Funding and regulation hindering startup success South Africa
Industry experts agree that South African startups have what it takes to succeed on the global stage, but structural issues are hindering development. While executives from South Africa’s leading enterprise development incubators are bullish about the progress being made and about the standard of South African startups, they are also concerned about government regulation, lack of funding direction and market access and inequitable distribution.*
According to Sw7's founder Keith Jones there is a lot of frivolous activity within accelerator programmes, with many startups "set up to fail" and funding not dispersed in a way that breeds success. He says there are three make-or-break requirements for applicants to the Standard Bank programme he is involved in. "Coachability or being acceptable to constructive feedback, engagement, or commitment and the ability to make sacrifices to see things through and execution - the competence to get stuff done." An accurate measurement tool will bring structure to the chaotic world of startups, Jones thinks.
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Endeavor's managing director Catherine Townshend is "bullish" about the quality of local enterprises. She says they need publicity and to be packaged properly to elicit support.
"Are our startups adequately prepared to appear before panels of venture capitalists? There needs to be investment in coaching and developing sophisticated presentation skills. The South Americans have a better mindset when it comes to bringing their message across."
Many entrepreneurs agree that market access is a key issue. Snapplify CEO Wesley Lynch: "The mentorship and funding is there and is often overemphasised. We need to work with strategic partners to open up distribution channels. Instead of giving us $1 billion, get US firms to buy local services and products. Give us platforms in other countries." Other issues raised included access to talent and having to negotiate increasingly complex government regulation.
Matsi Modise, managing director at SiModisa, urges stakeholders to lobby government for much-needed changes in a positive manner. "Instead of criticising government for the sake of it, we should adopt a holistic approach and come up with solutions to our problems in a positive manner to amend crippling policies. We need to match resources and opportunities and encourage constructive feedback. What are we emulating and do we understand the challenges? We have a Minister of Small Business Development who has never run an enterprise herself," she says.
*All quotes are taken from a panel discussion at the Knife Capital Exit Conference at the Sandton Convention Centre on 21 August, hosted by Andrea Bohmert from the Grindstone Accelerator