Pitching to the newbies
CAPE TOWN-BASED start-up mobile voice over IP (VoIP) company Yeigo is talking to alternate telco operators – the likes of Internet Solutions and Vox Telecom – about partnering to provide its applications to users over their networks.
But it’s not only thinking locally. Yeigo has international aspirations and its three founders were recently invited to join an influential global network of entrepreneurs – the Endeavor Network – they hope will help catapult Yeigo into the big league.
Although South African entrepreneurs are seen as innovative, only a handful have put this country on the map. Some bemoan the lack of venture capital funding. Others have had international aspirations but failed to sell their products offshore.
There’s no telling how successful Yeigo can be. But the little company seems to have the right ingredients. If successful, that could pay off handsomely for Ivan Ferrer, a founder of accounting software company Pastel and former director of parent Softline when it was listed on the JSE.
Ferrer may be remembered for launching a competing bid for Softline, in conjunction with Dutch group Exact, after an attempted management buyout in 2003 led by CEO Ivan Epstein. Ferrer beat the 130c/share Epstein-led bid, but his group’s 145c offer was no match for British accounting software giant Sage plc. It took Softline off the market at 200c/share.
Yeigo CEO Rapelang Rabana says Ferrer and two associates had put up the initial capital for the company. However, the founders retained a majority stake. She declined to disclose the amount. But Endeavor only considers companies that have a turnover of at least R3m or accessed financing to the same amount.
Yeigo will seek to raise additional capital over the next few months. But more important than just raising cash is to find the right partner to help it sell its products internationally, Rabana says.
While consumers can download Yeigo applications to their cellphones via its website and make cut-price mobile VoIP calls (“Cutting call costs”, 16 May) Rabana says that’s not where the money lies. It will instead target corporate clients wanting VoIP with mobility and earn a licence fee per user in partnership with operators for doing so. Although it’s yet to sign up any operators, Rabana says some are testing its applications and it’s confident of doing so next year.
Fellow director Wilter du Toit says its applications can run on 3G networks. With the advent of other wireless technologies such as Wi-Fi and WiMax, those can be deployed by the new operators, which will obtain infrastructure licences from regulator Icasa next year. Du Toit says the market will open up significantly from 2008 and says, in its case, it’s like becoming a mobile operator without needing to apply for the GSM spectrum or roll out the cellular network.
That addresses the potential problem of 3G operators potentially deciding to block voice over their data networks or charging significantly more for voice usage, says Du Toit. Yeigo’s applications may not even have to run on their networks. And the mobile operators would have to come to the party with lower costs in response to the competition, he says.
The three founders – fellow 2005 University of Cape Town Business Science graduates Rabana, Du Toit and Lungisa Matshoba – recently became Endeavor Entrepreneurs, an exclusive global network aimed at supporting what it calls “high impact entrepreneurs”. They were part of a group of 12 entrepreneurs from nine companies most recently selected to join the Endeavor Network, nine being South Africans.
While the global board boasts members such as former World Bank president James Wolfensohn, the SA board includes Discovery founder and CEO Adrian Gore, De Beers Fund chair Jennifer Oppenheimer, Barloworld director Isaac Shongwe and Internet Solutions co-founder David Frankel, among others. Rabana says the interview process was the most rigorous she’d ever been subjected to, with the entire process taking nine months.
Endeavor started in 1997 and has offices in Argentina, Brazil, Chile, Colombia, Mexico, Egypt, SA, Turkey, the US and Uruguay. Rabana says Yeigo would most likely retain its development capabilities in Cape Town but would consider moving its sales and marketing overseas, depending on where its future partner was domiciled.
Matshoba says Yeigo currently offered mobile VoIP, plus SMS and instant messaging applications. It would launch additional new services in 2008 but wasn’t giving those away just yet.
Its applications run on Windows Mobile and Symbian-enabled mobile devices. And there’s a Yeigo LITE product that can be downloaded to almost any cellphone.
Finweek
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