Helping start-ups to take off, a group of successful South African entrepreneurs, today launched something the country has never seen before: a Venture Capital (VC) company that doesn’t just invest in early stage start-ups, but personally nurtures them through each phase of their business growth cycle, with the aim of scaling them in readiness for entry to international markets.
Called FUTURENEERS™, this pioneering company will bring select start-ups together with capital and the necessary management and professional support services, to get them to where they need to go. In addition to this, FUTURENEERS™ (and the chosen start-ups), will be supported by mentors who will not only guide them, but also connect them to opportunities locally as well as abroad.
In so doing, the company will be filling the current gap that exists after early angel investors exit, to where start-ups require an additional injection of capital and experience, to achieve recurring revenue generation. It is also capitalising on the rise of emerging-market technologies, usually born out of necessity, that are finding resonance in more established markets.
Having built unquestionably impressive track records across the globe as both entrepreneurs and investors, the team behind FUTURENEERS™ believe the death of real deal-flow in SA can be attributed primarily to perceptions of risk. Since South African investors often lack the time, knowledge and resources to screen, manage and grow promising start-ups, they tend to invest in more mature, post-revenue businesses.
Heading the group is Johannes (Jo) Booysen, best known as founder of Yonder Media (acquired by WPP’s Group M in 2015) the B-One Group (currently owned by Steinhoff Group) and Hot Dog Café Group. He’s joined by the likes of ex Price Waterhouse Coopers Partner Jaco Gerber, and Cipla Nutrition co-founder Deon Lewis.
And, because it is all about the people who make the businesses fly, backing the founding team is a powerhouse advisory board of ‘FUTURENEERS™.’ Part of that carefully selected and patriotic group keen to plough expertise back into South Africa’s start-up landscape is Los Angeles-based Brent Cohen.
Brent’s extensive experience ranges from Internet start-ups to high-growth companies, turnarounds, raising capital and IPOs, as well as mergers and acquisitions in the global technology sector. Perhaps best known for his 12 years at the helm of Packard Bell – where they achieved the distinction of attaining #1 market share worldwide – Brent has an equally impressive record in Venture Capital, also having optimised and exited a Softbank Capital and Texas Pacific Group portfolio company with over $1b. in proceeds.
Sharing Cohen’s vision and support for the company’s endeavours, and with similarly imposing track records, start-ups will have the benefit from guidance of local advisors such as the likes of Gustav Praekelt of the Praekelt Foundation, Martin Venter of Val de Vie and Derek White of the Clearwater Group, to name but a few.
FUTURENEERS™ will be addressing the problems that exist in the current South African VC ecosystem and has developed some unique characteristics to help them do so, which are exciting investors and start-ups alike:
Strategic partnerships in the US, UK, India, China, Australia and Israel, have facilitated the formation of a unique, multi-channel conduit for information, services and capital, aptly named the ‘Global Bridge’.
Accesses to professional services
Start-ups entering the FUTURENEERS™ programme gain unrivalled access to world-class service providers through a one-stop-shop environment.
Holistic Analysis Matrix
Before investments are reviewed and approved by the Investment Committee, they are rigorously screened and vetted against very stringent criteria.
Each member of the Management Team and Advisory Board have either started businesses, worked for large corporations, developed them, and then either exited, and/or attracted major investment capital or continued to be market leaders in their field.
Tax Benefit for investors
A Venture Capital Company, in terms of Section 12J of the Income Tax Act, that will enable investors to deduct the full amount of their investment from their income in the tax year in which the investment is made.
With active, hands-on involvement in the day-to-day business of the selected start-ups, FUTURENEERS™ will groom and nurture these start-ups through acceleration and product refinement, preparing them to scale globally.
Related: How To Get Venture Capital
By directly addressing the reasons why start-ups fail, FUTURENEERS™ is significantly reducing the risk profile of these start-ups, and enabling solid business success, almost from the outset.
Booysen summed it up by saying: “The start-up space, and especially the technology sector, has always been an exciting place to be. But today, more than ever – provided the risks are mitigated – it offers incredible returns. For us, the objective is simple: finding, nurturing and guiding the next Roelof Botha or Elon Musk, then introducing them to our influencer and funding networks around the world.
“With our ‘start-up machine’, international footprint and strategy, South African entrepreneurs and investors can experience what we believe is ‘real VC’ for the first time – financial support for early start-ups, professional services, and guaranteed access to a global ecosystem, along with all of the opportunities that this provides.”
