Philip Belamant On Raising $230 Million To Help You Buy Now, Pay Later With Zero Interest

Philip Belamant has been there, made mistakes, and come up with great solutions for the customers that have helped him build multi-million dollar companies in developing and developed economies. He was able to achieve remarkable success despite dropping out of college to pursue business. His latest venture, Zilch has raised funding from top-tier investors like Goldman Sachs Asset Management, dmg Ventures, M&F Fund, and Gauss Ventures.

In this episode you will learn:

• Learning from mentors
• Beng ready to start over as many times as possible
• Learning to manage investor expectations
• Spotting a trend early on and riding the wave
• His top advice on what it takes to start a business

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About Philip Belamant:

Philip Belamant graduated from the University of Johannesburg in South Africa, where he completed both his BscIT and BscIT Honors degrees.

At age 21, he started up his first company through winning a Microsoft Project Firefly competition and Belamant has also founded a number of fintech ventures, many of which have won awards.

Philip also launched mobile payment services in 15 different countries across India, Africa, and Europe and was the founder of a Top 40 fin-tech company in Africa.

The services he launched in India, Africa, and Europe reached more than 20 million users and his Top 40 fin-tech company in Africa had more than one million users in the first six months.

Belamant also created and launched the first of its kind Cash-to-Mastercard solution in South Africa for Uber which was way before Uber became as large as it is today!

Connect with Philip Belamant:

• Crunchbase
• LinkedIn

Read the Full Transcription of the Interview:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. We have a great founder today, a founder that has been there, has done it, and now multiple times. So I think that we’re going to be getting really inspired with his story, and especially with his tremendous growth that he has experienced during COVID and some of the friction, too, that he has experienced during these times. So without further ado, let’s welcome our guest today, and that is Philip Belamant. Welcome to the show.

Philip Belamant: Alejandro, thanks for having me. I’m excited to be here.

Alejandro: Philip, you were born in South Africa, so tell us about your upbringing there.

Philip Belamant: South Africa is a really dynamic country and an interesting place. It’s always like that, I guess. If you haven’t grown up in a country, it’s hard to understand it from the outside in. It’s a very complex country, with a lot of dynamics in the country, but a huge amount of opportunity. I think it’s always a bit like this in my view, particularly with developing economies and growing economies is that one has to make it in your own life. You can’t expect necessarily always to be able to join some amazing huge beautiful corporate. You have to be entrepreneurial in a lot of instances, even in how you might go about your corporate job. I think South Africa has contributed highly to how I view the world, how I view business, and how entrepreneurial I am in the way I see things.

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Alejandro: In this case, you did go the entrepreneurial route very, very early. Were there people in the family that influenced this, or how did you find that inspiration to know that one day, you were going to build your own business?

Philip Belamant: Absolutely. My father is a technologist and went the traditional route of getting that first job. He was French, and he moved over to South Africa early on and met my mother, who is South African. He got his first corporate job and [3:16], but hugely driven, a very smart guy, and he went through a few positions in the corporate world and decided to build some proprietary technology and breakaway with a partner of his from that company who had the network, and knew people, and funding sources, etc. They broke away, and I’ve learned all of my entrepreneurial side of how I think about things from my father, who then started his own business that became very successful in the payment space. So I always had my father as someone who would guide me through this process and how I think about things, and he also very much has supported me in my aspirations to go and become an entrepreneur. I think that’s something he’s probably always driven me towards rather than just going and working at a corporate job, is what I would say to that. So definitely, my father influenced me heavily in that regard.

Alejandro: In your case, as they say, it’s all about being at the right time in history. You decided to go and study biometrics, AI, a little of mobile as well. We’re talking about the early 2000s. That was before the craziness of AI. Now you have AI applied to absolutely everything. What prompted you to go in that direction?

