South Africa needs more entrepreneurs – especially those who start up, establish and grow small and medium enterprises (SMEs). Are you thinking of expanding or starting your business? The first thing on your mind will be how to raise the capital needed to fulfil your dream. Thankfully, in a bid to grow entrepreneurship in South Africa, a number of government and private funding platforms are available, each with their own mandate, qualification criteria and application process. Let’s take a look.
South African Investment Network
This is an online platform that connects South African entrepreneurs seeking business funding with over 156 000 ‘angel’ investors worldwide looking for investments.
South Africa needs more entrepreneurs – especially those who start up, establish and grow small and medium enterprises (SMEs).
To get started, you need to register online to connect with investors, then create a pitch for your business. There is a handy tried-and-tested template available on the website to assist you, as well as some great resources to help you along. Next step, publish your pitch. Once it is approved on the site, it will be listed for prospective investors to browse and evaluate. You can also have your pitch emailed to investors and send personalised messages to individuals. If an investor likes your pitch, you will receive an email asking to connect. You will then gain access to their contact details to continue discussions, schedule calls and meetings – and possibly secure that funding.
You can accept funds from investors at any time – you do not have to reach any funding target and investors transfer to you directly, so there are no commission fees involved.
For more information, visit: www.investmentnetwork.co.za.
Business Partners Limited
Business Partners is an investment company for SMEs. The company invests between R250 000 and R15 million in SMEs across all sectors except farming, on-lending and non-profit organisations. Investment financing is offered for businesses at all stages of development, including startups, expansions, outright purchases, management buy-outs, management buy-ins, franchises, tenders and contracts. The company also manages a number of specialist funds, which provide investment financing for defined-profile entrepreneurs. Business Partners also has a range of support services for entrepreneurs, including property management consultants, mentors who are allocated according to the company’s needs, and access to other expertise to ensure the success of a business.
For more information, visit: www.businesspartners.co.za.
The Small Enterprise Finance Agency (SEFA)
SEFA provides financial products and services to qualifying small, medium and micro enterprises (SMMEs) and co-operatives, as defined in the National Small Business Act of 1996 and amended in 2004. It forges successful partnerships with clients, which contribute to great enterprises. The agency serves as a strategic financial partner to contribute significantly to the growth of the enterprise and so create lasting value. This means that SEFA is not the only channel to help SMMEs and co-operatives. They can also access SEFA’s products through any of its intermediary or partnership channels: commercial banks; co-operative financial institutions (CFIs); micro-finance intermediaries (MFIs); retail financial intermediaries (RFIs); strategic partnerships; and structured finance solutions (SFSes).
SMMEs and co-operatives can get credit facilities from R500 up to R5 million when applying through any of SEFA’s intermediaries or partnerships. Direct loans between R50 000 and R5 million can be accessed through the regional offices, SEFA co-location offices and satellite offices nationally. Make sure you have a feasible business plan before you apply for the loan. SEFA staff will evaluate your application to determine the viability of your loan and at what rate it can be repaid.
For more information, visit: www.sefa.org.za.
National Empowerment Fund (NEF)
If you are directly involved in your business and need funding of between R250 000 and R75 million, the NEF may be able to assist you. It is mandated to offer financial and non-financial assistance to black-owned businesses.
Funding decisions are guided by the Industrial Policy Action Plan (IPAP) across a variety of sectors. Startups can qualify for funding up to R10 million. The NEF also offers assistance for rural and community development, franchise finance and new industry development.
NEF funding is currently obtainable from five funds These are:
This fund is designed to support black entrepreneurs wishing to start new businesses, as well as to support existing black-owned enterprises with expansion capital. The fund supports these entities by offering debt, quasi-equity and equity finance products, with the funding threshold ranging from R250 000 to R10 million.
The uMnotho Fund is designed to improve access to black economic empowerment (BEE) capital and has five products: Acquisition Finance, Project Finance, Expansion Finance, Capital Markets Fund, and Liquidity and Warehousing. These products provide capital to black-owned and -managed enterprises; black entrepreneurs who are buying equity shares in established black- and white-owned enterprises, starting new ventures or expanding existing businesses; and BEE businesses that are or wish to be listed on the Johannesburg Stock Exchange (JSE). Funding ranges from R2 million to R50 million.
Rural and Community Development Fund
This fund is designed to promote sustainable change in social and economic relations and in supporting the goals of growth and development in the rural economy, through the financing of sustainable enterprises. This is achieved through mobilising rural communities in legal entities or co-operatives to participate in broader economic activities and realise the economic transformation goals in rural South Africa. The fund has three products: Acquisition Finance, Expansion Capital and Project Finance (New Venture/Startup/Greenfields), with the funding threshold ranging from R1 million to R50 million.
Strategic Projects Fund (SPF)
The SPF’s sector focus is informed by the government’s strategies on industrial development through the Department of Trade and Industry’s National Industrial Policy Framework, the corresponding IPAPs and the current government economic growth strategy, the New Growth Path. The sectors identified are based on the IPAP and the New Growth Path and are: agriculture; business process outsourcing (call centres, data storage centres and termination centres); textiles; mining, mineral processing and mineral beneficiation; automobiles; renewable energy and biofuels (solar, biomass, hydro, co-gen and wind); plastics; pharmaceuticals and chemicals; forestry, pulp and paper; infrastructure (telecoms, healthcare, roads, rail airports, dams and water); manufacturing; and tourism (hotels, resorts, tourism attractions and leisure).
Arts and Culture Venture Capital Fund
The Arts and Culture Venture Capital Fund was designed to promote and develop the arts and culture sector by providing affordable loans to start and/or expand small businesses. It is an important source of finance for startup entities and for companies that have a limited operating history and which do not have access to capital markets. The Department of Arts and Culture realises that to achieve radical economic transformation, access to funding must not be limited to only a few businesses. This fund will assist businesses with potential to be self-sustainable and not to rely on the government for grant funding. Funding will be made available to businesses in all provinces, where more job opportunities will be created.
For more information, visit: www.nefcorp.co.za.