New ideas light up start-up prospects

Por­tal mooted to draw ru­ral self-starters into net­work

Sunday Times - - BUSINESS TIMES - Zipho Sikhakhane

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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