Philip Belamant: That’s a great question, actually. For us, to be fair, when we were at school, computers and computer science wasn’t really even a subject. You had to do that in your spare time, and that’s what I did. I was really fascinated with coding. That’s where I started—Turbo Pascal and all of these old-school languages. It was a passion of mine, something I was very interested in. When I went to university, luckily, they had a few courses that were in mobile development, and I was quite forward-thinking at the time, frankly, and for the university as well. I was fortunate that they had some of these courses in biometrics and mobile technology. We had some great professors and lecturers. It’s like anything, I think the foundation of the course was pretty good, but it was my interest that was very peaked by this. I did a huge amount of work online, and doing my own studies, and researching things, and building projects of my own. That culminated in my thesis for my Honors Degree, where we had to build, as a group, something in a project from Microsoft. We did well in winning that project with our biometrics system. That did open my eyes to what else is out there because that link to Microsoft gave us access to see what was happening in Silicon Valley and what was going on elsewhere in the world. You realize that this was going to be a massive space. I still remember us playing around with the iPhone. On the first iPhone, we had to jailbreak and bring from the U.S. to South Africa, just to play around with it. This silly Coye fish pond app was one of the only apps you could get. That’s where we thought, “Wow. This will be a huge opportunity if we can start building apps for this product before it blows up.

Alejandro: You, obviously, took the chance, and you left the studies side of things, and you actually went at it. How was that? I’m sure that it was a little bit scary to go at it with your first business.

Philip Belamant: Absolutely. I think maybe this is where fortune favors the young, to an extent because you’re a little bit naïve, and it’s probably a good thing. You’re not so calculated in everything you do. You have far less to do. I definitely think that plays into it, but I left university and spoke to a few people I had met along the way and said, “I’ve got this interesting idea to do social gaming.” This was on Nokia 3310s and Samsung D600s. There was no Facebook or things like this. I had this idea to do social gaming, and I had met some great people along the way who were really smart. I said, “Why don’t we just go out and try and do this.” I spoke with my father about the idea. His advice was, “Go and look for an investor and see if you can get started.” That’s what we did. We found an investor. You’re not talking about big money. You’re talking about rands, way back then, so you’re talking about $5,000 – $10,000 to start. We put together a team of two to four of us, and off we went and started building games. That’s where the learning curve, I think, happened for all of us in mobile development, where you’re building multiple versions of the same product against all of these different phones. You had different operating systems. You had different brands, and you had different parameters for all of them. So you had to port one application across thousands of different devices, types, and screen sizes. It was much different from what you see today in the app store world, where you go, and you build something beautifully on Android, and off you go, and it works everywhere off of the app store. On the iOS store, it wasn’t quite like that. We spent a huge amount of our time learning how to build and engineer our games. Ultimately, we grew that quite well, and we had a number of users using the product. But ultimately, as most startups go, they don’t always go exactly as you think. People were able to use anytime credits to play our games, and they could actually transfer these credits to one another. Over time, what we realized is, no one was playing the games. Everyone was just transferring the anytime credits to one another or using them for competitions. So we thought, “Maybe we’ll stop making the games, and we’ll focus on this type of peer-to-peer payments or competitions.” That’s what we pivoted toward, and that became very successful for us. If we hadn’t done that, we would be here today.

Alejandro: I hear you, but also, that caused some friction with some of your investors that were not too happy with that switch. So how did you go about that, and what was your lesson learned from that?

Philip Belamant: Yeah, that really was my first big lesson, I guess, in how to manage expectations of someone who has given you their money. It’s an interesting challenge. At the time, we presented a business case. We suggested that we were going to be doing one thing, and, obviously, we then decided we should pivot to doing something else. For us, it was the best thing for the business. It was the right decision. We were not getting the type of traction in the gaming space that we wanted, and we could see a really huge amount of value in the other space. The investor turned around and said to us, “Well, you sold us one thing. You gave us a business plan. We want you to stick to the plan. If you don’t do that, then we want the money back, and you can carry on, and you can do what you want. But you’re not going to do it with our money.” It was a huge decision for us because, of course, to go and repay the capital they had put in so far and now go figure out what you’re going to do was a huge decision. But ultimately, we took that decision. We just were seeing so much growth in the other side of the business, the payment’s side and the airtime game side, that we just took that difficult decision, and ultimately, we then borrowed an additional 150,000 rand. I think that must be $12,000, which was a lot of money in rands. We went and rolled this product out to [10:41] in South Africa and Nubia at the time. We were able to pay that money back in about a week. The product started to launch and grow so well. Before we knew it, we were making close to 100-200 grand a day. A few months later, all of a sudden, we had this investor, who initially came in, forced us to pay their money back because they didn’t like the pivot, and then was upset with us after the fact because the pivot was making so much money, and now they were no longer involved. It’s just such a strange thing to manage.

