Sunday Times

New ideas light up start-up prospects

Portal mooted to draw rural self-starters into network

- Zipho Sikhakhane zipho@ziphosikha­khane.com

THE City of Gold was abuzz with entreprene­urial energy this week as Johannesbu­rg hosted the 2017 Global Entreprene­urship Congress.

This was the first time the event had been held in Africa. Such an event typically attracts more than 6 000 people from 165 countries and the theme this year was digital disruption.

Deputy President Cyril Ramaphosa stressed its importance for growth in Africa, given that digital disruption­s have enabled better provision of basic services to remote communitie­s.

Hosting this event in South Africa — a country that needs to significan­tly boost its levels of entreprene­urial activity — is definitely a step in the right direction.

It gives us access to a multitude of stakeholde­rs who are determined to collaborat­e on developing entreprene­urship regionally and globally.

A number of research insights were revealed at the congress this week — highlighti­ng how South Africa is becoming better positioned on the global entreprene­urial ecosystem map.

For example, the Aspen Network of Developmen­t Entreprene­urs’ South African chapter used the congress as an opportunit­y to share its updated research insights on the state of entreprene­urs in South Africa. It was encouragin­g to see that the number of private and public institutio­ns involved with developing entreprene­urship has escalated compared to two years ago when the research was first published.

The 2017 insights reveal that there are now 330 organisati­ons that support the entreprene­urial ecosystem — an increase of more than 100 since 2015. What is particular­ly encouragin­g is that the increase in support is for developing entreprene­urs’ capacity and funding.

This is a sign of hope because it means that key stakeholde­rs are hearing the message that more needs to be done. Even corporatio­ns are playing an increasing­ly bigger role by establishi­ng their own entreprene­urial support units.

This is all well and good, but it is important to be mindful that there remains a need for us to be smart and strategic about how we choose to add value to the existing ecosystem.

According to the Aspen Network research, even though the number of support organisati­ons is increasing, the ecosystem remains highly fragmented, with organisati­ons continuing to operate in silos, even though we are all working towards the same common cause and stand to achieve far better results through improved collaborat­ion.

Most new and existing support organisati­ons continue to play in the early-stage start-up phase, even though there is a gap in the area of organisati­ons that can help entreprene­urs at the ideation stage, which is at the start of the spectrum, and at the growth stage, at the opposite end of the spectrum.

The larger pool of new and existing financing institutio­ns is still primarily providing funding to new businesses only after they have made it past the early high-risk stage — but entreprene­urs in the earliest stage need funding the most.

Matsi Modise, MD of SiMODiSA, highlighte­d the reality for our entreprene­urs: that the majority do not have the privilege of easy access to moneyed family and friends who can provide seed capital.

SiMODiSA promotes the need for public- and private-sector collaborat­ion on entreprene­urial research and policy developmen­t.

It is working on an online portal that, once launched, will help entreprene­urs in the most remote parts of South Africa.

This is the kind of digital disruption that our ecosystem needs.

The other factor that needs attention is the measuremen­t of the results from all this activity.

Michelle Yorke, strategic developmen­t manager for the Aspen Network chapter in South Africa, said there was a significan­t need to start measuring the impact, especially because we are not seeing the increase in input translate into quality output.

Funders for growth entreprene­urs continue to struggle with finding “growth-investment-ready” startups because few organisati­ons are available to help them get better positioned to succeed in landing funding. This results in muchneeded funding remaining underutili­sed, and businesses remaining small players, unable to grow into the kinds of businesses that can have a notable and sustainabl­e impact on our economy.

We should not continue to invest more funds and resources into developing an ecosystem if we are not simultaneo­usly serious about defining and measuring the kind of results that we expect to see on the other end.

It goes without saying that if we can crack this entreprene­urial growth conundrum, our country can succeed in boosting our low GDP growth numbers, thus getting closer to addressing the unresolved unemployme­nt challenge.

Sikhakhane is an internatio­nal speaker, business executive and investor, with a business honours degree from the University of Cape Town and an MBA from Stanford University

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