SUNDAY TIMES - New ideas light up start-up prospects
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Sunday Times Opinion By Zipho Sikhakhane , 2017-03-19 00:00:00.0

New ideas light up start-up prospects

The City of Gold was abuzz with entrepreneurial energy this week as Johannesburg hosted the 2017 Global Entrepreneurship Congress.

This was the first time the event had been held in Africa. Such an event typically attracts more than 6000 people from 165 countries and the theme this year was digital disruption.

Deputy President Cyril Ramaphosa stressed its importance for growth in Africa, given that digital disruptions have enabled better provision of basic services to remote communities.

Hosting this event in South Africa - a country that needs to significantly boost its levels of entrepreneurial activity - is definitely a step in the right direction.

It gives us access to a multitude of stakeholders who are determined to collaborate on developing entrepreneurship regionally and globally.

A number of research insights were revealed at the congress this week - highlighting how South Africa is becoming better positioned on the global entrepreneurial ecosystem map.

For example, the Aspen Network of Development Entrepreneurs' South African chapter used the congress as an opportunity to share its updated research insights on the state of entrepreneurs in South Africa. It was encouraging to see that the number of private and public institutions involved with developing entrepreneurship has escalated compared to two years ago when the research was first published.

The 2017 insights reveal that there are now 330 organisations that support the entrepreneurial ecosystem - an increase of more than 100 since 2015. What is particularly encouraging is that the increase in support is for developing entrepreneurs' capacity and funding.

This is a sign of hope because it means that key stakeholders are hearing the message that more needs to be done. Even corporations are playing an increasingly bigger role by establishing their own entrepreneurial support units.

This is all well and good, but it is important to be mindful that there remains a need for us to be smart and strategic about how we choose to add value to the existing ecosystem.

According to the Aspen Network research, even though the number of support organisations is increasing, the ecosystem remains highly fragmented, with organisations continuing to operate in silos, even though we are all working towards the same common cause and stand to achieve far better results through improved collaboration.

Most new and existing support organisations continue to play in the early-stage start-up phase, even though there is a gap in the area of organisations that can help entrepreneurs at the ideation stage, which is at the start of the spectrum, and at the growth stage, at the opposite end of the spectrum.

The larger pool of new and existing financing institutions is still primarily providing funding to new businesses only after they have made it past the early high-risk stage - but entrepreneurs in the earliest stage need funding the most.

Matsi Modise, MD of SiMODiSA, highlighted the reality for our entrepreneurs: that the majority do not have the privilege of easy access to moneyed family and friends who can provide seed capital.

SiMODiSA promotes the need for public- and private-sector collaboration on entrepreneurial research and policy development.

It is working on an online portal that, once launched, will help entrepreneurs in the most remote parts of South Africa.

This is the kind of digital disruption that our ecosystem needs.

The other factor that needs attention is the measurement of the results from all this activity.

Michelle Yorke, strategic development manager for the Aspen Network chapter in South Africa, said there was a significant need to start measuring the impact, especially because we are not seeing the increase in input translate into quality output.

Funders for growth entrepreneurs continue to struggle with finding "growth-investment-ready" start-ups because few organisations are available to help them get better positioned to succeed in landing funding. This results in much-needed funding remaining underutilised, and businesses remaining small players, unable to grow into the kinds of businesses that can have a notable and sustainable impact on our economy.

We should not continue to invest more funds and resources into developing an ecosystem if we are not simultaneously serious about defining and measuring the kind of results that we expect to see on the other end.

It goes without saying that if we can crack this entrepreneurial growth conundrum, our country can succeed in boosting our low GDP growth numbers, thus getting closer to addressing the unresolved unemployment challenge.

zipho@ziphosikhakhane.com

Sikhakhane is an international speaker, business executive and investor, with a business honours degree from the University of Cape Town and an MBA from Stanford University