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Identifying and Growing Entrepreneurship Ecosystems

Creating an effective South African entrepreneurial ecosystem.

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Entrepreneur EcoSystem

Entrepreneurship is a skill that can be learnt, and is not entirely dependent on natural ability or talent, believes Anthony Farr, CEO of the Allan Gray Orbis Foundation, a non-profit organisation aimed at assisting and developing a new generation of high-impact entrepreneurs and leaders to bring about job creation in Southern Africa. “However of equal importance to the skill of the entrepreneur is ensuring an environment that encourages and rewards high-impact entrepreneurial leadership and is tolerant of mistakes and failures,” he says.

Creating an environment that encourages entrepreneurship is not a matter of chance or accident. “Entrepreneurial ecosystems are usually the result of identifying areas and individuals that can affect high-impact entrepreneurial change and putting the correct systems and support structures in place to make it possible for them to succeed,” says Farr.

The elements of an entrepreneurship ecosystem

Daniel Isenberg, Professor of Management Practice at Babson College in the US and keynote speaker at last year’s Cape Town Entrepreneurship Week, has developed a comprehensive system for identifying and growing entrepreneurship ecosystems. According to Isenberg, such an ecosystem consists of hundreds of elements that can be grouped into six general domains:

1) Markets, which includes early customers and networks such as entrepreneurship networks and multinational companies;

2) Policy, which includes solid leadership practices and support from government structures in the form of institutions, regulatory framework incentives and venture-friendly legislation;

3) Finance, under which micro-loans, venture capital funding and angel investors can be grouped;

4) Culture, including visible successes, tolerance for risk and failure, and social status of entrepreneurs;

5) Supports, which broadly covers infrastructure, support professions such as legal and accounting, and NGOs who support entrepreneurs, and;

6) Human capital, covering labour and educational institutions.

“The powerful consequence of this understanding of ecosystems is the flexible dynamics it brings.  Due to unique cultures, regulatory frameworks and available support structures, each entrepreneurial ecosystem will be unique. The interplay between the hundreds of different elements creates these unique environments, so it’s important not to try to copy the success of another country and simply apply their approach locally,” says Farr.

In the South African context, it is of absolute importance that we start to create a business and regulatory environment that is conducive to entrepreneurial success. “South Africa currently has a 25% official unemployment rate and job creation has become a primary objective of government. Economic studies from around the world regularly link entrepreneurship to rapid job creation, GDP growth and long-term productivity increases. The question is: how do we establish an entrepreneurial ecosystem in South Africa?” Farr asks.

Supporting high-impact entrepreneurs

There is an increasing weight of evidence showing the disproportionate impact that a small number of high growth entrepreneurs can achieve. This reality has recently been captured by the Kaufmann Foundation by way of Schramm’s Law which states: ‘The single most important contributor to a nation’s economic growth is the number of start ups that grow to a billion dollars in revenue within 20 years’.

South Africa’s business environment is unrewarding to high-impact entrepreneurs, and there’s a definite stigma associated with failing at a business venture. This often discourages potential entrepreneurs to take a chance and launch their idea, much to the detriment of our economy. “It is vitally important that we start challenging this culture of intolerance toward failure sooner rather than later, or we risk losing a great many opportunities for high-impact entrepreneurial change. Countries such as Ireland and Chile managed to change their attitudes in the space of a single generation, a so called ‘generation on the move’. There is no reason why the same can’t be done locally.”

Farr argues that only once we have considered the above aspects should we look at the role of government   in helping to support an entrepreneurial ecosystem. “Government should remove legal obstacles to business growth, and implement helpful laws that decriminalise bankruptcy, simplifies tax, and allows entrepreneurs to quickly start over after a failed venture. Government’s role is to unleash – not harness – people’s entrepreneurial energies, and build on and reinforce existing clusters instead of trying to create new ones. It’s a case of putting the correct systems in place and then letting entrepreneurs get on with the task at hand.

“Entrepreneurship should be promoted as a worthy pursuit and should form part of the curriculum – both at school- and university-level. But at the same time, we need to start removing legal hindrances to entrepreneurship and create an environment that rewards risk-taking and innovation in business, or we risk being left behind in the global economy.”

