How South Africa's bright internet ideas shape up
News that Goldman Sachs has valued Facebook at $50-billion makes it tempting to look at the prospects of some of SA's innovative and successful internet ventures.
- Yola, which has secured $20-million from the Luxembourg-based Reinet Fund (controlled by the Rupert family), recently signed a distribution deal with California-based IT firm Hewlett-Packard, which sells more than 60 million computers a year. A similar deal is set for early this year with AOL.
Yola was founded in 2007 by South African Vinny Lingham and is a website-building and hosting service, helping small businesses develop their online presence. In March 2008 it moved its headquarters to Silicon Valley in California but still has offices in Cape Town.
Lingham said there were no plans to list or take on a private equity partner. "We see Yola as a global business that was started in South Africa."
- MXit is a free online mobile chat service that also provides music downloads, movie clips, sport and quizzes and facilitates obtaining quotes for travel and insurance, as well as quick access to news and weather.
MXit South Africa has been profitable since September 2006 and since then has not required any funding.
"We hope to increase revenue even more as we explore new fields such as m-commerce and wallets, and when we launch the best version of MXit ever, Version 6," said Herman Heunis, the founder and CEO of MXit who is based in Stellenbosch.
MXit International is still in an investment phase and the shareholders are Naspers (30%) and Heunis. MXit has more than 30 million registered users, many of whom are from SA.
Online travel agency Travelstart, founded in 1999, posted 30% growth in transactions in the first seven months of last year in the face of the global economic crisis.
Stephan Ekbergh runs the company he founded 11 years ago in Sweden but which is now headquartered in Cape Town.
"This is as good a place as any to run an internet company," he said.
The site has 25000 unique visitors daily and about 120000 customers are on the business's database.
Wholly owned by Ekbergh, the company's options include listing in SA or London or both, or taking on a private equity player.
Travelstart launched in Tanzania three months ago, is setting up in Kenya and has plans for Egypt and Turkey.
- Zoopy is an online and mobile social media community that was launched in 2007. Users visit the site to upload, share and discover videos, photos and audio files.
"We thought that to have all three media in one place is a lot more beneficial," said Zoopy co-founder Gerry da Silva. YouTube, for instance, offers only video.
Zoopy has 120000 registered users and more who view the downloads. It is 75% owned by Vodacom.
"We would consider listing but not right now," said Da Silva. Users, mainly from SA, also span the US, Germany, Nigeria, India and the UK. At one stage about 40% of Zoopy's users were from the US.
Small countries (apart from Israel which has had multiple listings on Nasdaq) battle to create internet models that are internationally successful.
"America is so successful because internet usage is prolific and ideas catch on quickly in larger markets," said Allon Raiz, the CEO of Raizcorp, the privately held business incubator that supports more than 200 enterprises.
"Entrepreneurs here generally don't have deep enough pockets to sustain the time it takes to break even."
The Silicon Cape initiative is trying to build an ecosystem for entrepreneurs, but has yet to see notable successes.