Calling all young Entrepreneurs
According to a recent report by the Global Entrepreneurship Monitor (GEM), South Africa scores poorly when benchmarked against youth entrepreneurship in fellow BRICs countries. The report states that only 7% of South Africans between the ages of 18-24 and 10% between the ages of 25-34 start their own businesses.
One of the leading causes of the culling of entrepreneurial spirit amongst the youth remains access to finance; however there are a number of entities that are willing and able to finance youth ventures.
Here are a few establishments, which could assist you in strutting down the path to business success.
Content in this guide
- National Youth Development Agency (NYDA)
- Gro-E Youth Scheme
- The Youth Entrepreneurship Fund (YEF)
- Umsobomvu Youth Fund
- Free Mentorship Programme: The Mara Foundation
- Mentorship Programme by Application: Bizco Business Consulting
- Acceleration Programme: New Ventures Studio
- Free online courses for young entrepreneurs
Grants and Funding
National Youth Development Agency (NYDA)
This government grant aims to supply funding to the youth of South Africa, and is currently broadening its offering by creating mentorship and development programmes.
Types of NYDA Funding
NYDA awards grants to both formal and informal businesses that are in the start-up or development phases. These government grants are also awarded to co-operatives; an autonomous association of people united to meet common economic and social goals through a jointly owned and democratically controlled enterprise. Additionally, the NYDA awards grants to youth that are actively involved in community development and facilitation projects.
Do You Qualify for NYDA funding?
- You need to be eighteen years old at the time of application.
- The grant needs to be for business start-up or growth.
- You need to be between the ages of 18-35 years with the necessary skills and experience, or display the potential skill appropriate for the enterprise.
- Only South African citizens residing within the borders of South Africa are eligible.
- You will need to be part of the day-to-day operation and the management of your business.
- Require a grant from NYDA of not less than R1 000 and not more than R100 000.
Once you’ve received the grant, if you’re still employed full-time, you might need to resign and present your grant officer with proof of resignation. This is a requirement of the grant because the NYDA requires you to focus completely on your venture and not split your focus with other obligations, such as a full time job.
How to Apply for NYDA Funding
Entrepreneurs or co-operatives that meet the following criteria are eligible for NYDA government grants:
- Applicants must be between 18 to 35 years old. They must also have the necessary skills and experience or show the potential skills for the business and industry in which they wish to operate.
- Applicants must be South African citizens with ID documents and operate their business within South Africa.
- The applicant must need the grant to start or grow their business. The applicant must not need the grant as any other source of capital.
- Applicants must involve themselves in the operation and management of the business on a day to day basis and must work on their venture full-time.
- The business may be formal or informal, and categorised as a micro-enterprise.
- The company must show potential to be commercially viable and sustainable.
- Applicants should be sole traders or in the case of groups have a minimum of five people.
Contact Details for NYDA Funding
- Number: 0800 52 52 52
- Website: www.nyda.gov.za
Read more about NYDA funding.
Gro-E Youth Scheme
The Gro-E Youth Scheme offers both financial and non-financial support to youth initiatives. The aim of this scheme is to help young entrepreneurs contribute towards sustainable job creation. R1 billion has been set aside to assist with funding of businesses owned by individuals, under 35 years old.
This scheme provides loans at prime less 3% to enterprises that operate in the industries that fall within its mandate and aims to create new jobs for South Africans. Only South African citizens or permanent residents are eligible for funding.
Do You Qualify for Gro-E Youth Scheme funding?
- A least 50% of the ownership needs to be by an individual under the age of 35.
- Your business needs to be a start-up and the funding can go towards purchasing a building, machinery or working capital.
- Your intention could also be to expand your existing business.
- A business that demonstrates economic merit and has prospects of suitable profitability to be able to facilitate their funding obligation.
- While the business is within the funding period, the cost per job cannot exceed R500 000 relative to the total funding required.
- Broad-Based Black Economic Empowerment certification from an accredited verification agency, where applicable.
- Ventures that are operating or expanding within South Africa.
- Your funding period will need structure in order to meet the cash flow needs of your business.
