2016_08_entrepreneur_fund your business (1)
TRANSCRIPT
AUGUST 2016 ENTREPRENEURMAG.CO.ZA 31
TACTICS FEATURETACTICS FEATURE
FUND YOUR BUSINESS
30 ENTREPRENEURMAG.CO.ZA AUGUST 2016
CHECKLISTBefore you apply for funding, do you have the following documents?
□ Business plan or relevant application
□ Formal contracts directly with a blue chip company or government department
□ Letters of engagement with clients
□ Tax clearance certificate
□ CIPC company documents
□ BEE certificate
□ Audited financial statements
□ Management accounts
» Established: Your business is thriving with a place in the market and loyal customers.
» Expansion: Characterised by a period of growth into new markets.
» Decline: Decreased sales and profits. » Exit: Either the opportunity to cash out
on all the years of hard work, or it can mean shutting down the business.
* See table below
Step 2: Identify the funders/financial institutions and their target audienceThis information is available on each funder’s website. Read each funder’s mandates to determine:» What the funders are looking to achieve
(black/youth/female ownership, jobs, profitability, rural vs. urban business, contracts etc.)
» Priority industries» Business phase/size» Minimum and maximum funding available» Collateral requirements and personal risk» Valuation methodology in the case of
buying into or selling a business » Operational involvement of previously
disadvantaged individuals.
Step 3: Research the funds within the relevant institutionFunders will, on average, have between two and 26 different funds, each with their own mandate, eligibility criteria, funding type (loan or grant), costing, things they will and won’t fund and other specifics. Read the mandates to find your fit.
Step 4: Reach out to the fundersCall and speak to the funders and be fund specific. Speak to a consultant at the fund to clarify your eligibility before starting the application process.
Ask questions around:» Their timelines» When the credit committees or panels sit
for adjudication » What is considered for your application to
get adjudicated.Arming yourself with this knowledge
will exponentially increase your chances of being considered for funding. Many applications do not reach the adjudication phase because the business doesn’t match the fund or the application is incorrectly filled in.
You cannot receive funding if your application is not even considered. The correct content and format is vital.
Q ARE GOVERNMENT GRANTS ONLY FOR SMALL ENTERPRISES?
Not at all. Where a large business is looking to expand its network through distributors, agents or franchisees, wholesale loans from the likes of SEFA, NEF and IDC as well as some developmental grants such as the Jobs Fund, Incubator Support Programme and Social Enterprise Fund are attractive funding models for previously disadvantaged individuals to be included in your value chain as business owners. This is also a way that businesses are able to leverage funding for growth.
Q WHAT IS THE FIRST STEP TO SECURING FINANCE FOR YOUR BUSINESS?
You must understand what you need. There’s a basic checklist to follow:» Do you need money for working or operating
expenditure vs capital investment?» How much do you require?» How long do you need the money for?» What is the cost of capital you can afford
to repay?Armed with this knowledge, you can start finding the right fund or finance vehicle for your needs.
Q HOW DO YOU IDENTIFY THE RIGHT FUND FOR YOUR BUSINESS?
There are four key steps in the process.
Step 1: Know your business phaseEach phase of business attracts a different type of funder, so it’s important to be clear about which phase you’re in.» Seed: Your business is just a thought or
an idea. » Start-up: Your business now exists legally.
Products or services are in production and you have customers.
» Growth: Revenues and customers are increasing, profits are strong, competition exists.
FUNDERS APPROVE FUNDING BASED ON DIFFERENT CRITERIA:➢» Turnover: mainly grants➢» Profitability: loans and grants➢» Balance sheet: loans and grants➢» Ability to scale: venture capital
Page over for a comprehensive list of funders
LIFE-CYCLE VS FUNDING VEHICLES
Growth and expansion phase
Maturity
Idea R&D Launch
Venture capital firms & corporate
investors
Private equity firms
Founders
Seed funders
Start-up funders
Angel investorsDebtor and trade finance; long-term funders
and Development Banks
BanksIPO acquistion
Rev
enue
Time
93% of South African businesses lack the knowledge of how and where to access finance. Nadia Rawjee unpacks the how, where and who of funding your company.Q&A
FUNDING
GET THAT CASH
There’s a wealth of funding and finance
available in South Africa — you just need to know
where to apply, and what they need from
you.
