Monday, March 23, 2015

Day 5: Exploring The Start-Up Nation


We kicked off Day 5 with a visit to the manufacturing plant of start-up Woosh, a provider of turnkey solutions for drinking water in public spaces. Israel is a country that is mostly desert, and with a growing need for better water security. Woosh set out to make drinking water available to more people at a lower cost and used Tel Aviv as a pilot. Their innovation is built around a well-designed water filling station that can be placed in public spaces for users to refill their water bottles by swiping their credit cards. The cost of refilling your own water bottle is a fraction of buying bottled water anywhere in the world. The co-founder of Woosh, tells a fascinating story about his personal inspiration for this innovation – proof that inspiration can come from anywhere, what matters is what you do with it.

The company had also extended its services to water purification and desalination (which Akhona Maqwazima taught me is converting seawater to drinking water. Smart guy that!). Furthermore, the need for better access to drinking water cannot be fully served by the retail of bottled drinking water. Lately, many big cities have started to frown upon plastic water bottles.


The website posted this article on 26 February 2015:

"San Francisco has become the first city in America to ban the sale of plastic water bottles on city-owned property. “A move that is building on a global movement to reduce the huge amount of waste from the billion-dollar plastic bottle industry,” according to The Daily Catch. Over the next four years, the ban will phase out the sales of plastic water bottles that hold 21 ounces or less in public places. Waivers are permissible if an adequate alternative water source is not available. One of the largest supporters of the proposal was the Think Outside the Bottle campaign, a national effort that encourages restrictions of the “eco-unfriendly product.” Americans use 50 billion plastic water bottles a year, according to an anti-plastic bottle campaign Ban the Bottle, and just 23 percent of those are recycled. Should Venice be next?"

A number of entrepreneurs in our group were intrigued by the technology especially since we have our own problems with water supply in South Africa, and we ought to be embracing technologies that help conserve this key life source and protect the environment. We certainly don’t want a repeat of the electricity issue, where we didn’t adequately plan for a future that we knew was coming. So don’t be surprised to find yourself re-filling your glass or steel water bottle from a Woosh in downtown Johannesburg, Durban or Cape Town.

After Woosh, our group made a trip to the University of Tel Aviv to hear about Space IL, an Israeli non-profit founded by 3 young engineers in 2010, answering the Google Lunar X Prize challenge. They are aiming to make history and land the first Israeli spacecraft on the moon. The group also visited The Therapeutic Riding Centre of Israel, which is another non-profit dedicated to improving the lives of disabled people through a unique therapeutic and recreational method of Animal Assisted Therapies.

I missed both these visits as the rest of my day was scheduled with 3 back-to-back meetings before a party at Morris Kahn’s home. The prospect of partying with billionaires later in the day had me looking forward to these meetings.

My first meeting was with a company called Connesta. Eli Doron, the CEO, had made the trip across town to meet with me over a delicious pizza in an eatery not far from the University of Tel Aviv.

Eli is a warm, fascinating guy. Unlike all the tech entrepreneurs I had met to this point, he is also not young. He is grey-haired and I would place at circa +50 years old. In 1992 Eli was part of the team that wrote the protocol for VoIP (Voice Over Internet Protocol). He wrote the actual protocol for the technology that the likes of Skype and others are built on. I should’ve taken a selfie with this guy!

Anyway, his company Connesta has found a way to broadcast LIVE events online, with all the bells and whistles, and all you need is a camera and an internet connection, all at a fraction of the cost of his competitors. I loved his presentation and attention to detail. We promised to stay in touch.

I then had to make my way across town (with a very unhappy cab driver who only spoke Hebrew) to visit the offices of a very impressive tech start up that is seeking the change way we interact with data when teaching, or making presentations.

The company is called MUV Interactive and they have created ‘bird’ a human-machine interactive tool that clips on your index finger and gives you ‘powers’. Gartner named this technology 2014 Cool Vendor in Human-Machine Interface.