- Appropriate capital and interest payment holidays are a requirement that you must apply depending on the financial needs of your specific business.
- There is no prescribed minimum for owner contribution.
In order to support the government’s New Growth Path (NGP) and Industrial Policy Action Plan (IPAP), businesses in the following sectors can apply for funding:
1. Green industry
- Renewable energy
- Energy efficiency
- Pollution mitigation
- Waste management and recycling.
2. Agricultural value chain
3. Manufacturing activities
- Advanced manufacturing
- Automotive, components, medium and heavy commercial vehicles manufacturing
- Clothing, textiles and footwear, and leather
- Forestry, paper and pulp, and furniture
- Fabrication, capital and transport equipment
- Plastics and chemicals.
4. Strategic high-impact projects
- Industrial infrastructure
- High-impact cross-sector projects.
5. Mining value chain
- Downstream mineral beneficiation
- Mining technologies.
6. Tourism and high-level services
- Business process services
7. Media and motion pictures
- Motion pictures production
- Media value chain – broadcasting (radio and television)
- Media expansion – including new media
- Film production and animation.
8. Knowledge economy
How Does Gro-E Youth Scheme Work?
- Funding is at prime less 3%, to businesses that will create jobs.
- A maximum of R50 million per project is available.
- The funding will be available over a five-year period or until the scheme depletes, whichever occurs first.
- You will need to use your funds within one year from the approval of funding. If you miss this deadline, pricing reverts back to normal IDC pricing.
- Reduced loan pricing will be available for five years, after which normal IDC pricing will apply.
- If you require finances in excess of the scheme’s limit you can access more capital through traditional IDC funding.
- Pre- and post-investment support and mentorship is available where needed.
Gro-E Youth Scheme offers programmes that provide non-financial support for entrepreneurs. This backing is available during pre- and post-approval stages. The support also includes services such as assistance to distressed clients.
Contact Details for Gro-E Youth Scheme Funding
Call Centre on 086 069 3888 or email firstname.lastname@example.org.
The Youth Entrepreneurship Fund (YEF)
The Youth Entrepreneurship Fund aims to promote businesses led by youth. The fund aims to achieve this by providing grant funding and business development programmes. Youth pay in a commitment fee for the assistance package that suits their needs.
Do You Qualify for Youth Entrepreneurship Funding?
This fund is open to all South Africans irrespective of race or gender, who are still in or outside of the schooling system. Candidates need to be within the ages of 18-35. There is encouragement of black youth to actively partake in this opportunity to create businesses. The fund also encourages parents, guardians and corporates to invest on behalf of the youth to create wealth.
How to Apply for Youth Entrepreneurship Funding
Starting a business is not a single moment but a process and there are no shortcuts. As a result of this, YEF places a priority on training, mentorship and business coaching.
This is the process leading up to its grant disbursement:
First you chose the package that you need and complete the necessary documentation online.
Second, the business validation process starts. Included in the validation processes are the assessment of your business, guidance and the refinement of your business plan. There is an emphasis placed on business validation, which means your business will need to be innovative and commercially viable. Existing businesses should display the potential of being scalable.
Third, once they’ve evaluated your business for market readiness, the dispersal of the grant will begin. You can only use the grant for the business and nothing else.
Fourth, to ensure the success of your business, mentors will guide you in the process of building your business. Numerous platforms can ensure that your business receives as much support as it needs, both physically and virtually.
What are the Required Contributions and Benefits?
The YEF have created two types of support for youth-led business. This includes financial and non-financial support. The financial support comes in three packages depending on what your business requires. Each package has a corresponding fee structure, as follows:
- Silver: R166 over a 12-month period = R2 000
- Gold: R333 over a 12-month period = R4 000
- Platinum: R500 over a 12-month period = R6 000
Its non-financial support is equally as important, therefore the YEF pays particular attention to this element of business. A reputable academic institute will offer you non-financial intervention, and a network of mentors. These mentors all boast core competencies in the realm of business development.
