But are you making money?

South Africa is enjoying a ‘boom period’ for new technology start-ups – with one popping up every other day. Companies with names like Yola, Toodu, Trustfabric, Mobiflock, Woothemes, Snapt and Evly are making headlines in the mainstream media.

The increased awareness around entrepreneurs in the local technology and Internet arena is helped by institutions like the Silicon Cape initiative, which aims to foster a start-up scene similar to Silicon Valley in the USA.

High profile success stories, like Visa’s recent acquisition of SA start-up Fundamo for R844 million (US$110 million) – and of course VeriSign’s purchase of Mark Shuttleworth’s Thawte for R3.5 billion ($565 million) – have lent credence to the idea that local tech start-ups can be a great investment.

Good news for local tech entrepreneurs is that some investors are willing to push millions into start-ups. Many new tech companies are already benefitting from venture capital from firms like World of Avatar, HBD Venture Capital and Reinet Investments.

This funding not only helps entrepreneurs to set up their businesses, but also helps to develop and train South Africans; drive an entrepreneurial spirit; and develop the local technology market.

Funding is also an essential ingredient if local start-ups are to compete effectively against their counterparts in places like Silicon Valley where investments of millions of dollars in new start-ups are commonplace.

Investors and start-ups are, however, not always in it for the warm and fuzzy philanthropic feelings. In fact, it is mostly about the money. You know what I am talking about – moolah, dough, loot, cash!

News like FireID’s problems – which after an investment of tens of millions of Rands by Reinet was close to shutting its doors – understandably makes investors uneasy.

FireID was saved by an investment from World of Avatar, but it will now have to prove that they can make money and show a return on investment.

And this is one of the big questions which both investors and observers want to know: are you making money – or are you set to make money in future?

MyBroadband BusinessTech asked a few high-profile technology and Internet startups whether they are making money.

Company Question Answer
Yola About Yola was founded in 2007 (as Synthasite) by Vinny Lingham. Yola makes it easy for people to build and host their own website.

Vinny Lingham
Vinny Lingham
Investment $25 million in funding from Johann Rupert’s Reinet Fund
Relying on investments to operate? No answer from Yola
Number of employees? 80: “42 staff members in Cape Town and the rest in San Francisco and abroad”
Generating revenue? Yes
Profitable? No answer from Yola
Wantitall About Wantitall was founded in 2006 by Justin Drennan.  Wantitall offers an ecommerce service with more than 14 million products.

Justin Drennan
Justin Drennan
Investment Yes: “Business was initially self funded. Once profitable, we went looking for investment to help grow the business”
Relying on investments to operate? No
Number of employees? 20
Generating revenue? Yes
Profitable? Yes: “This includes paying market related salaries to the founders/directors”
ARC Telecoms About ARC Telecoms was founded in 2010 by Steve Briggs, Michele McCann and Paven Chetty. ARC Telecoms is an IP telecommunications service provider dedicated to the small and medium business sector.

Steve Briggs
Steve Briggs
Investment Yes: World of Avatar
Relying on investments to operate? No answer from ARC Telecoms
Number of employees? 30
Generating revenue? Yes
Profitable? No answer from ARC Telecoms
The Daily Maverick About The Daily Maverick, a news website, was founded by Branko Brkic in 2009. The company launched its iPad publication iMaverick in 2011.

Branko Brkic
Branko Brkic
Investment Yes: World of Avatar
Relying on investments to operate? Yes: “We launched our daily publication iMaverick just 4 months ago, which means we have had to invest a lot of money into the venture and we are looking at a 2 year pay back period”
Number of employees? 18: “Before iMaverick we had 8 full time journos, and now we have 18 in order to produce iMaverick”
Generating revenue? Yes
Profitable? No
TrustFabric About Trustfabric was founded by Joe Botha in 2010. The company aims to facilitate smarter relationships between businesses and individuals.

Joe Botha
Joe Botha
Investment Yes: World of Avatar
Relying on investments to operate? No answer from Trustfabric
Number of employees? No answer from Trustfabric
Generating revenue? No answer from Trustfabric
Profitable? No answer from Trustfabric
Localsort About LocalSort was founded by Marcel van de Ghinste, Jonathan Womersley, Justin Womersley and David McLennan in 2011. LocalSort helps tourism businesses to connect with each other.

Marcel van de Ghinste
Marcel van de Ghinste
Investment Yes: $50,000 from Google and 5 angel investors
Relying on investments to operate? Yes: “We are still testing and building out the initial product before we scale up”
Number of employees? 7: “There are currently seven of us employed by the business, all of whom are paid out of our current funding”.
Generating revenue? No: “We have a strong revenue model, but it relies on a thriving marketplace. We’re still building out that marketplace.”
Profitable? No
Cable & Grain About Cable and Grain was founded by Erik Brits. It is an electronics company devoted to creating premium quality, functional art

Cable Grain logo
Cable Grain logo
Investment Yes: “Once the ball was rolling, a significant lump sum investment was made by a family member”
Relying on investments to operate? Yes: “To produce a profitable margin on products, the direct importing of electronic components was necessary, and this can only be done in volume”
Number of employees? Only the founders
Generating revenue? No: “We are almost finished with the business mechanics, and then will begin marketing and sales”
Profitable? No
Zoopy About Zoopy was started in 2007 by Jason Elk, Gerry da Silva and Pat Elk. Zoopy was started as a YouTube competitor, but has evolved into a mobile video tabloid news website.