The best way to explain ‘bird’? Think Minority Report starring Tom Cruise, meets boardroom presentations and watch this video.

Of course, one would have to use a projector to reflect the images onto a surface, however from then on you will be able to control everything using your finger.

The company is planning mass production for 2016 where they plan to raise $10 million to take the innovation to market. In 2015 however, they plan to have a certain number of units in the market in different geographies to test appetite and traction.

The future is here, ladies and gentlemen!

My last meeting was with a South African entrepreneur, Jason Glick, who had moved to Tel Aviv almost 10 years ago, who has now built a sizeable media business in outdoor advertising and digital media. We had a lovely cup of coffee in Hertzliya and struck up a good rapport.

I then needed to make my way back to Netanya, which is 24km from Hertzliya, to check into our hotel for the night and prepare for a party at dollar-billionaire Morriss Kahn’s home. He is now 85 year-old and he decided to invite the South African delegation to a have a party at his home. I had also been asked to speak at the dinner, so I was a little nervous about that.

I eventually reunited with the crew at the party, which was well attended by Morris’s friends, half of whom had left South Africa +-40 years ago and returned to their homeland of Israel. It was a great night. I made my way through the speech and everyone’s positive feedback, especially from my host Morris Khan and our other new BFF, Jonathan Beare, was a overwhelming

And then the dancing started. We took over the party (as South Africans typically do) and made some of the older folk feel very young with their moves on the dance floor. I can safely say that Israelis know how to get down. Even the host, at 85, was mostly found on the dance floor.

getting down

A good time was had by all!

Unfortunately we had to leave the hotel by 07h30 the next morning for our trip to the holy city of Jerusalem, so we have to cut the night short.

Day 4: Logging Into The Start-Up Nation


After a night out with the group, we kicked off Day 4 with a reflection session themed on how the first 3 days have made us feel – a sort of midway check-in.

Here are some of the comments from our group:

“I feel like I should appreciate what I have more. After listening to Katya in Palestine, I feel like people back home who are living in pain and could benefit from hearing how other people live and how fortunate we are even though we don’t often see it that way”

“The kibbutz made an impression on me. I saw groups of people who are working together and creating something special in co-habitant space. I work with people and they often let me down. There I saw a communication that works together”

“I struggle to take a step back from the day to day running of my business. I am very scared to leave the fate of my hard work in the hands of people who may not share my passion. I thought about that a lot in these past few days”

“I am learning that it is okay to be in a space of uncertainty. I am learning to be comfortable with discomfort”

“I went for a run along Jaffa, and it reminded me of Jonah. I am thinking about a greater purpose for my business bigger than just making money”

“I feel heavy. I have seen and appreciate more how complex the political situation is between Israel and Palestine. I feel emotionally heavy. But I also woke up and realized that these issues are not mine”

“I feel sense of calmness. I feel like we, as Africans, are going to be okay. We have come a long way, and there is still along way to go, but with us, entrepreneurs, as a pillar of light for Africa, I am convinced we are gonna be okay”

“I appreciate the power of working together. It reminds me of how a group of ants can bring down a cockroach, where even they are smaller insects, working together they can achieve great things”

“I am itching to get on with it. I have a rejuvenation for the opportunities before me, and I just want to get my hands dirty and see how I can do business on this trip”

After the session I left the group to attend the Axis Tel Aviv Start-Up Conference. This is a two-day conference that provides a platform for Israeli start-ups to pitch to global investors. I had set up a meeting with the CEO of Trendemon, Avishai Sharon, a very young man who had founded a company that automatically analyses traffic of websites and improves hits, revenues and engagements for website owners and publishers – all automatically.

I was intrigued by the technology.

He had 5 minutes to convince an audience of approximately 200 investors to inject a further $2 million and thereafter take questions from a panel of 5 carefully selected investors. The audience also had forms where they are able to jot own questions and submit these for the start-ups to respond to via email post-event.