Contact Details for the Youth Entrepreneurship Fund
- Office Address: 1st Floor, Block C4, 150 Rivonia Road, Morningside, Sandton
- Email address: email@example.com
- Office Number: (010) 001 6170
- Call Centre Number: (010) 001 6171
- Website: yef.co.za
Umsobomvu Youth Fund (UYF)
Umsobomvu Youth Fund is a government initiative that creates opportunities for South African youth in entrepreneurship and the creation of new jobs. This voucher programme is not a loan programme. The voucher programme provides support services to both new and existing youth-run businesses.
Do You Qualify for Umsobomvu Youth Funding?
You will need to adhere to the following requirements:
- Males between 18-35 years of age
- Females 18-65 years of age
- Unemployed graduates
- Rural and urban youth
- Youth in conflict with the law
- Previously disadvantaged individuals (PDI’s) – 90%
- Only South African citizens are eligible
- Non previous disadvantaged individuals – 10%.
Your business should also be within the following sectors:
- Information Communication Technology (ICT)
How Does the Umsobomvu Youth Fund Work?
The voucher programme provides support in the following areas:
- Bookkeeping – once off clean-up
- Business plan development
- Business and financial administration
- Due diligence
- Legal services
- Marketing planning
- Tender application support
- Web-based marketing
- Branding and design of business forms
- CC and PTY registrations.
Contact Details for the Umsobomvu Youth Fund
Every Wednesday morning at 10:15am, a UYF Information Session transpires and after this session you will receive an application form that will allow you to apply for support services.
For general queries you can also visit its headquarters at The Business Place, 7 Anton Anreith Arcade, 1st Floor, Cape Town on weekdays between 09:00 to 16:30 or call +27 (0) 21 425 7816/7/8/9.
Resource: How to Write a Funding Proposal
Free mentorship programmes
The youth of South Africa are on the back foot with regards to access to education. According to the Institute for Justice and Reconciliation report, young people tend to lack the skills or experience to navigate the business world.
How can unskilled and inexperienced youth create a successful long-lasting business venture? The UYF’s solution to this problem includes: Mentorship programmes, online courses and accelerator programmes.
Free Mentorship Programme: The Mara Foundation
The Mara foundation is offering a free online mentoring platform, called Mara Mentors. This mentoring programme allows ambitious entrepreneurs and global business leaders to connect, while business experts can engage with entrepreneurs via the Mara Mentors web-based platform and mobile application.
Mara Mentor enables ambitious and aspiring entrepreneurs to connect with international peers and business leaders. This platform aims to empower entrepreneurs through the provision of resources that comprise of:
- Discussions and debate forums
- Industry news and updates
- The knowledge of world class mentors.
Entrepreneurs gain encouragement, support, guidance and vital feedback that will help you to evolve your business idea and plan.
Contact Details for The Mara Foundation:
Mentorship Programme by Application: Bizco Business Consulting
Bizco Business Consulting (BBC) offers a consulting programme that is unique and allows it to work exclusively with a limited number of start-up companies on a one-on-one basis. BBC expects a commitment from entrepreneurs of at least three months, as it is extremely selective and the programme is highly intensive.
Do You Qualify for Bizco Business Consulting’s Mentorship Programme?
- You must be a South African Citizen over the age of 18.
- Only applications from individuals.
- There is no fee to submit an application.
- Only online, electronic, applications accepted.
Contact Details for the Bizco Business Consulting:
- Number: 086 123 7775
- Website: bizco.co.za
Related: Have a Mentor in Your Back Pocket
Acceleration Programme: New Ventures Studio
Accelerator programmes aim to jumpstart businesses. You will increase your chances of raising venture capital from a third-party after graduating from the programme. Mentorship, is another advantage of an accelerator, as you’ll be in contact with other entrepreneurs working within the accelerator.
New Ventures Studio is a platform for young (16-35) individuals, aimed at those who are working towards being successful entrepreneurs. It specifically focuses on those who have realised the importance of upskilling themselves before trying to navigate unfamiliar territory in entrepreneurship.
The programme is an eight-week long insightful course and the five individuals who successfully complete it join the incubator.
