In November last year, eleven promising startups boarded a plane bound for London where they would be introduced to potential investors and mentors. The eleven, chosen as part of Silicon Cape’s incubation programme, pitched to a panel of investors that included the Mamba Mentors, a group of South African expats who were also involved in previous pitching rounds.
One of the startups, Studentology, a student marketing company with a mobile payment solution, caught the eye of Mamba member, Haji Chana. Chana has a background in private equity, management consulting and investment banking, having worked at Blackstone Group, Mckinsey & Company and Morgan Stanley, prior to forming HcCapital, the UK-based VC and advisory company.
Studentology, lead by Stuart Minnaar, developed a mobile app that allows students to pay for items and claim student discounts. Minnaar is a UCT grad who is also involved with the Tertiary School in Business Administration (TSiBA) and the Cape IT Initiative.
In terms of a business model, between three and five percent of the cost of every transaction will go to Studentology. The goal is to put the app into the hands of 100 000 students in the first year and with a projected average spend per month of R250 Rand (US$30) per student, turnover should amount to roughly R6m (US$696,500). The target for the following year is 500 000 users.
Minnaar decided on a 45% equity split with his newly found investors, with the incentive of claiming back 10% if certain milestones are reached.
Chana feels that Studentology has hit a sweet spot with an mCommerce app that fits within the student community niche — think Facebook in its early days. In the long term, data collected from transactions can be used to create new student or graduate targeted services.