Yappo - an Insight into the Business

Product of Studentology5th Floor, Bandwidth Barn66 Albert RoadWoodstock, Cape Town021 409 7000

www.studentology.co.za

Towards the end of 2011, I had the opportunity to embark on what was to become the most defining moment of my career - creating, developing and bringing to market a mobile wallet into the South African university student market.

At this stage, we did not even have a name, but had the intention, energy and ardent desire to do something different, something meaningful, something that could change the way people do things.

I had a vague clue of the challenges and lessons that lay ahead, but I could never have imagined the sheermagnitude of experiences that were about to comemy way.

Yappo | Introduction

Joining forces with an ex-colleague Stuart Minnaar (centre) and Andrea, who joined us a year later (right) - each of us had never had a day experience in programming!

This is an insight into the business we created, the mobile wallet that saw 1500 students download it within the first three months of launch.

Yappo | Company Overview

Overview

Key figures and stakeholders structure

Management Board

Yappo is a product of Studentology which was founded in 2010 as an online marketing company connecting businesses and brands to the student market.

Studentology started as an online noticeboard for students in Cape Town. After noticing retailers reluctance to advertise on the website, Studentology launched a student discount card (StuDCard). StuDCard had 4000 users and 120 stores (offering discounts) listed and was the tangible product that connected retails stores to the student market via Studentology. The card was a research tool to ascertain whether there is a model in the student market that could analyse student consumerism.

Studentology took the student discount card model and integrated an e-wallet into it and developed Yappo: a mobile payment app for South African students which enables its users to use their phone as a wallet. Yappo integrates into 21 Point of Sale software systems.

Investment: Studentology received Series A investment from UK based Mamba Mentors for proof of concept. A second round of Series A investment was received from an Austrian based angel investor.

Proof of Concept: Yappo went live in Feb 2013, currently has 1500 active users and 3 large franchise stores (Pick n Pay, Vida e Caffe and Kauai: 26 stores) active accepting Yappo.

Stuart MinnaarFounder & CEOFinancestuart@yappo.co.za

David AmiraCo-Founder & Brand, Operations & Techamira@yappo.co.za

● National Winner SAB Kickstart 2011● Voted Top 30 most innovative companies in South Africa -

Accenture Innovation Index, 2013● Ernst & Young Intrapreneurship Programme recipient

2013

Targeted users: 300 000 (Dec 2014)

Investment required - R800 000Equity: 20 - 25%

Exit - end 2014

26%

74%

CurrentInvestors

Founder

Yappo | Business Model

www .

Yappo integrates into 21 POS software systems

Yappo has created its own online payment gateway

Top-up Yappo Account

UserParent

Yappo stores offer between 15 - 20% of which 3 - 5% is revenue

POS Integration

Yappo Treasury

Back-end,servers & databases

Yappo Functions● Pay in-store ● Pay Online● Purchase airtime/electricity● Peer-to-peer payment

Consumer and Spending analysis

Targeted Advertising

Student Financial Aid

Yappo payment ecosystemOnline payments

app POS

website

e-commerce

mobile POS

ServerTreasury

Campaignportal

Back-endportal

More spend per year than the average citizen

online16% purchase

Annual spend from students

Yappo | Market Analysis

General Market Information*

Spending analysis*

Disposable spendper month

R3510

15%

78%Get money from Parents or family

R39.5bn

Average spending per month

Entertain

R150R650

R150 R200 R320

R510

R200- 9% more on contraceptive- 10% more on music

- 19% more on jewellery- 32% more on laundry

BLACK | 76%INDIAN | 10%WHITE | 9%COLOURED | 5%

Spending behaviour (racial groups)*Spend more on cosmetics, take-aways, extra tuition and gadgets. 47% more on clothing than any other group

Spend 68% more on jewelry and accessories than other groups

Spend more on entertainment, groceries. Spend 6 times more on alcohol + cigarettes + petrol than other groups combined .

Spend more on fashion, magazines and cigarettes. Spend the most on fashion

‘South Africa has the highest mobile phone penetration of sub-saharan Africa, at 123% with over 50 million connections.’ The overall region also has the highest growth rate globally (higher than W. Europe and the USA)

Source: Wireless Intelligence, Buddecom

Online/Mobile Payments

Mobile money and payments has achieved the broadest success in Africa; in South Africa approx. 10% used a mobile phone to receive money in 2012.

