FINDING THE RIGHT GROWTH EQUITY PARTNER

IN OCTOBER, a bombshell story was published claiming that an attack by Chinese spies infiltrated 30 US companies, including Amazon and Apple, and compromised the country’s technology supply chain.

The report cited 17 unidentified sources to support claims that a unit of the Chinese People’s Liberation Army infiltrated the supply chain of computer hardware maker Super Micro Computer to plant malicious chips that could be used to steal corporate and government secrets.

The chips purportedly allowed attackers to create “a stealth doorway” into any network that included the altered machines.

The report sent seismic shock waves throughout the global cyber-security industry, with tech giants Amazon and Apple flatly denying that their security had been compromised.

While companies and government agencies continue to dispute the facts, security experts are warning that even if the attack didn’t happen, it is plausible that hardware is being infiltrated and compromised within global supply chains.

While local suppliers and service providers may be working with trusted global brands to deliver products and devices to South African customers, those trusted brands have a complex supply chain that have risks and vulnerabilities of their own.

In most instances, supply chains will become compromised and there will be no knowledge of it for months or even years down the line.

While there is clearly no easy solution or patch, awareness and education is critical. Simply by becoming aware and informed of the cyber threats and vulnerabilities, business leaders can mitigate some of the potential risks.

Business leaders should communicate with vendors and suppliers and ask them the tough questions. Are they aware of the risks and what precautionary steps are they taking?

The supply chain is only truly secure when all players implement effective, co-ordinated and proactive security measures. To this end, local companies should begin to consider procedures such as annual vendor risk assessments, random spot checks on physical devices and hardware security audits on newly-acquired equipment.

Also, while cyber experts look to mitigate threats to hardware security, business owners and leaders should be implementing robust systems and procedures of their own.

Brian Timperley is the managing director and co-founder Turrito Networks, and joint MD of Dial a Nerd. COMPANIES often come to a junction in their existence where they are mature enough to expand, or face stagnation.

Growth more times than not needs money and finding the right equity partner is often a challenging endeavour for most South African business owners. They quickly realise that, just like they had to find “product-market fit” for their business’s goods or services, they also have to find an “equity-partner fit”.

To find the right equity partner, a business owner has to look beyond the search for finance. Bringing an investor into your business with the appropriate expertise to aid in a support role, or as part of the board of directors, is essential to growing it.

Many businesses look at venture capitalists as alternatives to traditional funding institutions, like banks. Some might argue that they are better alternatives to banks.

Others may venture that they are more expensive than banks, and they would be right, they are, but then they are also willing to take the risk (equity – business) that the banks cannot and will not accept.

Is it better to own 100 percent of a cupcake or a 10 percent slice of a huge chocolate cake? Entrepreneurs that started their business are hesitant and sometimes just not willing to relinquish control, or even a part of it.

Is it pride, is it ego? Who knows? But from where I’m standing it is short-sighted. Sometimes, if not always, it’s necessary to allow for more expertise to enter the business to grow. I would venture that it is only those who have been able to learn, adapt and be flexible that have taken the junction as a springboard to success.

Finding an equity partner who is willing to meet your financial expectations is probably the hardest of the factors mentioned above. Often business owners value their businesses more than an investor is willing to pay and that is another negotiation. Finding a partner that is willing to invest their money and lend their expertise to your business is a huge benefit.

Not one of us grew up doing it all our own way. Along the way we had parents, teachers, mentors and tormentors. Business is the same; if you were perfect, you would not need investors or capital, would you? If you need help, be it expertise (then you pay for it) and if you can afford to buy the best, then maybe the best are willing to invest in you if they buy into your dream.

In short, your equity partner should be like your spouse in life. They are there through the rough times and you have to pay them and compensate them for that in the good times. They share your heartache, and lend an ear and sometimes a shoulder to cry on, and when you are lucky and they share the dream, they open and willingly share what they have with you. Respect that, take care of that relationship and please don’t be threatened by it.

In the end, the art of making money is simple but the actual mechanisms are complex, the structures minefields, the taxes a bottomless pit and your bankers either your friends or demons.

The bottom line is that if you trust your partners, the sky is the limit. If you don’t, you may just as well get the divorce over and done with as soon as possible.

The choice is yours.

Willem Oberholzer CA (SA), MCom Tax, is an executive director at Probity Advisory (Kreston South Africa).