Trendemon presented in the Digital Media category along with 4 other companies:

Homage – a mobile co-creation video platform that allows users to become a participant in any video content and creating personalized emoticons. Their target market consists of content owners, production studios and content sponsors. The founder used a clip from Idols to embed his image onto the popular TV show and record a trailer that featured him alongside Simon Cowell judging contestants – I wasn’t too impressed, shame.

Sensegon – a technology that uses personality types, as opposed to demography and geography, to target advertising on social media. It is a media-buying platform that analyses the total addressable audience into personality types, and channels the advertising budgets accordingly. Their core market consists of digital media agencies, representing brands, or the brands themselves through a percentage fee of use of the platform or a revenue share on all spend on the platform. The technology is based on machine learning algorithms which cluster consumers into persona categories including risk-averse, practical, emotional, etc. – I was impressed by the idea, but I wondered if leading media agency groups would not quickly catch up to similar technology as they seek more insight into consumer behavior and strengthen their offering to large global advertisers – perhaps Sensegon founders are targeting an exit on this basis should they be able to prove their technology is better than anything else on the market.

Total Boox – this was the best presentation by far! The CEO opened by asking how many people in the room had bought a book they’ve never finished. More than half the room raised their hands with some chuckles in the crowd. He then asked how many people had bought a book they’ve never read. More hands are raised this time accompanied by silent laughter. Then he says: “Imagine if you only had to pay for the pages you read”. Total Boox is an online platform where you are able to ‘buy’ a book (they have over 35,000 books on their catalogue) but you only pay as and when you read a page. If you never finish the book, no problem – you only pay for what you have read. If you never read the book, no problem – you pay nothing at all. What impressed me about these guys is that they had already raised $2 million and were looking for another $2 million. They also have two types of clients. On the one hand, they target consumers who download books on the e-readers, Kindles, iPads and Tablets. On the other hand, they’ve also secured a number of government libraries as customers thanks to an unexpected interest and take up from the United States. How do they make money? They share the revenue with the publishers of the titles, and they market the service on-line via their very popular newsletter that, according to them, is under-pinned by a superior recommendation and discovery engine. I was very impressed!

WeKast: By far, the bravest presentation on the day! The company has developed a technology that lets presenters connect instantly without requiring a lengthy setup, internet connection or even a laptop. The CEO decided to do her presentation using her product to prove that it works (of course!). The only problem is that she had some technical problems when she was setting up, so much so she had to ask the facilitator to tell us jokes. This rather compromised the core brand promise of ‘zero time to connect’. However, eventually the system was connected and she proceeded to do her presentation, controlling it from her iPhone. It looked really cool. The system consists of a USB-style dongle that you insert onto a projector or TV which creates a secure loop or network. You then go into a mobile app where you pull up your presentation, and boom, Bob’s Your Uncle! The system also has other uses. Because of the secure loop, your audience has the ability to make comments, put up questions etc. onto your presentations, which you can follow up after your presentation. Noemie Alliel is the CEO and she was very good in articulating her market and user-friendly nature of her innovation. She and her team have funded everything themselves in proving the concept and was now ready to work on distribution channels and manufacturing the hardware (the dongle), she also had a respectable ask of $500,000 – I was very impressed by the innovation in a space that could do with creative solutions as an alternative to the irritating cables that never work properly.
I met a number of investors from all over Europe and Asia and they all seemed pretty excited about the session and the prospects of the rest of the conference. I spoke to a gentleman from Spain who had attended the FIFA World Cup in South Africa in 2010, who noted to me that there are a number of innovations South Africans could take into their own country and the continent. He was very positive about South Africa and not one word about crime or Eskom from him. Naturally, I enjoyed that chat.

I rejoined the group for a picnic lunch, after which we made our way to LEAD, an organisation that runs programmes to create future leaders of Israel. Young people are recruited at school level and get involved in a programme that develops their leadership potential. As part of the programme, students must think of and implement a community project. We watched the story of a young man who had a passion for football and used that to unite a Jerusalem community of Jews, Arabs and Palestinians

Click here to see what LEAD is all about.