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Entrepreneur Competition Top Five Heading For The Finish Line

One more workshop, the workshop for the final five followed by the contestants’ last chance to pitch their businesses, and then the winner will be announced on 13 September 2018.

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The five finalists in an entrepreneur competition run by co-working operator The Workspace and MiWay business insurance have been chosen.

One more workshop, the workshop for the final five followed by the contestants’ last chance to pitch their businesses, and then the winner will be announced on 13 September 2018.

The finalists are cloud based loyalty management platform and app for SMEs, Loyal 1; finance solution company, Matla Risk Management; events and catering business Sindi’s Best for All; mining tech integration partner, Dwyka Mining Services; and Minatlou Trading 251, supplier of general and women-specific protective personal equipment/clothing.

CEO of The Workspace, Mari Schourie, said it was vital to support and recognise entrepreneurs and small businesses as a prerequisite to growing South Africa’s economy. While competitions such as this helped give emerging businesses a leg up, it also fell to corporates and consumers to do their bit too.

Phakiso Tsotetsi – entrepreneur, Ambassador of the Branson Centre of Entrepreneurship and co-founder of the Hookup Dinner and one of the judges – said a pitch-readiness workshop helped whittle down the top 10 and deciding the top five businesses.

“It helped the entrepreneurs in developing concise, repeatable sales pitches for their businesses, which afforded them the opportunity to get closer to being chosen into the top five,” he said. “As it stands we are very excited about the decision we have made and looking forward to the rest of the journey in this competition,” he said.

Related: A Comprehensive List Of Angel Investors That Fund South African Start-Ups

The workshops and pitch interventions have been invaluable, personally and professionally.

What the finalists said

“Personally I have grown in self-confidence,” said Mpho Mpatane, managing director of Minatlou Trading 251. “I’ve learned I should learn to listen more and be open to learning from other people’s experiences. Business wise, I have learned how to pitch better so that my value proposition is clearer and is more attractive to possible investors. I have learned that I have much to learn from my peers and I can get business from my peers as well. We can procure business from each other and start improving our skills and expertise.”

Dwyka Mining Services’ Rethabile Letlala said the competition has been a “rather uncomfortable yet extremely exciting experience overall. I was forced to confront my public speaking insecurities and even more, learn how to enjoy it and use my own personality to influence and improve my presentations”, he said.

“Entrepreneurs are the true drivers of the economy. Competitions like this not only give entrepreneurs a chance to grow, but plainly the confidence to know that they are noticed, they are making a difference. That affirmation alone is all that someone needs to keep pushing and working towards their dream.”

Thabo Moodie, who runs Matla Risk Management, said he’d learnt how to structure his pitch. “It’s much more crisp and precise. You may have a lot to say and you may know about your product and service, but knowing how to translate that to your potential investor or partner is crucial,” he said.

Besides being an invaluable networking opportunity, the entrepreneur competitions such as this one help entrepreneurs get an edge on the bigger competition, said Sindi’s Best for All founder, Sindiswa Beverly Gqogqonyeka.  “When we are groomed and mentored correctly at an early stage of a business, our success rate becomes higher as we end up knowing what good business practices are. And then we can become profitable,” she said.

Loyal 1 creator, Tshireletso ‘TY’ Hlangwane, said he had been given the opportunity to learn from judges, as well as a shot at prizes that would help grow his business and become a “well-oiled machine”. “Many entrepreneurs in South Africa need such skills in order to improve the business and grow their businesses,” he added.

Related: Government Funding And Grants For Small Businesses

The prizes

The prize, worth over R350 000, includes 12 months free office space for up to four people at The Workspace’s Village Road premises, free Wi-Fi, free phone rental, free business insurance and business advice, as well as all risk equipment insurance, free tea and coffee, free usage of meeting and board rooms, free security and 24-hour access, free parking and a new laptop.

There’s also a brand new responsive design website and content management system plus training in how to keep digital collateral updated; a share portfolio from Opulentus Wealth and a complete brand communication strategy and two strategic sessions from Oxigen Communications worth over R50 000.

