This article first appeared in the Business Times section of The Sunday Times on 13 March 2016
LAST week, I found myself in the midst of entrepreneurs who had come to witness the launch of the next phase of a Samsung-sponsored initiative aimed at supporting business ideas with a social impact.
The initiative, Launching People, seeks to find ways to mix talents and come up with sustainable solutions to societal challenges.
It may seem like a tall order, but the power of collaboration is unique, and, as proved in the pairing of a business coach and a property entrepreneur, potential game-changer results are possible.
The initiative partnered two individuals, Carol Koffman, a senior manager at Deloitte South Africa, and Jonathan Liebmann, a property entrepreneur and the driving force behind the rejuvenation of Johannesburg’s Maboneng Precinct.
Koffman and Liebmann’s collaborative effort has highlighted what, in my view, is the greatest bottleneck in creating successful entrepreneurs in South Africa.
In research conducted during their campaign, 49% of respondents believe they have a business idea that would work, but they don’t know where to start in making it a reality.
According to the Global Entrepreneurship Monitor, South Africa has an “alarmingly low level of entrepreneurial activity”. Only 12.8% of young people are involved in some form of entrepreneurial activity.
The finding wasn’t too surprising as statistics have shown us that almost 35% of young South Africans are unemployed.
But the part that really caught my eye was “don’t know where to start”.
Our country has an underdeveloped venture capital market. In fact, one may easily conclude that a traditional venture capital market doesn’t actually exist. There are a few funds that support ideas coined by people in the same social or business and sometimes religious circles, and that’s it.
Look at Stellenbosch.
A small town of 22km² is essentially the home of South Africa’s most innovative and successful start-ups. You may think that this is because the best ideas emanate from Stellenbosch.
No. It is because the best ideas in South Africa are likely to be better supported in Stellenbosch than anywhere else in the country. Why is that?
Capital and mentorship — the two most important ingredients needed to transition from good idea to great business.
As long as we don’t have sustainable ideas with adequately patient capital and meaningful relationships and all over South Africa, many great business ideas will remain exactly that: Great ideas and never businesses.
However, because not all corners of our country are blessed with the capital and business acumen that exist in this 22km² in the Western Cape, we need to be creative in solving this problem.
One of the ways we can mobilise capital for great ideas is the retail market. Here I am talking about ordinary, gainfully employed South Africans with an appetite for risk and excitement.
Most responsible young adults invest their hard-earned rands in conventional products such as unit trusts, endowment policies, fixed deposits, and pension and provident funds.
These are heavily regulated and have proved to be very secure investments, allowing many to care for their families and retire comfortably.
However, young millennials prefer a balanced view to investments.
Gone are the days of saving for when I’m 65. Many want to feel like they are in the heart of economic activity, and start-ups have become a sexy, albeit very risky, destination for capital they are “willing to lose”.
This is due to many start-ups being either spectacular successes or spectacular failures.
I suspect there are thousands of ordinary people with jobs and no interest in becoming entrepreneurs themselves who would welcome a platform that facilitated investment into South Africa’s best ideas, without the requirement of owning a property in Stellenbosch.
The problem is that no such platform has existed.
Crowd funding platforms are probably the closest we have come to this. But while there are AngelList and Kickstarter in the US, no trusted platform to support ideas existed in South Africa — until Launching People came along.
It is a portal powered by an innovative ideas bank that filters and vets entrepreneurial ideas according to type, industry and nature of impact and channels and matches them to the right business partner, coach, funder or business collaborations.
It is a collaborative and dynamic solution owned by the contributors and entrepreneurs themselves.
Sponsor Samsung hopes that the government and other stakeholders will support this initiative.
I hope the platform will allow the ordinary Joe to invest in South Africa’s greatest ideas and give them a fair opportunity to eventually be South Africa’s greatest businesses.