Alejandro: Unbelievable.

Philip Belamant: Ultimately, I think that was my first real lesson in being responsible in how you take on people’s money and setting expectations for those investors.

Alejandro: 100%. What happened next?

Philip Belamant: After that, we just built the business quite significantly. We had a number of key partnerships with some fantastic people selling into Africa. We were live in about 22 African countries with a number of services. We started to move into a lot more payments-types of products like virtual card issuance, lending products, airtime lending products, all of which were really popular. We built the first cash card product for Uber, for instance, in Africa that allowed people to use cash to take an Uber, which was quite interesting. So we did a lot of these interesting projects. Over time, we saw it to work more closely with my father’s company, which was a magstripe card issuing business initially and had moved into social wealth and government bond distribution, but really card-based. They didn’t have mobile take, and we really weren’t a card-based business. We were a mobile business issuing virtual cards, so quite complementary. I merged my business into this business, and that company’s name was Net1 listed on the Nasdaq and reverse-listed on the JSE book Stock Exchange. That business focused on financial inclusion and all of the products that come with that. That’s where we got significantly into a responsible ending and building interesting and engineering interesting financial services and products that would add a huge amount of value to the customer base. That was the risk of the journey in that regard up until about six to seven years ago where I completely exited that group, moved over to the UK, and started to look at this new venture.

Alejandro: How old were you when the company reached $2.2 billion in market cap?

Philip Belamant: At the time, that must have been about 14 years ago. I must have been 25 around there.

Alejandro: That’s amazing! Three thousand people in staff, $2.2 billion market cap. What a tremendous ride! In your case, having built a company like that, what really got you to say, “It’s time for me to turn a chapter?”

Philip Belamant: I think, Alejandro, the important distinction there, is that you had—my father’s business doing great, and we merged with that business, and this was not built from the ground up, from zero to $2 billion all on our own with our own feature. This was a combination of companies that brought us to this value. Ultimately, that was a phenomenal achievement for everyone and really exciting. But ultimately, there were a lot of things that one has to take into consideration when you’re working with governments and distribution of wealth. These things are complex. You can’t necessarily move as fast as you would like to be hugely innovative. When it comes to Fintech, that’s where you’ve got to be. That’s really what I love. People, I find, tend to call themselves peacetime or wartime. I’m certainly a wartime person, and I love the build and the hustle to get something up and running and really growing faster. That’s what I love to do.

Alejandro: Nice.

