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How The Rethaka Founders Funded Their Business By Winning Competitions

Two extraordinary young South African entrepreneurs proved that not having cash is no excuse to not following your dream.

Monique Verduyn




Vital Stats

Having grown up in the dusty mining town of Rustenburg, childhood friends-turned-business-partners, Thato Kgatlhanye and Rea Ngwane, knew all too well what it’s like for kids to do their homework when the sun goes down and there is no electricity supply.

What also troubled them was the seemingly endless number of plastics bags and bottles polluting the environment around the town and nearby settlements.

The two – aged just 21 and 22 respectively – put their heads together and came up with an innovation that is now travelling the world.

Rethaka, their social start-up takes advantage of all that plastic waste by upcycling it into 100% recycled plastic backpacks – branded Repurpose – for disadvantaged schoolkids. But there’s more.

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The bag also doubles as a light, thanks to a nifty solar panel stitched into the flap so that children can do their homework after dark. And to make sure that the kids are more visible to traffic in the early morning when they are making the often long trek to school, the bag is also covered in reflective strips.

To get their idea off the ground initially, they had to set up a workshop with the right equipment and machines that could stitch plastic. When they started in 2013, there wasn’t even infrastructure for plastic recycling in the North West.

“We had no manufacturing experience and no cash,” says Kgatlhanye. “All we had was an idea that we started to think about while we were studying, and the determination to put bags into the hands of kids who desperately needed them.”

Refusing to let their lack of capital deter them, Kgatlhanye and Ngwane got creative, stepped into the trenches, and differentiated themselves. The result: They bootstrapped their way to business success.

Thinking outside the bag

repurposeschoolbagsWith no capital, they had to get creative. “We had the words to describe our product, so we entered start-up competitions and applied for grants, putting all our energy into writing the best proposals you can imagine.”

Their plan worked. They submitted an application to the SAB Foundation Social Innovation Awards, came third, and went home with R300 000.

“From nothing, we suddenly had a meaningful amount to work with,” says Kgatlhanye. “By telling the right story to the right people, we got them to trust us enough to give us capital that we did not have to pay back. It’s a different approach, but it certainly worked for us.”

Sweat equity

Driven by the commitment to making their dream happen, they worked tirelessly. They developed their own system and infrastructure for collecting plastic from landfills and schools, and the raw material started coming in.

Called Purpose Textile Banks, these plastic bag collection sites can be set up at schools, churches, complexes, estates and offices.

At the same time, their research was ongoing. A pilot project was launched in January 2014. They set up a small workshop where the plastic could be processed into a textile, after which workers use industrial sewing machines to turn the material into bags.

“It was a huge risk because we had to employ people to manufacture the bags,” says Kgatlhanye. “We basically took a gamble on everything.”

Business differentiation

The level of manufacturing innovation underlying their business, as well as its potential social impact, were two important elements that differentiated Rethaka from other start-ups. With the research behind them and a product in development, they had the IP and the potential to generate revenue.

Through a combination of enthusiasm and confidence, the two founders did not find it too difficult to bring what they call ‘Giving Partners’ on board – companies and organisations that purchase or give donations towards Repurpose schoolbags on behalf of learners.

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“Finding corporates and individuals who want to contribute to a cause focused on education and children is what has enabled us to turn our original idea into a sustainable social enterprise that benefits kids, employs people from the community and also turns a profit.”

No easy shortcut to profit

“Everyone thinks you need money to start a business, which is true, but we proved that you can do things differently provided you have enough drive and you’re prepared to work harder than you would ever have thought possible,” says Kgatlhanye.

Their plans for the future? They are adamant about growing the business, and Kgatlhanye says there are no plans to give away any equity for the foreseeable future.

Right now, brand management is top of mind for them and they are introducing new product lines, as well as a luxury brand that will enable them to finance even more of the socially responsible side of the business.

As part of the proceeds of the sales, they will be able to finance and subsidise even more bags for schools around the country.

“We plan to build a green empire and develop production plants in other provinces where the need is great, like Limpopo and the Eastern Cape. We are also starting to export products to Australia, and several European countries. There’s a lot of overseas interest. Helping children, employing people, cleaning up the environment – that’s what we are selling. We’re living in a time when more and more people are drawn to the idea of contributing to a better world for all of us to live in.”

Monique Verduyn is a freelance writer. She has more than 12 years’ experience in writing for the corporate, SME, IT and entertainment sectors, and has interviewed many of South Africa’s most prominent business leaders and thinkers. Find her on Google+.

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