Funds Needed for Setting-Up Company Selling Software As a Services

Opportunity Snapshot

Investment Opportunity

I am starting an IT company with a mixed source business model - as I will be using propitiatory and open source software. I'll be targeting SMEs and small institutions.

There are so many SMEs in South Africa and what I have noticed is that they lack IT support. And this is because of so many reasons the two being that they cannot afford it and also IT companies in South Africa focus on big corporates.

At the moment I am setting up a company that will address that, the services that I will be offering range from hardware procurement to application development and eventually support contracts depending on the needs of my clients. However my main focus will be on offering them software as a service, and together with my mixed source model this means that they will be paying for the value that I have added to the software while preparing a solution for them.

This software as a service includes operating systems, ERPs, incident reporting applications, e-mail clients, etc. And for my targeted market to be able to afford they will be open source software plugged in with propitiatory software if needed. Thus by this my clients will be able to afford systems and IT services that used to be exclusively for big corporates. And now this is the right moment, since open source is making waves within IT.

Another reason is that most organizations are considering open source even big ones, for example FNB has started deploying open source operating system (Linux), and the government has been encouraging municipalities to go open source. And regarding municipalities and deploying open source I was informed during a conversation with one of the IT managers from the municipalities that there is a skills shortage. And with my company I am planning to address this by providing my clients with those solutions and deploying support engineers for the duration of the contract.

And I will couple my services with a hardware retail store, so that I will have income being generated every day. I actually started the whole mixed source business model as an experiment where I work however our challenge is that we have to compete with propitiatory software and our sales and marketing division prefers to sell propitiatory solutions instead of ours because of the huge commission.

Competitive Advantage

As mentioned above my main competition will be my current employer and another small IT company that is also experimenting with a model similar to mine. However with problems that our open source department is facing chances of that it thriving are slim.

And I can confidently say that we are one of the pioneers of this business model in South Africa.

Rationale for the deal

To make my idea profitable, my direct market is SMEs together with small organisations. And my main focus will to convince them that software is affordable.

Use of financing

The funds will be used for start-up and also to serve as a sort of a cushion during the early days of my business.

Looking for similar investment opportunities