One of the largest disclosed amounts in the country in recent years, after a leading US-based venture capital firm found positive user reviews of its product online.
Ventureburn reported that Stellenbosh-based tech startup,Skynamo, an app that helps streamline the sales process for field reps, was proactively seeking investments from other companies at the time, but it was the positive online reviews on third-party software websites that attracted interest from Five Elms, a company that specialises in investing in business-to-business software companies.
“Sam (Clarke), our CEO, spent quite a few months pitching our business to investors abroad, and it wasn’t easy,” says Skynamo Chief Marketing Officer Julian Diaz. “But Five Elms actually ended up approaching us. They went to a couple of software review sites and compared our product with competing products, contacted some of our customers, and liked what they saw.”
Five Elms then contacted Skynamo directly. Ultimately, it resulted in the Stellenbosch-based company securing $30 million, or R431 million, in series A funding – an investment amount that is significantly higher than any other disclosed local tech investment in last 12 months.
According to VentureBurn, the highest disclosed tech startup funding deal last year was R167 million, for the cloud platform Rapid Deploy.
Diaz says that Skynamo’s popularity among users is due to its ability to streamline field sales representatives’ call report processes – and to give them more time selling and less time reporting back.
“Typically sales reps begin their days by logging miles on their odometers, and then driving around to customers. They’ve got a list of customers to see, who they need to locate and then drive to,” says Diaz. “Once there, they must take notes on a laptop or in a notebook, capture orders, and then manually fill in paper forms.”
On returning home, reps must then capture all of this information by transcribing it into an email or spreadsheet, and then send that off to their sales managers – a process that Diaz says wastes up to two hours of a sales reps day.
“Skynamo uses GPS technology to track where the sales reps are going, where they’re driving, and who they’re visiting. Reps ‘check in’ at every customer, and then when checked in, the app tracks how much time they’re spending with the customer,” says Diaz.
Reps are then able to use the app to capture all of their notes through typing or dictation, and then through integration with other applications like Sage, Xero and SAP, access live product information to ensure the orders are correct and products are in stock.
“Products often have complex numbers that require manual entering, and human error might mean these are incorrect – so they put in the wrong product, or they order a product that’s not in stock, because they don’t have a live view inventory,” says Diaz. “Skynamo also solves this with live integration through the back office.”
Skynamo started out offering their services to small and medium enterprises with sales teams of around five users. But as they’ve grown, so too have their user numbers – a step that Diaz says is important to the company’s ongoing expansion.
“Until now funding has restricted us to what we can do. But we now have the money to do what we should be doing – to serve our customers and deliver more value.”
Diaz says the R431 million will be spent on expanding their operations. “That means hiring more people, and improving our customer side of the operation. We need to be able to onboard customers quickly and easily in order to scale. And then to expand into the US and the UK, and to grow our sales teams.”
Aside from the company’s head office in Stellenbosch, they also have sales offices in Johannesburg, Durban, and the United Kingdom. And the new investment will also help them establish an office in Atlanta, to expand sales into North America.
In spite of the global outlook, Diaz says they’ll remain firmly rooted in the country as a “through and through South African company”.
“We’re optimistic about the future of the country, and the investors wouldn’t have backed us if they didn’t believe in the potential success of a South African company in the US,” Diaz says.
“What sets us apart as a country, and company, is our attitude – we make a plan, we make things happen, we’re optimistic and enthusiastic, and we can build anything out of very little. We’re very industrious in that respect. If we can take that attitude and those qualities into the US, now with funding and a great product, I think we’ll do really well.”
Five Elms is based in Kansas City, Missouri, and has a wide portfolio of software companies – mainly dealing in subscription-based logistics, sales and customer relationship management products.
According to their website, they have a strong “anti-Valley approach”, and don’t believe in “unicorn or bust”. Rather, they specialise in partnering with “founder-owned, bootstrapped businesses, working alongside management to accelerate growth and continue to build industry leading businesses.”
They typically invest between $4 million and $40 million in companies with revenues of between $2 million and $20 million