Jason Elk
Jason Elk
Investment Yes: “Between the three founders, we bootstrapped the business for a year before receiving investment from Vodacom in 2008”
Relying on investments to operate? No answer from Zoopy
Number of employees? 15
Generating revenue? Yes: “We generate revenue every month via various revenue models. I can’t disclose any more about the details or nature of our finances.”
Profitable? No answer from Zoopy
Mobiflock About Mobiflock was founded by Patrick Lawson in 2010. Mobiflock makes cell phones safe for children.

Patrick Lawson
Patrick Lawson
Investment Only later: “Mobiflock started as a new venture between three existing entrepreneurs and it was built just using free time whenever possible at the start of the project.”
Relying on investments to operate? Yes: “After we had prototyped our idea and demonstrated a need we realised in order to grow dramatically we would need investment to hire the key staff required to grow.”
Number of employees? 5: “They are all paid out of investment funds at this stage.”
Generating revenue? No
Profitable? No
Toodu About Toodu was founded in 2011 by Lee Hartman. Toodu is a service that matches items on your to do list with people and businesses who can help you get things done.

Toodu logo
Toodu logo
Investment Yes: “The business was seeded by the founders and then raised VC funding later”
Relying on investments to operate? Yes
Number of employees? 7
Generating revenue? No
Profitable? No: “Toodu is an ambitious play with a long runway and our VC partners understand that.”
Evly About Evly was launched in 2010 Eric Eidelstein and Eran Eyal. Evly is a crowdsourcing collaboration platform.

Eric Eidelstein
Eric Eidelstein
Investment Yes
Relying on investments to operate? No answer from Evly
Number of employees? 9
Generating revenue? Yes
Profitable? No answer: “As a private company, we’re not disclosing our revenue numbers
FSMS About FSMS was founded by Daniel Schwartzkopff in 2010. FSMS provides free SMS services.

Daniel Schwartzkopff
Daniel Schwartzkopff
Investment Yes: World of Avatar
Relying on investments to operate? No answer from FSMS
Number of employees? No answer from FSMS
Generating revenue? No answer from FSMS
Profitable? No answer from FSMS
Motribe About Motribe was founded by Nic Haralambous and Vincent Maher in 2010. Motribe enables users to build and manage their own mobile social communities

Vincent Maher
Vincent Maher
Investment Yes: 4Di Capital
Relying on investments to operate? No answer from Motribe
Number of employees? No answer from Motribe
Generating revenue? No answer from Motribe
Profitable? No answer from Motribe
Snapt-UI About Snapt-UI was founded by Dave Blakey. Snapt-UI builds enterprise grade management front-ends for open source server software.

Dave Blakey
Dave Blakey
Investment Yes: 4Di Capital
Relying on investments to operate? No answer from Snapt-UI because of the company’s “agreement with 4Di”
Number of employees? No answer from Snapt-UI
Generating revenue? No answer from Snapt-UI
Profitable? No answer from Snapt-UI
Cerebra About Cerebra was founded by Mike Stopforth in 2006. Cerebra is a social and mobile media company.

Mike Stopforth
Mike Stopforth
Investment No: “We were fortunate enough (as an IP business) to experience organic growth from day one”
Relying on investments to operate? No: “The business is entirely self-funded”
Number of employees? 28
Generating revenue? Yes
Profitable? Yes: “We have grown significantly in revenue and operating profit every year since inception”
Firestring About Firestring was founded by Alison Jacobson in 2009. Firestring helps enterprises to create social networks within organisations, specific sectors and closed special interest groups.

Alison Jacobson
Alison Jacobson
Investment No answer from Firestring
Relying on investments to operate? No answer from Firestring
Number of employees? No answer from Firestring
Generating revenue? No answer from Firestring
Profitable? No answer from Firestring
WooThemes About WooThemes was founded by Adriaan “Adii” Pienaar. WooThemes designs and sells premium themes for WordPress.

Adii Rockstar
Adii Rockstar
Investment No
Relying on investments to operate? No
Number of employees? 17
Generating revenue? Yes: “WooThemes is a a multi-million dollar revenue business”
Profitable? Yes: “We had revenues (and thus profits) immediately after launch, which meant we didn’t need to figure out a way in which we would fund the growth of the business.”
Cognician About Cognician was founded by Patrick Kayton and Barry Kayton. Cognician gives users direct and immediate access to cognitive guidance

Patrick Kayton
Patrick Kayton
Investment Yes: “We’ve had a number of investors come on board”
Relying on investments to operate? Yes: “We’re partially funded and partially income-supported.”
Number of employees? 9
Generating revenue? Yes: Cognician prefers to keep exact revenue figures confidential, but we can confirm that they have generated revenue.
Profitable? Close: “We’re close to being profitable, but cash flow remains tough in the drive to expand and grow the business”

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But are you making money?