South African startup Wanos Networks, which creates software for businesses allowing them to accelerate the network between their branches, is on the lookout for ZAR600,000 (US$50,000) in funding, and more importantly an investor to advise on business development, as it looks to expand operations further and boost already significant profits.
Wanos, which is one of the startups taking part in the second StartUp90 accelerator programme in Cape Town, focuses on network acceleration, which ensures business applications perform optimally and saves them time and money.
“Like zipping a file, Wanos compresses bandwidth,” Antonie Henning, who founded Wanos in February of last year, told Disrupt Africa.
“Wanos is Winzip for the network link. Because the software compacts more data on the link, business users see an increase in bandwidth throughput in real time. What we do is similar to zipping an email attachment to save time and bandwidth.”
Sounds simple, but important enough that the startup has acquired customers from as far afield as Myanmar, Uruguay, the United States (US) and Canada. More than 2,600 businesses have registered in the last year, with Wanos’ user base growing by 10 per cent each month. Revenue is growing as well, up 50 per cent per quarter, from selling software and hardware. Net profit for this month will be around ZAR100,000 (US$8,500), which will go straight back into growing the business.
To grow it further, Henning is seeking investment- ZAR600,000 to be precise, for which he is willing to part with five per cent equity. But he is not looking for just the money. The company recently took part in 88mph’s DealWeek programme in Cape Town, but turned down investment as the deal was “a bit too aggressive”.
“While bootstrapping, taking an investment is tempting, but we had to be disciplined and make the right call for the business,” Henning said.
“More important than the cash, we are looking to partner with someone that will advise on business development.”
Henning feel Wanos has a strong future, given the “prohibitively expensive” cost of network acceleration software.
“Usually in a healthy ecosystem there will be premium, mid-market and mass market segments. Based on these, the Wanos hypothesis was that there is a business case for network acceleration software for the mass market. This also resonated with our objective of working on something meaningful,” he said.
“The price is determined by what the market segment is willing to pay. The business case works because large enterprises work on five-year technology lifecycles. Too bad for the market segment that can’t risk waiting three to five years to recover their capex.”
This is where Wanos sees its opportunity.
“Our focus is to stay lean and make the technology accessible to a market segment that needs to see a quick return on investment,” Henning said. This market segment is the small medium business (SMB) sector.
“Many startups have a better chance of reaching product-market fit in the small to medium business market. It will depend on the problem that is being solved, but large enterprises tend to have long lists of requirements and features,” he said.
“The smaller businesses rightly don’t want to pay for features they don’t want. The second benefit is that a product targeted at the SMB can evolve to meet the requirements of larger enterprises.”