We then had a surprise visit from a gentleman who spent time, sharing with us first hand experience of the situation in Syria. Another very complex conflict there, which is between the people of Syria and also between Syria and its neighbors. This gentleman and his organisation also noted the involvement and support received from South Africa in supplying medical care during this difficult time. I later learned that this was through Imtiaz Suleman’s Gift of the Givers Foundation.
Later than night we had a very carnivorous dinner with the group, and were joined by a young Israeli entrepreneur, Michal, who is part of the Breaking the Impasse initiative that seeks to unite entrepreneurs in Israel and in Palestine. Her perspective was very interesting. The organisation is a platform trying to address common challenges for entrepreneurs and show both sides that the two nations can work together. It was however very difficult to keep the organisation away from the public and to meet openly.

I shared with her our experience with Katya in Palestine and asked her about the practicality of an effective partnership between the two nations when, in my view, the Palestinians essentially have nothing to bring to this partnership. Alternatively, this platform runs the risk of being seen as Israeli entrepreneurs trying to extend an olive branch to Palestinian entrepreneurs, which can have varied outcomes mostly unintended negative ones.

She highlighted that a number of Israeli engineers and professionals were involved in the development of Rawabi, the brand new Palestinian city and this was a good step in the right direction. The conversation became heavier and more complex as the entrepreneurs explored the different angles of the political conflict between the two nations.

I needed a break from this and ended up finishing my delicious bottle of merlot at the bar downstairs with Karabo Songo, the founder and CEO of Joburg-based agency, Olive Communications. Good guy that. We had had enough of politics for one night, and had to plan for a very busy next day, with back-to-back meetings, and checking out and traveling to Netanya.

PS: If you are interested in investing into or partnering with any of the companies above, feel free to drop me an email on and I will connect you.

Day 3: Palestine. How The Other Side Lives

Day 3 of our trip coincided with a very important event in Israel – national elections. As a result we took the opportunity to visit the West Bank, but first we had some business to take care of in Tel Aviv.

We kicked off with a visit to The Save a Child’s Heart centre, a Tel Aviv based non-profit medical facility that carries out heart surgery for children from all over the world, including Kenya, Ethiopia, Zanzibar and even Iran, Palestine and Syria at a fraction of the cost of similar procedures in private hospitals.

It was quite difficult watching infants only a few weeks old connected to tubes and machines undergoing major heart surgery. Entrepreneurs shed lots of tears when the doctors were briefed us on each child’s case and circumstances. We were able to visit the children who had either undergone surgery or were waiting surgery and it was amazing to speak to the African children and how they came to be part of this initiative. A young girl from Kenya, named Mary, made a particular impression on me.

The centre is funded and supported by Morris Kahn, the ex-South African dollar billionaire who also supported the young entrepreneurs on our trip – proof once again that capitalism can do good – its really is up to the capitalists.

After dancing to loud Rihanna music with the children at the centre, we started our long journey to the West Bank. The day was to become an emotionally heavy one.

We drove past 3 security check points on our way to Rawabi, the first planned Palestinian City and brain child of multi-millionaire entrepreneur, Bashar Masri. What a sight!

We had a guided tour from Shadia Jaradat, one of the chief engineers of the project in her high heels, no gaal. The development is funded by the Qatari government and promises to be a modern way of living for middle-class Palestinian families – Think of Melrose Arch on steroids!

Our group chat with Bashar was my highlight of the day. He opened by unapologetically telling us that the city is primarily a commercial project and its key objective is to make money. There is only one partner, the Qatari government, who have extended a $1,6 billion funding line for the project and expect a fair return from their investment.

Given that, according to Bashar, the projected IRR is estimated at 2,9%, in a market where dollar cash deposits earn a return of 3% interest per annum, it was clear to see that whilst all business is for commercial return, this development represented much more to him and his colleagues and partners than just commerce.