What Franchises Need To Lookout For From Budget Speech
Franchise business owners are waiting with bated breath for the outcome of the 2019 National Budget Speech to be delivered by Minister of Finance, Tito Mboweni, as they seek more opportunities to increase their contribution to GDP.
Morne Cronje, FNB Head of Franchising, says the Budget Speech is an important economic indicator that franchises can use to gain insight on the government’s plans on spending and economic growth for the year ahead.
He highlights potential National Budget Speech outcomes that could boost confidence of franchises:
Any form of relief that is likely to bring positive change, rebuild confidence and address some of the key challenges impacting consumers will be welcome by franchises.
Cronje says consumer spending contributes a significant portion to the profit margins of franchises especially in the food sector.
Rating agencies are keeping a close watch on South Africa’s performance and prospects for growth, which will impact our Sovereign ratings for the rest of the year.
Measures that the government puts in place to promote economic growth this year will be of interest to franchises.
Franchise owners will be looking to benefit from regulatory changes that aim to improve growth, operating environment and enhance participation in all facets of the formal economy.
Based on the Mid-Term Budget Review in October 2018, there’s likely to be no major shake up from a business tax perspective. The anticipated relief in tax will go a long way to boost the profit margins of franchisees.
Spending on infrastructure creates vast opportunities for franchise business owners, as well as job creation in the country. The government has signalled an intention to partner with the private sector to develop an infrastructure fund to increase investment in public infrastructure.
“Franchises that operate in South Africa should prioritise the National Budget Speech as key decisions announced by the minister have a direct impact on their growth,” concludes Cronje.
5 Businesses You Should Start in 2019
Here’s the lowdown on consumer and technology opportunities in 2019 and beyond.
Savvy entrepreneurs should keep a close watch on consumer and technology trends in 2019. This, according to Silvertree Internet Holdings Co-founder and MD, Manuel Koser. Having invested in and grown a number of highly successful South African brands (among them Faithful-to-Nature.co.za, UCOOK.co.za, Pricecheck.co.za, CompareGuru.co.za, Petheaven.co.za, Cybercellar.com, and CarZar.co.za). Silvertree’s management team sees several business opportunities set to grow exponentially over the coming decade.
Here’s the lowdown on consumer and technology opportunities in 2019 and beyond.
1. Indigenous and ethical: Personal and home care products
2019 Sees growing potential for personal care products – ‘Those with local and indigenous ingredients, ethical sourcing which is kind to nature and the body,’ Koser explains. ‘There is a lot of room to play in the African haircare market particularly, as it’s often overlooked by the major FMCG companies.’
The Silvertree MD also sees increasing room for innovative natural home cleaners as consumers become increasingly environmentally conscious. ‘Until now, it was all about the well-known cleaning products the major chemical manufacturers put on the shelves. Now, there’s increasing space for new, exciting entrants.’
2. New beverages
‘Locally-sourced ingredients and an earth-first mindset will also play an increasing role in the consumer beverage market. Add to this the fact that major soft drink manufacturers will struggle to produce drinks for increasingly health-conscious consumers. They’re often just not quick enough to adjust to changing consumer tastes – particularly the tastes of millennials. Think less about a standard fizzy drink, but rather one that’s kind to the body, with natural ingredients. Non-alcoholic: water plus, say, cucumber, or another indigenous ingredient. The market for this will grow.’
3. Ethical snacking
Plant-based, vegan, ancient grains, ethical, protein-rich snacks – these are just some of the trends Koser sees dominating in the snack segment in 2019 and beyond. It’s about unique, tasty, functional foods that cater to the modern, time-starved consumer, Koser explains.
4. Buy, sell and compare online
In the technology space, marketplaces, e-commerce sites and classifieds will all gain momentum in 2019 and beyond. This encompasses aggregators as well as more unusual online businesses, which are increasingly able to find and reach consumers interested in niche products and services.
‘Consider an online ice-cream business. Once, something like that would have been unthinkable,’ Koser explains. ‘But as consumers demand greater choice, room for niche products like this grows.’
Yet, dabble online and seamless execution and delivery become make-or-break factors. ‘Many South African consumers use services such as Google, Amazon, Uber and Spotify daily – world-class products that function on a global scale. You can call an Uber and wait for just two minutes before getting a ride,’ Koser explains. ‘It’s quick and totally seamless. Consumers have come to expect that level of service across the board. Aligned to this is the fact that the millennial wave is currently hitting Cape Town right now, and Joburg secondarily, meaning a number of opportunities are opening up. Go after products and services in the right space and consumers will follow.’
