI chatbot to take over their drive-thru.

­INDUSTRY FOCUS

5 Things in AI Right Now

1. The Worry – Last week, reports surfaced that the “godfather of AI” Geoffrey Hinton resigned from Google in protest to the company’s renewed efforts to take on OpenAI – “they used to be very careful but things have changed” – and is now openly saying AI is a bigger potential threat to humanity than climate change.

2. The Weird – And he might have a point if we consider the dodgy stuff people have been using AI for – from using AI to write university essays to AI-generated Joe Rogan reading an ad for Athletic Greens (in flawless Spanish) and creating deep fakes to spread misinformation. And with 350’000 AI projects already in the wild, it might be worth keeping an eye on this.

3. The Force – Some of the good from AI, though, is cool stuff like these Star Wars teapots.

4. The Cringe – Remember that crazy AI-generated pizza ad? Well, feast your eyes on the absolute carnage that unfolds in this AI-generated beer commercial.

5. The Ooh La La – 23-year-old Snapchat influencer Caryn Marjorie (@cutiecaryn) used ChatGPT to create an AI version of herself so over 1’000 guys can date her at once for $1 each.

Seen some cool AI stuff? Send it our way by hitting reply….

THE THREAD

Building a leading FinTech from the ground up in South Africa is no small feat and partnerships have been key in creating momentum for EasyEquities. Carel Nolte join us to chat about how they did it.

Or if Spotify is your jam, catch it here. You can also skip to some highlights:

07:21 Partnering in public

11:18 Building Purple from the ground to a community

27:30 Lessons from new ventures

40:04 Know your niche

Want to suggest someone to join us for our next podcast? Hit reply and let us know….

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