The project itself carries with it huge political risk, because it is built on land that is under occupation by Israel. Until this political impasse is resolved, his remains clear and present risk. I sensed a subtle hope in Bashar’s voice, that today’s Israeli elections would yield an outcome that takes one step towards such a resolution – That hoped was to be dashed by comments from the re-elected Prime Minister of Israel the very next day.

Bashar highlighted the international coverage that Rawabi had received and why it was important. The man speaks passionately about using the development as a catalyst for economic growth of the West Bank which is home to 3,7 million people, of which a third are under 40 years-old and 74% depend on the state for their livelihood. I guess these are the real consequences of donor-funded economies that are essentially restricted in free trade with the rest of the world.

I asked him about his media interests and why the international community hasn’t covered it in detail, the perspective of the Palestinians in the conflict. He felt that there were many factors at play in the coverage but he chose to focus on the positive coverage that has happened from Germany, the USA, England, and even South Africa. He believes that the more the international community is exposed to the injustices of Israeli occupation, the more likely a sensible solution will be found.
I quickly got the sense that in this region every conversation eventually turns political – How can it not?

Bashar spoke passionately about his love for Palestine, even though he studied and lived in North Africa and the US. Virtually all of his business interests are in Palestine and he constantly turns down lucrative business opportunities, preferring to put his money where his mouth is. Notwithstanding that he continues to hold small interests in Morocco, Egypt and Jordan. He admitted that this approach cost him dearly, between 2000 – 2004, when the political situation was dire and all of his businesses lost money, with most having zero revenues.

I asked him what could the international community do to help make the development of Rawabi a success and by extension Palestine. He spoke of media coverage and also bringing services into the city, such as call centres and other Business Process Outsourcing (BPO) services to create jobs for Rawabi residence and complete the offering of it being a place where people can ‘Live. Work. Grow’.
We left Rawabi in awe. In awe of the charming entrepreneur that is Bashar, notwithstanding the political challenges he and other Palestinian entrepreneurs have to contend with, and in awe of the $1,6 billion development with a 500-seater amphitheatre.

Lunch was at a restaurant in Ramallah, owned by Palestinian entrepreneur, Katya and her brother. What I thought would be relaxed chat over lunch about entrepreneurship in Palestine turned out to be a political debate about the structural challenges experienced by young people.

Katya spoke of how access to finance has become a dependency on the banking industry for young entrepreneurs. According to her, loans are handed out to young people who often can’t afford to pay them back creating a dependency.

However, her biggest challenge by far is the non-existent market. Because of the occupation, and the security situation that created security check points all over the West Bank. She speaks of how a few minutes trip between Ramallah and Jerusalem has become a 2 hour trip because of these checks.
She feels that sabotage is very rife against Palestinian business. To prove this point she related a story of a top Moroccan DJ whom her restaurant had invited to play at her restaurant. She paid the deposit, booked the flights, the DJ applied and received a visa to enter Israel en route to Palestine, but on the day of travel he was refused clearance at the airport, after landing. This led to her having to refund all her customers and making a loss on the event. She is convinced that this was done on purpose to sabotage her business.

Supply of certain basics is also a problem. For her as a restaurateur, she can’t even get furniture because in the whole of the West Bank nobody manufactures high end furniture so she is forced to order this from Israel. This also applies to her alcohol orders – they all have to go through Israel, which means double taxation as there are not double-tax treaties, simply because Palestine is not a recognized state. Add to this the risk of certain foods being spoilt by the time they are delivered at Katya’s restaurant.

Surprisingly, Katya sees a silver lining in all this.

She believes that doing business in the current political climate, has built her character and her resilience. She talks about fighting to build her business and her country. She also makes an interesting point about how this has forced young people to mature much quicker as they inherit lots of responsibility at a young age. She is 29.