5. Reinvent the wheel – and make it better
The final type of business entrepreneurs should keep an eye on is those that currently have low Net Promoter Scores. ‘This means that very few people like them, or the services they provide are of very poor quality,’ Koser explains. ‘Think of postal service providers or telecoms companies. With any monopolistic or oligopolistic structures, the service is often terrible because the heavyweights hold so much power. There’s a huge gap here.’
An allied approach for entrepreneurs is to assess opportunities for automation, or cutting out the middleman with technology. ‘Once, many markets – such as real estate were opaque, meaning you needed a middleman to help you transact. However, as the capabilities of technology have grown, markets have become far more transparent – making it easier for buyers to match with sellers safely. Today, a lot of this is easy to automate services – think about connecting a homeowner to a prospective renter through a digital solution where renters can be qualified, for example, in terms of their finances, personal information and criminal records. Quick and simple. And no middleman.’
The biggest opportunities here centre around where consumers spend the greatest amounts of time and money, Koser notes. ‘Housing and rent are always major costs. In terms of where consumers spend their time, on the other hand, much of it is, on a mobile phone, or PC.’
However, entrepreneurial success is never down to any one magic formula, Koser emphasises. Nor does Silvertree invest in prospective entrepreneurs solely on the basis of the product or service they offer. ‘It’s about passion, perseverance and tenacity as much as it is about the quality of the product.’
Silvertree Internet Holdings is an investment growth partner who aims to understand, grow and scale business, consumer and digital brands to unlock the brands’ exponential growth.
What To Watch For In Tito Mboweni’s First Budget Speech
By Rob Cooper, tax expert at Sage, and chairman of the Payroll Authors Group of South Africa.
Finance Minister, Tito Mboweni, delivers his first Budget Speech on 20 February at a difficult time for the South African economy. Even though President Cyril Ramaphosa has done much to restore business confidence in his first year in office, GDP growth remains weak, government finances are in relatively poor shape, and renewed load shedding is hurting business confidence.
Judging from his Medium-Term Budget Policy Statement in October last year, I expect Minister Mboweni — backed by the team in the National Treasury—to deliver a relatively cautious budget. Much of the focus will be on refinancing the state-owned enterprises and putting them back on to a sustainable footing.
We probably won’t see much in the way of radical thinking since the room for manoeuvre is so limited. Click each header below for an indepth video on the upcoming topics.
Renewal of the country’s public healthcare system with a mandatory health insurance fund and free healthcare at the point of need has been the ANC government’s policy for years, but progress has been slow to date. There isn’t much money in the country’s coffers to fund something as ambitious as NHI, yet the government will want to show that it is advancing the concept ahead of the elections.
With an NHI bill to be tabled in Parliament soon, we could learn more about how NHI will be funded in this year’s Budget Speech — it’s still not clear whether we will pay for it through payroll taxes, VAT increases or other fundraising measures. As an initial step, we could see medical aid tax credits reduced (or at least not adjusted for inflation) to free up some funding for the NHI.
The ETI Act came into effect on 1 January 2014; as a fan of this incentive, I was delighted that President Ramaphosa announced that it will be extended for 10 years another decade in his state of the nation address. However, I have also long argued that the scheme is not performing to its true potential because it is so complex for payroll managers to administer.
The introduction of the national minimum wage adds even more complexity— until and unless the ETI Act is amended, SARS is of the opinion that the National Minimum Wage will not qualify as a “wage regulating measure”. I hope the Budget Speech will announce steps to align the ETI with the national minimum wage and take other measures to simplify administration.
I don’t expect any major increases to corporate or personal income tax this year since the taxpayer doesn’t have much more to give. I think the top 45% rate will remain unchanged, while tax bracket creep relief (to compensate for inflation) will be limited to lower income earners. It seems unlikely that the Minister will increase VAT again this year, given last year’s increase.
That means the Minister is likely to look at ‘moral’ taxes (sin and sugar taxes) to raise more money; we can expect another steep increase in the fuel levy. Perhaps we’ll also hear about efforts to improve SARS’ revenue collection after several years of under-performance. The agency seems ripe for a turnaround strategy, with high-powered team looking for a permanent chief to take the reins at SARS.
Follow us on @SageGroupZA on 20 February 2019 for LIVE expert insights from the annual Budget Speech.
For more information about Sage’s annual tax seminars, please visit: https://get.sage.com/PRL_19Q1_C4L_ZA_EVCU_NPS_AnnualPayrollTaxSeminar2019
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