In 2004, Tunisian entrepreneur
Dhafer Berrachid started Axe
Finance to deliver consulting services to European banks. By
2007, however, he saw an opportunity to marry his previous passion,
software engineering, with his consulting business, by creating a
software solution for credit and risk management. Today, from their
base in Tunis, Axe Finance manages clients in throughout the Middle
East, North Africa, and Sub Saharan Africa. Along the way,
Berrachid learned a thing or two along the way about combining two
different sides of a business, exporting his products, and training
his team, which he shared with us at Wamda.
1) How did you decide to start your company?
As a software engineer, I worked for software vendors in credit
and risk management, first in Tunisia and then in France. Yet after
eight years of thinking about it, I decided I wanted to start my
own business. As I began selling my services as a consultant, I
realized people liked my work. So I took on more business and hired
seven other consultants to join me.
Then, when I decided to return to building software, I had gained enough business background to understand how to sell software. Initially, I wrote the specifications for the first version of my software and outsourced the development and coding, while keeping the research and development in-house. Today we have six clients using our software, including the biggest bank in Tunisia, STB Bank and the largest one in the Middle East (NCB, Saudi Arabia).
2) What were the most important decisions that you made in your company, or what was a key turning point in your approach?
My decision to move my company from France to Tunisia after two years was personal; however it ended up being strategic as well. I can’t imagine launching a software company in France today because costs are very high and competition is extremely tough. Indian companies are now pulling prices down, and I simply could not afford to have my R&D team in Europe. Also, selling to an emerging market and fostering cooperation within the region is the future. That’s why we focus on emerging markets rather than trying to sell to Europe and compete with long-established companies.
3) What is the biggest problem that you faced (or are facing) in your company? If you don't have a mentor, what issues could a mentor help with?
A major challenge is building our team. We have a very good team
but they need training, especially when dealing with international
clients. At this point, I’m not comfortable sending 50% of my staff
to clients outside of Tunisia, because of a lack of international
exposure and language.
A major problem in Tunisia is that education focuses on technique rather than skills, so it’s easy to find good software programmers, but hard to hire qualified people who know how to apply their knowledge in a business context. Often, business school students will memorize accounting or marketing techniques the way they were taught in the classroom, but will have very limited professional exposure and understanding of the challenges of entrepreneurship. We hope the revolution will change this approach to education.
4) Do you see your market as local, regional, or global? Do you plan to expand?
We already sell our software solutions to clients in Saudi Arabia, the United Arab Emirates, Morocco, and Sub Saharan Africa, and we continue to provide consulting services for clients in Europe as well.
We intend to increase our growth by expanding our client base in
the MENA region and Sub Saharan Africa. Then hopefully we can
expand to Southern Europe, South America, and Asia Pacific.
We are trying to target nearby regions first, as we optimize our
solution and train our people.
5) How do you plan to generate revenue? How did you decide on this model?
Until now, our revenue came from our consultancy fees. The consultancy side of the business has been funding our software business. But now that we are focusing on expanding our product line, we are seeking funding in order to grow our sales.
6) How long did it take you to get funding if you received funding? How was that process?
We are currently raising funds for our product line and hope to close our first round by the end of September. We are mostly tapping into local sources such as the Private Equity Fund Tuninvest and Alternative Capital Partners. Luckily our model appeals to investors because we mix business, banking solutions and innovative technology.
7) If you have partners, how do you manage your partnership?
I am planning to bring a business development partner on board by the end of the year. I need someone with services and sales skills to complement my engineering background. We have already identified someone in France who will be coming back to Tunisia to take on this role as well as invest in Axe Finance.
In the past, I have tried to partner with two or three other Tunisian enterprises to provide more well-rounded services to our clients, but it never worked. There are a lot of talented entrepreneurs in Tunisia, but the market is small, so they view other as competition. Because people are scared to lose control of their company, they are distrustful and look to expand abroad rather than at home; this is one of the reasons why we are an exporter country. Like many companies, Axe Finance receives fiscal benefits from the government for exporting 70% or more of our goods.
8) What does your spouse or family think of your company? Has owning a company made you financially more secure, or not?
My family encourages me and is happy that I have my own company.
It doesn’t necessarily generate financial stability yet, because
profits fluctuate. And at the early stages, we decided to reinvest
our profits in the company rather than take them as profit.
Luckily, my wife has a good job so we are able to cover our
9) Have the recent revolutions affected your approach?
They have had a very limited impact because we act in international markets. However, the day before the Libyan revolution started, we were expecting to add the Central Bank of Libya as a potential new client; needless to say, that did not happen. So that revolution certainly affected us. As for the Tunisian revolution, we only took 1 day off of work on January 14th, and came back the next working day.
10) What are five pieces of advice that you would give a fellow entrepreneur?
1. Think global.
2. Start selling your ideas before you invest in creating a product. Marketing and sales is extremely important and cannot be underestimated. Your product won’t sell itself.
3. Start small and grow progressively.
4. Control your costs.
5. Work hard.