Philip Belamant: When I moved over to the UK, the whole idea was, I really didn’t want to leave South Africa. It wasn’t a case of being pushed away; it was more a case of “Let’s go and have a look at a developed market and find something interesting that we can go and build in a space that I love and know very well and have a real run at building something of massive value.” So I moved over to the UK about six to seven years ago, 2013 or around then. I was talking with a bunch of people around a company called [15:21] of Australia. I started to notice a company called Klarna in the UK out of Sweden and a company in America called The Firm. What I found interesting about these businesses is that about 15 years ago, we had an interesting product, an installments product, that we had rolled out in South Africa specifically to challenge and close down with the aim of closing down as many payday lenders as we could. That product allowed our customers to have a physical plastic card in their hand, Mastercard, and they could walk into a store with their phone, they could dial up on USSD, and they could go and actually transact in that store. We would advance the money to the retailer on their behalf, and we would let them pay back in installments for no interest of any kind. That was 16 years ago. People were mostly buying food, healthcare products, and services. When I saw these other companies operating here with awesome cool brands who, pretty little things like [16:26] and Nike, I was sitting with father and laughing a little bit looking at it, and these guys were saying, “We’ve transformed credit. It’s completely new.” We were laughing a little bit because we were thinking, “Well, we were doing this 16 years ago in the middle of Africa.” But it’s certainly very interesting that it’s almost been reborn and, of course, upgraded with all of the latest technology. That’s where I thought, “This could be a fantastic opportunity to go and democratize access to absolutely free credit in a massive way here in the UK, and hopefully in many other countries too. That’s where my view was. I took a look at it and thought, “I have the experience. We’ve built this with partners at scale before, people like Mastercard, etc. Why don’t we go and leverage those relationships and all of our experience in building a deck book and running at a very low default rate? In tough countries like Nigeria and South Africa, why don’t we go and apply all of those learnings and roll that out here in the UK? That’s how I came to think about Zilch.

Alejandro: So that’s the birth of Zilch. For the people that are listening, in order to get what Zilch is all about, why don’t you share with us the business model and how you guys actually make money here.

Philip Belamant: Yeah, perfect. Zilch is a buy-now, pay-later company. Effectively, the fundamental difference between Zilch and what you might see in the market today is that fundamentally the customer for Zilch is different than the customer for the other incumbents—the incumbents’ customers, in fact, the retailers. Typically, they have a B2B2C model. They build this technology, sell it to a retailer, and the retailer then sells it to the retailer’s customer. The incumbent, the BNPL providers, typically are always aligned within looking after, first and foremost, the retailer. As a consequence of that, they add value to the end consumer. With Zilch, we did it the other way around. We said, “Why don’t we go and add value to the end consumer first and be aligned with them. As a consequence of that value, bring some value to the retailer. That’s the difference, really. I guess the best analogy I could probably put down to close the loop on this or explain this is, if you think about Amazon, way back at the beginning, and we remove all of those narratives around the story, and you look at the online bookstore. What Amazon built was this delivery infrastructure. If you think about it, what they could have done is they could have taken that same delivery infrastructure and sold it to one bookstore at a time, integrated with the bookstore, and sent to that bookstore, “If you want to sell a book online, we’ll show it to your customer for you, and we’ll ship it for you to your customer. It sounds familiar, right? I actually think that would have been fundamentally different for them as an outcome. They probably would have become a commodity. They would have become a shipping company like UPS or DHL. I’m not saying those are bad companies. They are massive and amazing companies, but they’re not Amazon. What I loved about what Amazon did is, they actually said, “Hang on. Where I get the books, and how I get the books, and how I ship the books is not your problem. Why don’t I go directly to the customer and say to them, ‘They can have any book in the world, and we’ll ship it to you in a day, but you got it from me.’” With Zilch, this is exactly the approach we’ve taken. We looked, and we said, “Hang on. Every BNPL provider has the same business model. Actually, they’re making it the customer’s problem. Who are they integrated with? Who are they not integrated with? Where can you spend it? Why can’t you spend? With Zilch, what we’ve done is we’ve said, “Let’s remove all of that for the customer, and we go directly to the customer and say, ‘If you want to pay over time and installments, you can do that any way you like with Zilch—online, offline, tap-in, pay over time, Amazon, eBay, anywhere you want to go, we’ll give it to you, but you got it from us.’” That way, we forge a relationship with our customers, which is phenomenal. Today, we’re offering pay-in-full, and I’ll come to that revenue model you talked about. We’re offering pay-in-full today, which is brilliant because customers see huge value in that. What’s amazing is that we can come up with any new way to pay tomorrow. We can build it in two weeks, and we can ship it for a dime to all of our customers who can use it at any retailer in the world instantly. A lot of the incumbents would need to speak to their retail partners and ask if it’s okay to launch those products. Because, remember, the end consumer is not theirs. It’s the retailer’s customer. That’s why we think we have something truly unique, and that’s why when you compare our growth year-for-year, and you compare that to someone even like The Firm, which is an amazing business and is in a six-times bigger market than us—we’re currently about four times ahead of where they were at the same point in their journey, mainly because of this phenomenal over-the-top model we’ve built. So, how does the model work? We make a variety of revenue streams, and that’s a combination of fees from the retailer, a fee from Mastercard, data revenue, and advertising revenue. When our customer checks out, and they split the transaction in four at any retailer they like, what you find is, they don’t have to pay any fees or interest of any kind, and they get to pay over six weeks. So they pay 25% when they check out and 25% every two weeks, and it cost them nothing, which is pretty phenomenal. And the name of the game in our business really is how fast you can turn that book and how many times you can make that commission on an ongoing basis within a year. What you’re looking for is, of course, to mean that your result in revenue with it per Anum is higher than the average cost of your bad debt losses, your cost of sales, etc. That’s the business that we’re running. So you’ve got this really awesome massive affiliate business combined with the card-issuing business and a lending company all in one.

