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With an unemployment rate of 29.1% and economic growth of 1.2% (optimistically speaking), it is difficult to overstate the importance of entrepreneurship in the South African economy. The National Development Plan aimed for SMMEs to account for 60-80% of GDP increase by 2030. President Cyril Ramaphosa last year went so far as to say that entrepreneurial skills development should be included in the basic education curriculum.
And yet, entrepreneurship in South Africa hasn’t grown in the leaps and bounds you might expect. While the latest data from Global Entrepreneurship Monitor shows that total early-stage entrepreneurial activity bounced back to 11% in 2017 from an abysmal 6.9% in 2016, it still hasn’t grown much since the 2001 level of 9.4%. South Africa has one of the highest startup failure rates in the world, with 70% of new businesses going under within their first two years of operation.
CEO SA Naspers Phuthi Mahanyele-Dabengwa said, “The first three years of a new company’s existence are critical: entrepreneurs need not only resources but also skills development, mentoring and access to markets.”
Those resources, however, aren’t necessarily easy to come by.
“The SA funding space is limited,” she acknowledged. “Entrepreneurs need access to more capital. Unfortunately, our banking environment is very conservative.”
Naspers decided to support South Africa’s entrepreneurs with additional access to global markets and capital. The firm launched Naspers Foundry, an R1.4 billion, SA-focused early-stage business funding initiative aimed at growing the technology ecosystem in South Africa.
“Our investment strategy for Naspers Foundry is simple and clear,” said Mahanyele-Dabengwa. “We will partner with exceptional local entrepreneurs to build businesses with high-growth potential that address real societal needs in South Africa and beyond.”
Foundry’s first investment, SweepSouth, is a digital platform connecting skilled, experienced domestic workers with customers. Founded by Aisha Pandor and her husband Alen Ribic, and in June last year, the company received R30 million in funding from Naspers Foundry.
The investment has helped SweepSouth achieve its goals of expanding its product offering and create further employment – to date, and the company has created work opportunities for 20 000 women.
Fabian Whate, Head of Naspers Foundry, said he believed this was a great example of how to support the development of the economy. “Entrepreneurs are significant drivers of economic development and job creation,” he said. “The early-stage tech business sector is not only crucial, but it is exciting because technology has the potential to open doors for South Africa’s previously marginalised communities.”
The Foundry also invested R100m in Aerobotics, a subscription-based artificial intelligence (AI) company providing intelligent tools for the agricultural industry to manage crop health and to predict crop yields.
Naspers’ involvement goes beyond just capital, though, as SweepSouth’s Pandor said, “Naspers made its broader networks available to us, and the team there step back and don’t meddle, letting us do what we were doing prior to their involvement, which is to grow the business. They’re also there if we need support,” she said.
“Our strategy is to partner with exceptional entrepreneurs to build commercially viable tech businesses with platform potential, that can scale in high-growth markets,” said Whate. “Such companies must have demonstrated traction, have generated revenues, and show potential to become sustainable and successful in the long-term.
By providing financing and support to businesses like these, expertise across several verticals, and access to a global network, Naspers is investing not only in enterprising entrepreneurs but in the country itself.
This post is sponsored by Naspers produced by Brandstudio24 for News24.