Beyers Müller, a judge and CFO of the Intespace Group, said The WorkSpace and MiWay Entrepreneur Competition was a great initiative that “showcases the hunger and spirit of up and coming entrepreneurs in South Africa. I’m thrilled to see how every entrepreneur is a broker between ideas and resources”.

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Obama Calls On The World To Be Madiba’s Legacy

Welcoming assembled guests to the lecture, Nelson Mandela Foundation Chief Executive Sello Hatang said, “It’s a very exciting moment for us.”

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Former US President Barack Obama delivered the 16th Nelson Mandela Annual Lecture, in partnership with the Motsepe Foundation, in Johannesburg on Tuesday 17 July.

To honour the centennial of Madiba’s birth, the lecture’s theme was “Renewing the Mandela Legacy and Promoting Active Citizenship in a Changing World”. It focused on creating conditions for bridging divides, working across ideological lines, and resisting oppression and inequality.

Welcoming assembled guests to the lecture, Nelson Mandela Foundation Chief Executive Sello Hatang said, “It’s a very exciting moment for us.”

The 15 000-strong crowd was addressed by programme director Busi Mkhumbuzi, Foundation Chairperson Professor Njabulo Ndebele, Motsepe Foundation founder and CEO Dr Patrice Motsepe, activist and Madiba’s widow, Ms Graça Machel, and President Cyril Ramaphosa before Obama spoke.

Ndebele said the world had welcomed Obama’s election to the US Presidency in 2008 and that he had inspired universal belief in human unity.

Motsepe, addressing the crowd, said, “The presence of each and every one here is living proof that the legacy and spirit of Nelson Mandela is alive.”

Machel, Mandela’s widow, said Madiba’s centenary was an opportunity to celebrate him “in all his incredible uniqueness”, and also to celebrate him as a representative of a broader collective leadership that had led South Africa and South Africans to freedom.

Machel called on young people to take inspiration from Mandela’s life so that they create a world in which all live in a way that respects and enhances the freedom of others.

Ramaphosa said the Nelson Mandela Annual Lecture, from the very beginning, had been “global in its ambition, and broad and inclusive in its outreach”.

Related: 5 Inspiring Quotes From Madiba To Stir You Into Action On Mandela Day

Ramaphosa said that his “Thuma Mina” (send me) message was “none other than Mandela’s message” of personal service: “Madiba … is sending all of us to deal with corruption, and to root it out of South African soil.”

Obama said: “Madiba’s light shone so brightly … that in the late seventies he could inspire a young college student on the other side of the world to re-examine my own priorities – to reconsider the small role that I might play in bending the arc towards justice.

“And now an entire generation has now grown up in a world that by most measures has gotten steadily freer, healthier, wealthier, less violent and more tolerant during the course of their lifetimes. It should make us hopeful.

“Let me tell you what I believe. I believe in Nelson Mandela’s vision, I believe in a vision shared by Gandhi and King. I believe in justice and in the premise that all of us are created equal.”

In his speech Obama tracked the enormous social and democratic progress the world has made in the 100 years between Mandela’s 1918 birth and 2018.

Obama went on to outline how the world has changed from one just emerging from a devastating war and in which most of what is now the developing world was under colonial rule. Women, across the world, were seen as subordinate to men, some races were seen – almost universally – as naturally subordinate and inferior to others, and business saw nothing wrong in seeking to exploit workers, of any race or creed.

Since then colonialism had come to an end and the world had, in general, embraced a new vision for humanity, based on the principles of democracy, the rule of law, civil rights and the inherent dignity of every single individual, Obama said.

This kind of progress was the kind of progress to which Mandela had dedicated his life, Obama said.

“Now an entire generation has grown up a world that has become freer, healthier, wealthier and more tolerant, in the course of their lifetime. That should make us hopeful.”

But, Obama cautioned, now  the world stood on the brink of letting go of all this progress.

Some people, world-over, saw the politics of fear and resentment as preferable to the “messiness of democracy”, Obama said.

The former US President said, however, that he still believed in the vision of Nelson Mandela.

“I believe we have no choice but to move forward,” Obama said. “I believe those of us who believe in democracy and human rights have a better story to tell.”

Obama called for the empowerment of young people, who would lead us into the future.