VITAL STATSPLAYER: Nadia RawjeeCOMPANY: Uzenzele HoldingsWHAT THEY DO: Facilitate a range of non-traditional, developmental grant and loan funding applications to expedite the progress and growth of established businesses.VISIT: www.uzenzele.com
PH
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UP
PL
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32 ENTREPRENEURMAG.CO.ZA AUGUST 2016 AUGUST 2016 ENTREPRENEURMAG.CO.ZA 33
IMPROVE YOUR FUNDING CHANCES: Submit applications before October and stand a better chance of gaining access to developmental funding grants and loans in the 2016/17 financial year.
NEF: National Empowerment Fund
Phase Finance Name of Fund Mandate Eligibility Criteria Contact
Debt Imbewu fund Supports black entrepreneurs wishing to start new businesses and existing black-owned enterprises with expansion capital.
50,1% black shareholding, operationally involved black shareholder, business and/or industry experience by black entrepreneurs is also considered.
+27 (0)11 305 8000;
0861 843 633 / 0861
(THE NEF)
applications@nefcorp.
co.za
Debt uMnotho Fund Designed to improve access to BEE capital and has five products: Acquisition Finance, Project Finance, Expansion Finance, Capital Markets Fund, and Liquidity and Warehousing.
Minimum BEE ownership of 25,1% post NEF investment, NEF exposure to the project generally not to exceed 50% of total project costs. Expansion: 50,1% shareholding with operational involvement.
Same as above
How to access NEF fundingThe vision of the NEF is to be a leading provider of innovative transformation for an economically inclusive South Africa through being a thought leader, promoting and facilitating black participation, providing financial and non-financial support to black-owned or empowered businesses, and by promoting a culture of savings and investment among black individuals and communities. This is achieved through fund management, asset management and strategic project funds.
Government / Development Finance Institution (DFI) capital
DTI: Department of Trade and Industry
Phase Finance Name of Fund Mandate Eligibility Criteria Contact
Rebate Grant
Automotive Incentive Scheme (AIS)
To grow and develop the automotive sector by increasing plant production volumes and strengthening the automotive value chain.
Light motor vehicle manufacturers and component or deemed component manufacturers that are part of the Original Equipment Manufacturer (OEM) supply chain.
Anna Theron
+27 (0)12 394 1094
Upfront Grant
Black Business Supplier Development Programme (BBSDP)
To improve the sustainability of black-owned enterprises by providing funding to increase the competitiveness of the businesses.
Majority black-owned with a predominantly black management team; turnover of R250 000 to R35 million per year; operating and trading for at least one year.
Gabriel Makhonxa
+27 (0)12 394 1438
gmakhonxa@thedti.
gov.za
Rebate Grant and/or Upfront Grant
Clothing and Textile Competitiveness Programme (CTCP) (PIP)
To structurally change the clothing and textile industry by providing funding assistance for enterprises to invest in competitiveness improvement interventions.
Clothing manufacturers: Textile manufacturers; Cut, Make and Trim (CMT) operators; Footwear manufacturers; Leather goods manufacturers; Leather processors (specifically for leather goods and footwear industries).
Joy Balepile
+27 (0)11 269 3762
Rebate Grant
Black Industrialist Scheme (BIS)
To achieve the demographic transformation of economic power and spatial concentration within the overall industrial sector.
Have more than 50% black shareholding and management control; Must have requisite expertise in the sector; Have a project with a minimum investment of R30 million.
Gabriel Makhonxa
+27 (0)12 394 1438
gmakhonxa@thedti.
gov.za
Loan Isivande Women’s Fund
Improves and expands access to finance for woman entrepreneurs.