You do not need to have a business in order to apply for this opportunity and each of the 20 successful applicants will receive a R35 000 scholarship to attend the eight-week entrepreneurship course.
By taking advantage of the various funds and incubator programmes on offer, young entrepreneurs are able to realise their goals faster, and more efficiently. However, acquiring funding and being part of a mentorship programme isn’t enough to excel in your sector. The programmes highlighted here serve to motivate and drive entrepreneurs to explore new skillsets, push proverbial boundaries and empower people around them by offering employment opportunities and the prospect of a better life.
Contact Details for New Ventures Studio:
Free online courses for young entrepreneurs
Education doesn’t always have to cost you a fortune; you can now undertake courses from leading academic institutions in the comfort of your own home, for free. From these online courses you can learn about business and starting up.
The courses offer self-paced modules, which means you can do it when your diary accommodates; either four, six, eight, 12 or 20 week periods.
Here are four online course platforms that you and any other entrepreneurs can benefit from:
This platform can teach you key tools and steps to building a successful start-up. It has a comprehensive course on acquiring the knowledge and skills necessary to see your business grow towards its next milestone.
This platform has an emphasis on tech-based courses including:
Visit www.udacity.com for other course options.
With this platform you get the added benefit of learning all the content you can for free. This site offers a variety of courses that you will need to establish and grow your business, such as:
- Business and Financial Modeling Specialisation
- Introduction to Corporate Finance
- Innovation for Entrepreneurs: From Idea to Marketplace
- An introduction to operations management
- Business strategy
- International leadership and organisational behaviour
- Smart growth in private businesses
- Engaging your audience.
Visit www.coursera.org for other course options.
edX offers free online courses from the world’s best universities including Harvard, MIT, UC Berkeley, Microsoft and The Smithsonian. Some examples of what this platform has to offer are:
- DO Your Venture: Entrepreneurship for Everyone
- Who is your customer?
- Building mobile experiences
- An introduction to credit risk management.
Visit www.edx.org for other course options.
Explore a wide range of business skills from project management and negotiation to leadership skills and online marketing strategy. lynda.com’s Professional development tutorials can help you learn SEO, spreadsheets, word processing, including:
- SEO fundamentals
- Online marketing essentials
- Human Resources
- Time Management
- Cross-cultured Intelligence.
Visit www.lynda.com for other course options.
3 Start-up Funding Tips To Help Launch Your Company
Most great ideas are just dollars away from becoming the next big thing. It is important to do your research and never quit.
Starting a start-up is one of the most terrifying and rewarding experiences anyone can ever have. It is rife with decision making and hard choices. Coming up with the product and showcasing it to people you know and outside investors is an incredible thrill. There is also immense stress that comes with owning a start-up. This comes, primarily, in the form of finances.
Those who own a start-up know that money is hard to come by and, whatever money there is, is immediately put to use. That is why venture capitalism has grown to the rate that it has. In the early 2000s, start-ups were not the hot ticket that they are today and since the tech boom we have seen a dramatic rise in the amount of start-ups year-to-year. The issue is not where to get the money, but, how?
In this article we hope to cover the basics of start-up funding that will increase the amount of exposure you get and increase the odds of receiving funding. Most great ideas are just dollars away from becoming the next big thing. It is important to do your research and never quit.
1. Focus On Vision
One thing that advisors and investors will both look for in a company is what that company stands for. In essence, it is important to reduce your business to a singular idea that represents the whole accurately and with great fervour.
The goal of your business should be stated clearly so that any potential investor knows exactly who they are investing in. For instance, if your business is centred around helping the disabled use computers, then state that clearly and let investors know. Simply put, investors do not want to invest in entrepreneurs who are only interested in making money.
While making money is a very positive thing, it should not be the sole reason for any endeavour. Your company’s vision should be the key aspect of your pitch and your investment stack.
2. Run The Data
It is crucial that all entrepreneurs know their business inside and out. This means searching for similar businesses and getting their numbers. Get to know the market like the back of your hand and keep a record of any data you come up with.
