Four important sources of financing for women entrepreneurs in South Africa
ENTREPRENEURSHIP is a vital part of South Africa’s business world, with small businesses providing essential employment opportunities and providing millions of people with viable livelihoods.
For a number of reasons, including the fact that women have been found to reinvest more of their income into the health and education of their children and the community, women entrepreneurs need to be supported in achieving their goals.
The latest Global Entrepreneurship Monitor (GEM) Women’s Entrepreneurship Report also found that women in countries like South Africa are among the most innovative and high growth entrepreneurs in the world.
Despite the immense value that women entrepreneurs offer South African society at large, there is a $42 billion (R795bn) gender funding gap that exists in sub-Saharan Africa, according to The Mastercard Index of Women Entrepreneurs.
For this status quo to change, women need to be more resolute in their efforts to access funding, and to explore funding avenues that can meet their unique needs and are aligned to their businesses.
At the back of International Women’s Day celebrated recently, these are four sources of financing for women entrepreneurs to consider:
Small business loans
One of the first places entrepreneurs look for business loans are traditional banks, but there are also a range of non-traditional small and medium enterprise (SME) funding options.
Most SME financiers offer both generalised and niche-focused loan products to cater to specific needs such as commercial property finance, asset finance and joint venture funding.
Business funds from Business Partners Limited, provide loans for commercially viable business with a special focus on those that are owned by women who play an active role in the business.
Unlike more traditional financiers, Business Partners Limited does not apply a blanketed approach to granting funding but evaluates all applications on their individual merits and potential profitability.
These loans come with a relatively high degree of flexibility in terms of longer financing period and the repayment arrangements.
What’s also beneficial with obtaining funding from a financier who takes a more active stance on supporting small businesses, is that you’ll also get access to much-needed mentorship opportunities, technical assistance, networking and financial planning advice. Apart from the financial aspect of building a successful venture, entrepreneurs also need additional support in the form of expert guidance, industry contacts and technical assistance.
Accelerators and incubators
As their name suggests, SME accelerators and incubators are business support hubs that offer services such as training, mentorship and financial assistance.
More specifically, accelerators work with SMEs that demonstrate high growth potential and can benefit from better access to market and customer bases as well as opportunities to scale their operations.
Incubators in turn, nurture startups from ideation phase into the earliest stages of applying for funding, doing adequate market research, understanding their product and
launching their ventures.
She Leads Africa is an entrepreneurial incubator aimed at advancing aspiring businesswomen in Africa. The initiative also runs a platform that provides women entrepreneurs with information and inspiration, as well as access to a community of like-minded individuals. The platform hosts regular digital and in-person events throughout the year, focused on helping participants to build their careers, grow their businesses and strive towards their financial goals.
The Africa Women Innovation and Entrepreneurship Forum (Awief) Growth Accelerator is a flagship development programme, sponsored by Awief and Nedbank. The programme provides support for early-stage and high-growth-orientated womenowned and women-led SMEs with growth strategy training, a corporate advisory service, mentorship, networks and access to finance.
Government funding programmes
Small businesses, especially those run by women, play vital roles in the community.
Not only are they engines of gross domestic product, but small businesses are highly effective sources of social and economic empowerment as well as community upliftment.
The South African government has recognised the need for women to have access to support in achieving their entrepreneurial ambitions and has partnered with various agencies and private sector partners to facilitate programmes aimed at supporting this important cause.
The Women Empowerment Fund, run by the National Empowerment Fund was founded to accelerate the provision of funding to businesses owned and run by black women in South Africa.
Currently, funding ranges from R250 000 to R75 million and is offered to small businesses across a range of sectors, in the form of secured debt, equity and a hybrid of the two.
Venture capitalists
The venture capital (VC) industry in South Africa has come a long way since its inception and has to date, been the source of funding and
support for several of the country’s leading names in Fintech, retail, consumer goods and green energy solutions.
Venture capitalists typically look for early-stage businesses or start-ups that show a high potential for future profitability and growth.
VCs provide these businesses with funding in return for an equity stake in the business, which allows them to inject their expertise and guidance into the process of getting the venture off the ground.
Dazzle Angels is a women-focused angel investing fund that is run by a team of experienced businesswomen.
In the process of supporting early-stage ventures, they provide funding as well as hands-on support that equips business founders with the skills and knowledge, they need to grow their businesses.
The fund is focused on empowering businesses that provide sustainable, innovative solutions to problems and are run by at least one woman.