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What NPOs Wish Corporates Knew Before Mandela Day

Joanne van der Walt, Global Director: Sage Foundation Promotions provides a roundup of the best advice to corporates from NPOs.

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“It was 2pm on Mandela Day at the after-care centre. The children were getting ready to go home when suddenly, 80 volunteers from a large local bank arrived, unannounced. We didn’t know who they were, but they wanted to use their 67 minutes with to volunteer with us. We appreciated the effort, but we had to turn them away, partly because the children were overwhelmed by the many unfamiliar faces, but mostly because we had no time to prepare the volunteers or the children.”

I’ve heard variations of this story from most of the NPOs we work with at Sage Foundation. The common thread is that, while highly appreciated, NPOs feel that Mandela Day activities could have a much bigger impact if they were better planned.

Planning to fail

In a recent poll of over 200 NPOs, we asked them what their biggest challenge was when it came to working with corporates on Mandela Day: 73% cited a lack of planning and failure to include them in the decision-making for the day.

Related: 5 Inspiring Quotes From Madiba

Their second-biggest challenge, cited by 24% of NPOs, was that too many volunteers show up. So, not only do NPOs not know what to expect, but it can feel like an onslaught, despite the good intentions.

When asked what they enjoyed most about Mandela Day, 50% of NPOs said exposure and 34% said engagement with the volunteers.

Yet, because of the planning oversight, Mandela Day tends to be a rushed affair, leaving little time to build relationships or raise awareness about the NPOs’ work, which is what CSR is all about.

mandela-day-2018

Advice from NPOs

So, we asked NPOs how we can do Mandela Day better and what they wished corporates knew about their needs – 36% of NPOs felt that a little education could go a long way.

Here’s a roundup of their best advice:

‘Include us in the planning’. Meet with your chosen NPO well in advance (weeks, even months before) to discuss their needs and plan the day. Mandela Day can be disruptive, and NPOs, especially those caring for children and the sick and elderly, need time to plan and allocate their own resources.

‘Help us get exposure’. Exposure is massive for NPOs and is often the biggest benefit of Mandela Day because it can attract new donors and support. Yet, often, it’s the corporates that get all the publicity. When charity initiatives are rushed or planned at the last minute, there’s no time to create awareness on social media, which often gets more corporates interested in what they do.

‘Treat us how you would a client or business partner’. Don’t cancel Mandela Day activities at the last minute, show up unannounced or not pitch at all. You’re their guest and they feel a lot of pressure to make Mandela Day a good experience for you, too. This is especially hard for smaller NPOs, so please respect their time and space. And please clean up before you leave.

‘Engage with us’. 58% of NPOs say the company of the volunteers is their favourite part about Mandela Day. Take photos but remember to put the phones away and interact with them. This way, you’ll get a better understanding of what they do and what they need.

This ‘Helper’s High’ goes both ways. One Harvard study found that people who volunteer are 42% happier than those who don’t. Another study found that volunteers were less likely to develop high blood pressure than non-volunteer, reporting greater increases in psychological wellbeing and physical activity.

‘Slow down’. Corporates squeeze a lot into Mandela Day and, while NPOs love every minute, it often feels rushed and overwhelming. NPOs love demonstrating what they do and the difference they make but there’s often no time on the day to demonstrate this. Also, 67 minutes or even one day once a year is not enough to learn about their needs and make a significant impact but it’s a good starting point, as long as you remember to do it.

‘Come back soon’. 45% of NPOs said they never hear from the corporates again after Mandela Day. To get the most out of their CSR initiatives and to make measurable, long-term impact, corporates should form partnerships with their chosen NPOs and provide support throughout the year.

South African organisations spent over R9 billion on corporate social investment in the 2016/17 financial year – a massive increase from the R1.5 billion spent 20 years ago.

For those that haven’t had a chance to properly plan their activities for Mandela Day this year, NPOs reminded us that financial support is often better than a frenzied one-day event that leaves a big mess and has no real impact. One NPO had to hire a contractor after Mandela Day to repaint a wall that well-meaning volunteers had left in a worse state than before.

Before doing anything, consider Mandela Day from the NPO’s perspective: ask for permission, give them what they need, and respect their time and space.

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