Investors want to see the average ROI in an industry. They want to see what the average operating cost is and how much they should invest to make your product viable. Even though this can be a difficult step, there are a number of outside resources that can gather market data for you but it is an important step to learn everything you can about the market you’re entering.
3. Seek More Than Money
One of the most valuable assets to any entrepreneur is a trusted advisor that can help you in your journey to success. It is tempting for startups to go out into the world and make deals on their own. While that is a fine strategy to use it may not be the best way to go about funding your business.
Related: The Investor Sourcing Guide
Seeking the help of an advisor can save you a lot of headache and heartache. Typically, advisors can help you manage your funds and gain traction in the VC world. Ambling through the dark to try to find funding can oftentimes lead to deals that are either one-sided or unsound. Having an advisor there to guide you and double check all of your work can prevent loss and will give you the edge you need in negotiating. Indeed, one of the most valuable assets to any company is their advisor.
When starting a start-up, you are faced with an overwhelming amount of tasks and things to do that can hamper your progress. Add, on top of everything else, the need for funding and then you can get into a real snafu.
The best way to fund your business is simple. You have to be yourself and know your value in the market. You also have to trust outside help to guide you in your path to business growth. Through the use of advisors and in the process of synthesising your businesses goals, you can make a business that will succeed in any climate. Funding a start-up can be a laborious task, but, if you know how to approach it, you can make it an exciting journey that validates your business and leads to a land of opportunity.
How To Craft A Crowdfunding Campaign
Successful crowdfunding ideas come in all shapes and sizes.
Successful crowdfunding ideas come in all shapes and sizes. Publisher Colleen Higgs and author Ambre Nicolson decided to publish a book through crowdfunding.
Even if you’re an existing business, crowdfunding can provide a way to fund a product or project that would otherwise be out of reach. This was the case with A to Z of Amazing South African Women, a bright and colourful book with bold illustrations that celebrate impressive South African women.
“I came across a book published in the US called An A to Z of Rad American Women and posted something on social media saying that I thought there should be a local version. A clever friend of mine called my bluff and suggested that we make one together, and so the idea was born. Publisher Colleen Higgs immediately saw the potential for the project and came on board. From the very beginning, it seemed to resonate with people — particularly women — and it is really due to their support that the book saw the light of day,” says author Ambre Nicolson.
“Modjaji Books was very keen to publish the A to Z of Amazing South African Women, but we didn’t have the ready capital to fund a book like this, which is more expensive to produce than our usual text-based books,” says Colleen. “We needed funding just for this book, so crowdfunding seemed like the right idea. There are not many other ways of funding books in South Africa.”
The Thundafund crowdfunding campaign was a success, raising R104 400, slightly more than the stated goal of R100 000.
“You need to remember that a crowdfunding site typically takes a percentage of what you make, and then there are the bank fees to consider as well, so aim for about 15% more than you think you need,” says Colleen.
And how do you create a campaign that’ll provide you with all the funds you need? “I think the storytelling aspect of the campaign is very important. You need to give people a reason to care. In our case we wanted to showcase the strength and resilience of South African women, and this resonated with backers. Put time into the description of your project and into creating strong images. Your campaign has to compete with everything else vying for people’s attention online,” says Ambre.
Crafting a campaign
As is the case with just about anything, success in crowdfunding is a result of hard work and dedication. A great campaign requires an engaging story, a desirable product, clever marketing and a solid understanding of business fundamentals. Without a good story and product, people are unlikely to fund the campaign. Without a good strategy to turn a successful campaign into a successful business, backers can be left angry and disappointed.
“While every project is different, we have found that one of the most common factors with successful campaigns is the project itself: The idea, layout of the project page, and the whole concept must say the right thing to the right audience,” says Nicholas Dilley of South African crowdfunding platform Thundafund.
“Another thing that project creators are always encouraged to do before their campaign goes live is to build up a network of supporters who believe in their campaign.”