The entrepreneurs were very quite in the bus trip back to Tel Aviv. Given South Africa’s history, I suspect the day was emotionally hard on us, and it left most us with more questions than answers.
That night, the results of national elections started streaming in. We had dinner with Jonathan Beare that night and an opportunity to have great conversation on what we had seen and heard in Palestine over well prepared steak and a special 14 year-old Glen Fiddich whisky.

As we wrapped up the night, I realized that the political situation in this region is a complex one and unless you live here and contend with it day in and day out – you have no right opining. So, I wont.

Wednesday, March 18, 2015

Day 2: The R200,000 Tortoise

We started the day with another scrambled eggs, peppers and orange tomato breakfast in the Kibbutz before we set off on an early visit to BrightSource, the global designer and developer of solar thermal technology.
We were greeted by a tight security check as the solar company is headquartered right next to an Israeli army security base, which ‘according to foreign press’ may or may not be the home of all sorts of ‘frowned upon’ military equipment.
BrightSource’s technology uses solar thermal technology to reflect heat from the sun using software controlled heliostats (two-sided mirror panels), onto a central tower which boils water up to 300 degrees Celsius, produce steam, powering turbines to generate electricity. I was surprised that even I understood that.
It turns out that the company, though formed only in 1996, has its roots, through another company called Luz Industries, which in the 80’s became famous for thermal plants built on the Mohave desert, in California, USA.
As solar technology improved, BrightSource started perfecting some of this technology and is now rolling out in their newest development also in the California desert, called Ivanoah. This $1,6 billion development kicked off in 2008 with a pilot or ‘proof of concept’, which was a resounding success, notwithstanding some unexpected cost escalations including a $50 million spend on relocating an endangered species of tortoise that was found on its site. We were told that there were approximately 3,000 tortoises that were relocated – this translates to R200,000 per tortoise!
I also learned an interesting lesson about focus when I learned that BrightSource had struggled to excel at being both a project developer and a technology company. The company reached a point where it had to choose. They are now a focused technology company and they outsource and partner for project developments.
I suspect the project finance models, which initially attracts private equity funds and not debt, as well as the inherent high risk profile of such projects (including the risk of finding R200,000 tortoises) may have had something to do with that decision.
Whilst these projects typically have a guaranteed customer (the electricity utility, e.g. Eskom); a guaranteed concession period which gives you security of tenure (typically 20 – 25 years); and a guaranteed price (the utility normally publishes these prices), one still needs to build the plant and get to a stage where they generate the electricity – there may be a few tortoises out there with other ideas.
The Bright Source visit also taught me something else. Apparently South Africa’s IPP programme insists that bidders must have all the funding before they kick off any alternative energy project (e.g. build a solar park that will feed electricity into the grid) and our National Treasury insists that the debt raised for such projects must be Rand (ZAR) denominated. Is this true? It sounds like we are creating a few barriers here. I would be interested to hear the logic behind this.
In the afternoon of Day 2 we visited Google’s Tel Aviv office to receive a presentation from an exciting start-up called Mobile ODT, which has built a way of administering cervical cancer screenings using a mobile phone.
The founder CEO, Ariel Beery outlined the ethos of the company as using the power of a community of surgeons and specialists with the power of optical technology. Merging these two key ingredients means that its now possible that when you consult with your doctor, you could be consulting with hundreds of thousands of other doctors all over the world in real time and your doctor’s diagnosis will be based on accurate data every time for a fraction of the cost of today’s cervical cancer equipment.
I was blown away.
Even their go-to-market strategy is fascinating. They don’t sell to governments or private hospital. They partner with global health organisations. Apparently, 1.2 billion women around the world require regular cervical cancer screenings and 720 million of such screenings are carried out every year.
The benefit of the innovation is that it is ‘non-invasive’ as it takes pictures and make no physical contact with the patient. This has helped with quick adoption by surgeons. They have also managed to extend the technology’s application. Apparently the US government has started using the technology to better analyse sexual assault victims because of its accuracy in diagnosis.
The company believes that they are in the forefront of a new era of caring for people. They just happened to start with cervical cancer.
We rounded the day off with a special dinner hosted by two South African-born dollar billionaires and co-sponsors of the Young Entrepreneurs Trip 2015, Jonathan Beare and Morris Kahn. The venue was Liliyot, a Tel Aviv restaurant that provides high-school dropouts with culinary training giving young people hope, inspiration and a career prospect in the food business.
It turned out to be a very inspirational night.
Two of our fellow entrepreneurs, Eddie Majozi and Paul Galatis took us through their entrepreneurial journeys.
Eddie’s rendition of how circumstances forced him to drop out of university and initially taking a job selling newspapers to now running a multi-million group of businesses was the stuff of brilliance.
Paul’s warm and sometimes funny delivery of his journey from his ‘1,400 Year Anniversary’ logo for his high school (which he admits was not his best work) to co-building one of Africa’s largest e-commerce businesses in We also heard from our billionaire hosts, both of whom were very blunt in their advice on what we can do to help take our own country forward.
It will be a while before I forget Jonathan’s ‘fire in the belly’ metaphor as the true source of entrepreneurship and why we should never worry about taking on big business because every big business was once a small business, when other big businesses were around – So just focus on building your business.
Day 3: We go to Palestine!

