An engineering student saw a gap in the market, grabbed the attention of 13 000 students two weeks after launching his business, and then made a huge success of it.
As a result, he is now selling his technology business to a big media firm listed on the Johannesburg Stock Exchange (JSE).
This is the story of entrepreneur Stuart Minnaar, founder of online student platform Studentology and mobile payment application Yappo. Evident of the success of his business, is the £150 000 invested by Mamba Mentors, a UK based investment group, following a trip to London with business support organisation Silicone Cape.
“I always knew that I wanted to sell my business. We were a young tech startup and there was always the possibility of a big business creating a similar app. I wanted to cash in before this happened,” says Minnaar.
This realisation led Minnaar to seek out networks that would get him access to potential buyers.
As an entrepreneur, he says, he entered almost all business competitions and attended as many events as he could.
“South Africa does not yet have a culture of buying and selling businesses, which is the case elsewhere in the world. Our business landscape is not yet mature enough. You have to be proactive, you have to knock on doors, network with people, you’ve got to hunt down people who’ve done it before.”
Joining the global entrepreneurship network Power of Youth, which has financial firm Ernst & Young’s Vantage Programme under its support services umbrella, kickstarted the process of selling his business.
For six weeks, he had access to an adviser who could assist his business with an exit strategy.
“I worked with an adviser from Ernst & Young. Once I spoke to him about my ideas on selling the business, it was as if a rocket had been lit, with me attached to it.”
Through the adviser and the Vantage Programme, Minnaar was put in contact with a potential buyer.
A month later, the buyer contacted him to set up a meeting. In preparation, Minnaar says he sat with his adviser, and the two assessed what the value of the business was.
Minnaar also asked for advice from many other business owners who had previously sold their businesses.
He cites self-confidence as a key factor in the success of a sale. “Much rides on your self-confidence. If there is a crack of doubt, the buyer might think there is something wrong with the business.
“Also, if there are things that are not right with the business, it is important to disclose these upfront.
They will find out if you don’t, and then it becomes dirty,” says Minnaar.
He says he also had open conversations with his employees prior to the sale. They were given the option of staying on or leaving the business. All the employees chose to leave with Minnaar.
“Had they chosen to stay, I would have made their staying on a condition of the sale,” he says.
Minnaar chose to make a clean break and not stay on, but he says that, in some instances, the owner has the option to stay on and carry on building the business for a certain period before handing over to the new owner.
Since the sale is not finalised, Minnaar is bound by a non-disclosure agreement and cannot reveal the details of the sale.