Lastly, the rewards offered are obviously also important. “Thundafund is a rewards-based crowdfunding platform so, as expected, the rewards play a fairly large role in a campaign’s success. While the rewards may not be the icing on the cake in every campaign, they can make a small donation turn into a large one in some cases. Certain rewards can help build the credibility of a new brand, or even test the market to see which of your products will be most successful in the future of your business,” says Nicholas.
Trust is key
When it comes to crowdfunding, the most important thing is trust. By funding a venture or product that doesn’t exist yet, backers are placing a massive amount of trust in the entrepreneur. This trust can never be broken. The results can be disastrous, and can follow you long after you’ve abandoned your failed crowdfunding campaign.
From the outset, you should ensure that people understand what you are offering in return for funding.
“Rewards-based crowdfunding is not very well understood in many parts of the world. When you say ‘crowdfunding’, people tend to think it’s some sort of charity, or that people are buying shares in a business. Rewards-based crowdfunding is essentially pre-selling a product online, and most people are not aware of this. It’s important that you make this clear to people,” says Steel Cut Spirits CEO, Rob Heyns.
Trust usually comes down to honesty and open communication. Issues will almost inevitably arise, but it’s important to relay these to backers. Don’t disappear from your website or social media platforms for months and leave them wondering where you went with their money. Keep them in the loop at all times, especially if you’re dealing with unexpected problems.
“You need to prove that you will deliver, and then you actually have to do so once the campaign is completed,” says Rob. “I personally took full accountability for this campaign, as it can be easy to hide behind a product, brand or company when problems occur. We also aligned with key partners to ensure we could deliver. We were supported by Yuppiechef, so we knew we could execute on the e-commerce part, and we chose Thundafund as we knew they were the best option to execute on rewards-based crowdfunding in SA.
“We did mess up the communication with two backers who bought smaller rewards. It was merely a miscommunication, but it was eye-opening to me how great an effect such a mistake could have on a customer. We went to great lengths to solve the mistakes but it did concern me that there is an even higher trust-related expectation with crowdfunding than with normal e-commerce.”
Alternative Finance – Filling The Gap
Alternative Finance is finance beyond the traditional – it is defined by the financiers’ area of specialisation – by what they specialise in, whom they serve, and how they provide their funding.
- Call: 011 886 0922
- Visit: www.spartan.co.za
Alternative Finance is finance beyond the traditional – it is defined by the financiers’ area of specialisation – by what they specialise in, whom they serve, and how they provide their funding. It does not replace traditional finance but rather functions as a complementary and additional form of funding.
Alternative financers are specialists – they focus on a particular need and on a specific audience. As a result their ‘how’ is customised to deal with their chosen target market and for this targets unique needs. This applies to the funder’s processes and to their level of flexibility around things such as collateral. An example of this is that a SME may have an existing R1 million overdraft (their traditional finance) secured by R 1.5 million collateral but suddenly they need R5 million for some kind of contract or bridging finance – they need it fast and don’t have that extent of collateral.
The traditional funder cannot provide what they need, their process is too long and their flexibility is too low. An alternative financier providing bridging finance and specialising in SMEs is ideally positioned to fill this gap.
One of the most significant differences between a traditional funder and an alternative financier is in their process. In the case of the alternative financier, they have often chosen to deal exclusively with a particular customer base, for example SMEs. As a result, this funder has both an affinity and contextually relevant empathy in working with SMEs.
Not only do they speak the same language the funder also has an appreciation for the time and material constraints of the SME and has developed their processes to cater to this market. This applies most notably to the turnaround time of the funding need and to the assessment aspect – where flexibility around things such as collateral is vital in making the finance happen for the SME.
A traditional funder is unable to meet the deadline of a bridging finance need, submitted on an urgent basis, where the finance is needed as soon as 2-3 days from time of application. A specialised or alternative funder is able to do exactly this. A traditional funder is also unable to find creative methods in solving the SMEs lack of high-value collateral in applying for finance.
This SME has generally already used their high-value collateral for traditional credit facilities but now needs funding for growth or resolution of a temporary cash flow challenge. An alternative financier is able to look at such an application in a different way, and has most likely already established alternative ways to make this happen for the SME.
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