January 30, 2014
Stuart, please introduce yourself…
My name is Stuart Minnaar. I am a non-tech founder of a tech start-up that deal with the student market in South Africa. We are based in Cape Town.
What’s the story behind creating Yappo?
Yappo is a product of Studentology (company) which was started 4 years ago. We started out connecting business and brands to the student market, via a classifieds, discount card and on-campus activations.
We secured a series A round in November 2012 and built a closed loop payment system which students have access too via a free app. The app allows students to use their phone as a wallet.
How’s traction working out so far?
We completed out proof of concept in October 2013 and had a offer to purchase. We are currently in the sale process.
Tell us more about the sales process…
Selling a tech start-up in South Africa is not a common thing, and as a result finding the people who have the experience in it is scarce. I am fortunate to be part an organisation based in Scotland called Power of Youth, who do amazing work for entrepreneurs. Through them I got access to the Ernst & Young Vantage Programme which provided us a financial consultant from their London office for 6 weeks to assist with the process.
I learnt so much about selling a business and I still am. One of the main things that I have learnt is that because it is quite difficult to value a pre-revenue startup, a lot was riding on my confidence in the conversation with the potential buyer. Any crack in me was zoomed on as a flaw.
From what you are learning so far, what advice can you give to other entrepreneurs considering selling their company?
There is a bit of a science to it, its all about dressing it up. It helps to seek advice, meet with as many people in the selling game as possible (previous entrepreneurs, investors, transaction specialists), find the gold nugget in what each of them have to say and add it to your bucket. Then decide. Never doubt yourself.
How does it feel knowing you may no longer have control over something you’ve worked on for so long?
In the wise words of Winnie the Pooh: the minute you remove that thing that you have been keep inside and allow for others to see, it takes on a shape that would not be possible if left inside. Paraphrased.
What challenges did you face when launching, and how did you overcome them?
Pick one. Capital, talent, banking regulations, early adoption. I think the details in all the challenges are somewhat similar.
We had heart in the business from the beginning. We were not naïve to the challenges that we would face. Because of this, resilience is key. We kept pushing and tried every possible solution, adapted and moved on ready for the next one.
What are the benefits of being based in South Africa over other countries in the region?
To be completely honest, the South African market is not the most conducive for a tech start-up. I think there is an illusion with the size of potential adopters.
What is amazing about South Africa is that it has 1st world infrastructure and 3rd world opportunities. Innovation is the link.
How do you see the startup and investment ecosystem developing in South Africa?
South Africa has a very infant investment (PE, VC and angel) space with a booming start-up scene. There is not much appetite in South Africa for scale-up investment, which can be crippling. With that said, there is money out there, you just have to be hyena-like to find it.
There is so much potential in this space, so much can happen, entrepreneurs have the right attitude, the apt support is lacking.
What advice can you share with entrepreneurs wanting to start or expand their business into South Africa?
Be sure. Do the research on the market segment and its existing behavior before making any moves. If you get it right, it is a winning formula. But it is easier to get it wrong.
What’s next for Yappo?
We are selling, so whatever the buyers deems best. I have to cut the proverbial umbilical cord and accept that it will be where it needs to.