Day 1: The Kibbutz

Today was the first day of our Young Entrepreneurs Trip (#YoungTreps2015) with 25 young South African entrepreneurs to Israel and Palestine.
Having boarded our flight at OR Tambo at 14:20, enduring a 2,5 hour stop over in Addis Ababa, we landed in Tel Aviv just before 03:00 this morning.
After a 4 hour road trip to the southern desert part of the country, we arrived at Kibbutz Lohan to the sad news of the tragic passing of Minister in the Presidency, Hon. Collins Chabane. I was very saddened by the news as he was a dear friend to Given and we had developed a great friendship and played some good golf games together. I am still under shock and my sincerest condolences go out to his family, friends and colleagues.
Back to our trip. We visited two Kibbutzim, one an agriculture research centre that focuses on bespoke solutions and research for the farming community of the Kibbutzim. Amongst other things, they run equipment that is able to control the temperature of crops notwithstanding natural climate. We then visited a cow milking farm which milks 650 cows every 2,5 hours with the employ of only 2 people (we decided to call them ‘Titmen’) with everything else automated (see picture above).
We concluded the evening by having two sessions. The first was a detailed introduction to each other and we heard presentations (which I learned are called Pecha Kucha) from Dan Brotman, Executive Director of The South Africa Israel Forum, Ntuthuko Shezi, Founder of that cool ‘You fly. We fix’ business, Scratch Mobile and now an aspirant farmer and preserver of the Zulu language.
The second was the honour of meeting a young 26 year old lady, Emily, who became a source of huge inspiration after we heard her story of courage and perseverance. She then gave us a lesson on the history of Israel. You can imagine the questions and comments from bright South Africans about Israeli politics. Interesting stuff I tell you.
Tomorrow we are off to Tel Aviv with alternative energy as the day’s focus. Can’t wait! AK

Tuesday, March 17, 2015

Ian Fuhr: Legend

What a Saturday morning it as hearing from someone who has been in business for 40 years, through all the phases of South Africa’s recent past. He gave a good review of his journey, and also shared some important lessons on entrepreneurship. I thoroughly enjoyed how personable he was, and how willing he was to share his wisdom in a very frank way. I still can’t believe he started Sorbet only 9 years ago and now he has over 120 outlets countrywide and is about to open his first in London, UK. I think that’s legendary stuff! I highly recommend you read his book “Get That Feeling”

Monday, March 2, 2015

Economic Realities Must Drive SMME Support

When I received an invite to attend the State of the Nation Address (SONA), I quickly accepted because like all South Africans, I expected some fireworks from this year’s instalment. I was also interested in how the president would deal with the issue of electricity and whether he would give tangible initiatives to ignite this lethargic economy. I was particularly interested to hear more about initiatives to help support entrepreneurs and small businesses. I obviously got a lot more than I bargained for, both on and off the field, so to speak.