Alejandro: Got it. For a company like this, it takes money to build it. So how much capital have you guys raised to date?

Philip Belamant: At the moment, we’ve raised just over $300 million. The latest extension we did included bringing Goldman Sachs into the cap table on the equity side but predominantly on the debt side. So, of course, we have to fund all of these receivables, so this business is a bit more complex than some others. This business requires equity capital and debt capital at the same time. Goldman had come in. That $300 million today is roughly about half of equity capital and then half around debt capital so that we can fund receivables. Really, that’s just to help us grow. We’ve been growing at about 35-40% in underlying sales month-on-month for almost the last 12 months. So we’ve gotten to the point now that we want to take the lending off balance sheets and bring in a third party, especially someone as fantastic as Goldman, and that’s what we’ve done.

Alejandro: As you’re thinking about use of proceeds when you’re raising that capital, how does it change when you go from one financing cycle to another one in a business like this? We were talking about this earlier, which is meeting investors’ expectations and them being aligned with how you’re deploying the money. How has that changed over time for a company like Zilch?

Philip Belamant: That’s a great question. I think we can talk about that for a while, but the short answer I would give to that is, the one thing we learned from our previous business and this experience with the previous investor is one needs to almost run the business with a high degree of corporate governance regardless or not whether this is a private company. What that does, I think, is that it gives everyone that peace of mind that the use of proceeds is in line with the model that’s being presented. And, of course, as you scale, you have thresholds to how you’re going to spend that money and why people feel comfortable that you’re not misusing the funds effectively. That’s what I learned. When we set up Zilch, our aspiration is to actually list this business. That is the direction of travel for us as a business. So we really are running at a high level of corporate governance, even today, as a private business to ensure that we have everyone’s expectations managed. We do quarterly reports; we make sure that everyone knows what’s going on in the business that’s invested in our company. I think that’s what’s given companies like DMG or Goldman Sachs this high degree of confidence in us, and in our team, and in our ability to use the fund appropriately. But ultimately, it’s what you might expect. In the earlier rounds, the use of proceeds all goes into building the team, engineering, building the product, building this thing that we have to go and launch as an MVP. Then slowly, that changes into what you would normally expect: growth. So that’s marketing of product, and then continuing to invest in data science, and engineers, and customer support. A large majority of our proceeds today, when we raise money, goes into growing the business. That’s marketing the company, custom acquisition, our swelling engineering team, which is critical for a fintech, and data science, which is today the heartbeat of what we do. It’s really intrinsic to what we do. For us, customer support is so critical. You’ve got to be the best at customer support. If you go and have a look at Zilch today, at least in the UK, we are the most rated and most highly rated on Trustpilot across any of the VMPL. We’re really proud of that. You have to have phenomenal customer support. So this is what it’s all about for us. Then, you start to look at heavy compliance regulations. We’ve always built our businesses with compliance and regulation in mind and at the forefront of our minds. If you look at, for instance, our strategy in the UK, we went and applied for our FCA Consumer Credit License two years ago, well before the regulated announced that they were going to regulate VMPL. Ultimately, we have the same strategy for the U.S., and we have the same strategy for the EU. Because we are direct to consumer brand, we are not a B2B2C brand. We believe that we must have the consumer’s protection in mind when we offer them our service. I hope that gives you a nice succinct view of how that has changed over time. As the business grows, compliance, regulation, marketing, and sales become a much larger portion of the spend. Whereas, as I was saying in the beginning, it’s all about engineering and the build.

