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Startups be pitchin’: here’s what happened at Sparkup Live 2015
Another year, another Sparkup Live event. After 100 applications were vetted, five finalists were chosen to pitch in front of an audience of investors. From travel to tyres, the pitchers held their own as they faced Angel investors Ernst Hertzog from Action Hero Ventures, Groupon SA co-founder Wayne Gosling, and Paul Rutherford who’s from MIH Internet.
The three dragons investors all got first dibs at the pitchers’ brains and equity shares, with the audience encouraged to throw swathes of cash whenever they felt confident.
Organiser of the event Tracy Gander told Ventureburn last month that the live investment scenario is a much-needed added bonus to the Sparkup initiative, because it helps a lot with exposure.
TyreNet — on-demand tyre service
First up on stage: TyreNet.
The startup is looking to deliver and fit tyres across South Africa using a mobile fitment unit. But they don’t really sell tyres. “What we really sell is time,” the founder reassured.
While an on-demand tyre fitting service sounds, well, fitting in a world increasingly moving to on-demand everything, the investors remained skeptical. Gosling was questioning the startup’s expensive scalability as well as its tight margins.
“Cost will keep going up as you scale,” the Groupon co-founder said. The equipment costs around R80 000 for the mobile unit. Rutherford added: “Where the model falls down for me is with the economics especially when it comes to sourcing the tyres.”
Read more: Meet the 7 startups that pitched at Net Prophet’s Sparkup!Live
It was a no-go for the investors.
Erato — fashion accessories online
Founder of the niche ecommerce outfit, Juliet Anderson said that the industry she’s operating in is expecting 29% year-on-year growth. As we all know, she pointed out, fashion ecommerce is on the rise in South Africa.
It seemed that the online shop had everything in the bag — designer leather, that is. Erato was voted one of the top five fashion sites in SA within its first year, the founder boasted. While local ecommerce is accelerating, Anderson added that 35% of all sales in the space are on shoes and accessories — the sector the online shop focuses on.
The problem Erato faced, so far, has been its lack of staff. The one-woman-show explained that she personally sources items based on international trends and has been seeing good feedback from her customers so far.
The startup put itself out there for a R300 000 equity investment to help beef up its product stock, marketing and working capital.
Rutherford backed out saying that it’s not “a big enough problem being solved.” He also added that the big guys can easily take over this space. Hertzog quipped that he’s just “not a fashion guy.”
Investors just weren’t budging, yet.
IntelWorld — B2B mobile payments
On the stage stepped the CEO of IntelWorld, Allan Rwakatungu, who was fresh from the SWIFT Innotribe Challenge last week, which named the startup one of Africa’s most impressive fintech companies.
Hailing from Uganda, the CEO noted that he’s in South Africa to meet the right people so that everyone can make a whole lot of money together.
The company estimates that 95% of B2B transactions in the developing world are cash. This process is very inefficient for both the consumer and business. However, 70% of adults have access to mobile devices.
IntelWorld has developed a payment and commerce ecosystem to enable business — from corporates to startups — to transact with their customers using their mobile devices.
IntelWorld was looking for US$100 000 that would help customer acquisition. As one of the investors pointed out, though, the startup is in more need of opening doors — talking to the corporates — than cash.
After some encouragement to relocate to Cape Town from the investors, Rutherford put down US$25 000 with Daniel Guasco — the other co-founder of Groupon SA — matching that amount.
Things finally started picking up!
Vula Mobile — mobile health apps
Dylan Edwards from Vula Mobile came on stage to chat about the importance of mobile health apps in South Africa, especially rural areas.
The startup’s flagship product is an eye-scanning app which is being used in Tygerberg Hospital. Edwards added that Vula is additionally working with the public sector, where there is a lot of opportunity.
The health startup was looking for R1-million in equity funding together to broaden its reach.
Gosling noted that he’s not too sure about smartphone penetration in areas Vula is looking to target. “I’m scared about the paradigm shift from paper to computers,” he said.
Rutherford said that although the overlap between the medical challenges and smartphone technology is a very exciting space, it’s not one that he understands all too well.
Nonetheless, Hertzog was swayed. The Angel investor would be splitting the R1-million with AngelHub Ventures which eagerly chipped in from the audience. There was another R100 000 offer from a member of the audience.
Gummie — travel startup
The self-proclaimed Airbnb for tour guides, rounded off the event with a fantastic pitch. Founder of the three-month old startup, Ksenia Mardina stated that it already has 900 users signed up.
From being a travel magazine in 2012, the company today hand picks some of the most exciting travel experiences in South Africa. Essentially, it wants to replace those stacks of brochures you’ll find in a backpackers or travel shop.
Gummie currently has 30 tour guides on offer in Cape Town and Johannesburg. These range from adventure travel to cooking classes. Mardina noted that Gummie needs funding to to increase its supply across the country.
Rutherford said that he’s excited about marketplaces, like Gummie’s, which can scale fast, but he remained doubtful over the execution so far. Gosling added that travel into Africa is not as big a market as she thinks.
The evening concluded on a low note as all investors stepped aside.