So what did the president have in his bag of goodies for entrepreneurs and small business? Not much, I’m afraid.

Notwithstanding that ‘support for small businesses’ featured as one of the key issues raised by South Africans who participated in the president’s campaign calling for submissions into SONA 2015, the address in itself was rather thin on this crucial subject and somewhat out of touch with current realities.

SONA 2015 was largely dedicated to what many may say are more pressing matters like the energy challenge (not a ‘crisis’, of course), labour stability, challenges related to the mining industry, and the president’s nine-point plan “to ignite growth and create jobs”.

Coming in at number 7 of the plan was “unlocking the potential of SMMEs, cooperatives, townships and rural enterprises”. This got me really excited. As the president made his way through the first six points of his plan, I waited with bated breath and great anticipation for more details on how the government was planning to unlock this potential.

The details never came.

The only reference made to small business related to the funds that have been established by state-owned development finance institutions to support entrepreneurs and SMMEs. It was reported that the National Youth Development Agency (NYDA) had disbursed a meagre R25m to 765 youth-owned micro enterprises in the last financial year.

The president then made reference to the NYDA, Industrial Development Corporation (IDC) and Small Enterprise Finance Agency (SEFA) R2.7bn Youth Fund partnership, with SEFA putting up R1.7bn of the funding and the IDC contributing R1bn. This partnership was initially announced in August 2014.

The fact that the NYDA has disbursed an average of R33 000 per SMME is nowhere close to adequate support and is no reason for celebration. Setting up a R2.7bn fund is one thing. Disbursing these funds to deserving and qualifying businesses is another. It’s been six months since the launch of the partnership between the NYDA, SEFA and IDC. I expected a more detailed update on progress made by this fund, not just a regurgitation regarding its establishment.

Anyone who has met SEFA CEO Thakhani Makhuvha will tell you about a man who is passionate about his job. He is clear about the role of SEFA in a developmental economy and doesn’t try to compete with banks and other lenders. He stresses the “greater than normal risk” that SEFA takes on in providing entrepreneurs with loans ranging from R500 to R5m in value. Most of his applicants have no security and his organisation does not mind that. There is, however one requirement: the business must be “sustainable”.

The availability of capital for small businesses is not, in itself, enough to support entrepreneurs and SMMEs – especially in the current tough economic times that the president so accurately captured in the opening remarks of his address.

It is no secret how much pressure the South African consumer has been under in recent times. A tough 2014 saw our GDP grow by a depressing 1.4% and the spectacular failure of African Bank, the largest unsecured lender in the country, as consumers struggled to service debts raised to fund consumption. Until recently inflation has hovered just under the 6% mark, the rand has remained weak against major currencies, and the mining industry has had a torrid three years with the latest threat coming from extended labour strife. Commodity prices have also plummeted to record lows.
The reality is that most SMMEs have not been able to create ‘sustainable businesses’ in recent times, and require some risk capital to help re-ignite or sustain their struggling businesses.

Even with the president’s pledge for government to set aside 30% of certain categories of state procurement for purchasing from SMMEs, cooperatives, township and rural enterprises, economic times will remain tough. There won’t be too many ‘sustainable small businesses’ out there in this economic climate. There will be many who are struggling to pay salaries, fulfil orders and who may be forced to retrench workers – these are the SMMEs that require support now.

Policymakers must create interventions that are driven by the economic realities small businesses operate in, not idealistic notions. What we need is holistic support for small businesses experiencing a tough trading environment in a slow economy, and initiatives to ensure they trade through this climate – perhaps that way, we will get out of this slump with ‘sustainable’ businesses to be proud of.

This article originally appeared in the 26 February 2015 edition of Finweek. Buy and download the magazine here.