Alejandro: So, in this case, imagine you go to sleep tonight, and you wake up in a world five years later where the vision of Zilch is fully realized. What does that world look like?

Philip Belamant: For me, today, the way we work and how we think about the business is, today we want to be the best way to pay over time anywhere. That is our aspiration for today. We think that’s a succinct message; it’s clear and allows people to understand the differentiation of our product and the value our product brings. I think that’s a great starting point. But ultimately, what we would like to do is remove the words over time. So we’d like to become the best way to pay for anything. That is where we would like to go. You can already see this in the journey of our product features. We started with Paying For—we recently launched Pay In One with Cashback. What is phenomenal now is our customers can choose to actually check and pay everything and get cashback. They can choose to split in four. They can go retrospectively and change their minds, by the way, on both of those decisions, which is pretty cool. Moving forward, there are so many things we are looking at introducing that might be different ways to pay. So that may be longer durations, or that may be very different ways to fund those payments. Could you fund that just with [28:42] currency, or are there lots of other ways to fund those transactions? Ultimately, we want to become the best way for people to pay. Then, really jumping forward in the future, we do think that our name represents where things will most probably end up, and we hurdle towards this, and that is that we would like to see a more sustainable world, certainly so, and we think the way to do that is probably to own less things over time and to arrange more things over time and allow for redistribution. We think that our model perfectly tees us up to bring that to our customers over time too. So if you jump forward two steps, it’s where we think we’re going to end up over time, which will be somewhere around there.

Alejandro: That’s amazing. I love that. Especially when you’re saying that “Over time, we’re going to want to own less things.” I completely can see that. Imagine, now, that I put you into a time machine, and I bring you back in time. Imagine all this knowledge that you’ve been able to get over the years, and I bring you back in time to that moment when you were still in university and you were thinking about doing your own thing. “Look at these companies that we could start. Look at this competition.” And you were able to sit that younger Philip down, and you were able to give that younger Philip one piece of advice before launching a company. What would you tell that younger self and why, given what you know now?

Philip Belamant: That’s a great question. From the top of my head, I would say, “Just go and do it.” That, really, I have to say, is probably what’s helped me to get into entrepreneurship is not really thinking about it too much. I think if you go and start to think too much about something, especially when you look at business. Look at all these analysts, and they’ve got all this great advice. You can go and have some beautiful McKenzie documentation, and all of the facts are there. But the reality is that business is made up of so much more than just the facts in the market. There have been so many examples of things that just work, and people still don’t know why. So what I would say is what happened and encouraged by my father was, it really wasn’t even a conversation: “Should I? I’m going to go start this company.” And away we go. For me, I would say the advice for someone in that position would be, “If you’re going to talk about it too much, then you’ll probably end up doing nothing.” I would say, “Stop talking about it and go do it.” That would be the advice.

Alejandro: I love it. Philip, for the people that are listening, what is the best way for them to reach out and say hi?

Philip Belamant: People can find me on LinkedIn: Philip Belamant. My surname is quite unique, so you won’t find too many of those. Otherwise, you can always contact us through payzilch.com if you’d like to get to us that way. And anyone looking to join our business or be part of our journey, all of our job positions are on payzilch.com. You can check them all out there too.

Alejandro: Amazing. Philip, thank you so much for being on the DealMakers show today.

Philip Belamant: It’s a pleasure. Thank you so much for having me.

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