Source: The Little Data Book on Financial Inclusion 2012, The World Bank

The demographic of the smartphone population in Africa is that of the student market; over 50% of 18-34 years old are estimated to have a smartphone in 2013, a sharp increase of 40% since 2012.

Source: Google Insights at ourmobileplanet.com

have purchased something online

would purchase online

84%

9% have a credit card

* Sources: South African Mobile Generation - Unicef 29/05/2012, Studen Village Survey 2012 and Studentology Internal Survey 2013

Yappo | User and Store Acquisition

User Acquisition Store Acquisition

Yappo is targeted towards students in South Africa registered at tertiary and post-secondary educational institutions.

There are 850 000 students in 23 universities and technikons. Yappo aims to have 25-30% of the studentmarket as active users by the end of 2014.

For the next 18 months Yappo will be targeting the top 4 provinces according to studentpopulation size. Gauteng

193 000

Eastern Cape 64 000

Kwa-Zulu Natal80 000

Western Cape91 000

Wifi Hotspots- after noticing a poor mobile phone connection on UCT campus during a promotion, Yappo set-up a free Wifi hotspot. In order for students to access the Wifi, they need to download Yappo. We aim to have 3 - 5 Yappo Wifi hotspots on each of the campuses.

Yappo integrates into 21 Point of Sale software systems used by 70% of retail in South Africa

Online store Acquisition

Users can pay online by entering the code that Yappo generates off the app into the Yappo plugin on the shopcart

Benefits to students- Access to discounts- Free wifi- Convenience (airtime+electricity

Benefits to stores- Access to students- Feet into store- Customer and sales insights & analytics

Yappo | Milestones

2010 2011 2012 2013 2014 Time

Growth

Studentology website goes live

Yappo goes live

2nd Investment

National Winner

Top 30 Most Innovative Company in SA

1st Round InvestmentRegional

Winner

Ernst & Young Intrapreneurship winner

Discount card runs 12 months for research. 3500 cards, 120

stores

3 store brands active

2 Stores

6 Stores

17 Stores

UsersX 1500

Yappo | Payment Infrastructure

Back-end

Transaction

YappoTreasury

YappoServer

Merchants

Users 0.7% charge for each top-up.

Yappo incurs the cost

Yappo batch settles the storesR3.50 charge to the stores for the settlement

a 7-digit code unique to each transaction processes the transaction in real-time

% All merchants offer a discount. Yappo takes 3-5% of the discount as revenue

VASYappo generates a fixed Rand amount revenue from each Value Added Services purchase (airtime + electricity)

Revenue Model

ANALYTICSADVERTISING SOCIAL NETWORK Wifi HOTSPOTSYappo offers in-app advertising that can be targeted to users based on the spending patterns.

Yappo can control the shopping value chain from advertising to purchasing.

Based on the user behavior Yappo can draw analytics from:

- What has been bought where- Transactions of the users/merchants

By integrating into the social media channels users can see where their friends are spending and what the listed stores are offering and share via their channels.This becomes valuable for brand association.

The wifi hotspots offer insights into the users handsets and data usage. Yappo will use this platform for user surveying and advertising.

Users Store Till Point

Yappo transaction video

Yappo | Design

Yappo | Competition and Buyers’ Landscape

mobile payments

and discounts student market

and media

online payments

Yappo is uniquely positioned with its competitive set in the cross between the online and mobile payments industry and the student/youth market in South Africa

Yappo | Press Releases

Yappo, a mobile payment app for students, will be released on campuses across the Western Cape, South Africa, on Friday, February 1.The free app assists students in spending their money at certain stores, managing their purchase limits, buying from a variety of stores at a discount and even paying friends or advertising.

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The startup secured its first round of funding from UK-based Mamba Group at the end of last year, which allowed it build its concept, but a second round of funding is needed to scale and continue..

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Entrepreneur Stuart Minnaar from the Silicon Cape initiative speaks to GTA about his company Studentology. And we ask Angel investor Haji Chana when and why ideas have the potential to make serious money..

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Chana feels that Yappo has hit a sweet spot with an mCommerce app that fits within the student community niche — think Facebook in its early days. In the long term, data collected from transactions can be used to create new student or graduate targeted services.

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