At least six months in operation; 50% + owned and managed by women; potential for growth, commercial sustainability and job creation.
+27 (0)12 772 7910
Rebate Grant
Manufacturing Competitiveness Enhancement Programme (MCEP)
Enhanced manufacturing support for upgrading production facilities in a manner that sustains employment and maximises value-addition.
Operating for at least one year; Projects are required to sustain existing employment levels at the date of application for the duration of their participation in the MCEP; Level 4 B-BBEE contributor status.
Magdeline Thwala
+27 (0)12 394 1089
Sithembile Tantsi
tsithembile@thedti.
gov.za
+27 (0)12 394 1258
Rebate Grant
Export Marketing and Investment Assistance (EMIA)
Establishing export markets for SA products and to attract foreign investment into South Africa.
South African manufacturers and exporters; Export trading houses representing at least three SMEs; South African commission agents representing at least three SMEs/HDI-owned businesses.
Donald Mabusela
+27 (0)12 394 1716
dmabusela@thedti.
gov.za
Rebate Grant
SA Emerging Black Film-makers Incentive
To nurture emerging black filmmakers and to capacitate them to take up large productions in order to contribute towards job creation.
Black-owned qualifying productions with a total production budget of R1 million and above; must have been operational and involved in the film industry for at least six months, with at least a ten-minute trailblazer or short film produced.
Nelly Molokoane
+27 (0)12 394 1425
nmolokoane@thedti.
gov.za
Rebate Grant
SA Film and Television Production and Co-Production Incentive
To support the local film industry and to contribute towards employment opportunities in South Africa.
South African productions with a total production of R2,5 million and above. Must be the entity responsible for all activities involved in the production of the film.
Dimakatso Kgomo,
+27 (0)12 394 1462
How to access DTI fundingThe DTI has core areas of focus that include industrial development; trade, export and investment; broadening participation; regulation; and administration and co-ordination. It aims to promote long-term industrialisation and industrial diversification in metals fabrication, capital and transport equipment, green and energy-saving industries, agro-processing industries, automotive and respective components, plastics, pharmaceuticals, chemicals, clothing, textiles, leather, biofuels, footwear, forestry paper, pulp and furniture, tourism and cultural industries, business process outsourcing and off-shoring (BPO&O), and nuclear and advanced aerospace industries to name just some.
FUNDING DIRECTORY PHASE KEY
SEED START-UP GROWTH ESTABLISHED EXPANSION
IDC: Industrial Development Corporation
Phase Finance Name of Fund Mandate Eligibility Criteria Contact
Loan Gro-e Youth Fund
Financial and non-financial support to youth enterprises.
Over 50% owership by persons under 35 years; Level 4 B-BBEE Contributor status; Tax Clearance Certificate; recent Afs’s and management accounts
+27 (0)11 269 3000
Loan Green Energy Efficiency Fund (GEEF)
To encourage investments in energy efficiency and renewable energy projects aimed at improving energy efficiency.
Financially viable energy efficiency projects that provides significant energy and/or emissions savings; Offset grid-connected electricity through self-use; Priority will be given to companies that have less than or equal to R51 million turnover; R55 million assets; or 200 employees.
+27 (0)11 269 3000
Loan Manufacturing Competitiveness Enhancement Programme (MCEP)
Designed to promote competitiveness in the manufacturing arena, and to ensure job retention in this sector.
Must be classified as a manufacturer. +27 (0)11 269 3000
Loan convertible to Grant
Social Enterprise Fund(SEF)
Supports social and environmental issues and job creation of social value.
Majority of profits should be contributed back to the impact of the business, have a revenue model, not be a ‘project’ of the applicant, prove sustainability, should have a funding partner other than IDC.
Bukelwa Mntongana
+27 (0)11 269 3466
Equity Technology Venture Capital Fund (TVC)
Established by the dti and managed by IDC for the commercialisation of innovative products, processes and technologies.
Case-by-case Craig Sauls
+27 (0)11 269 3554
Equity Venture Capital Fund
Development and commercialisation of technology-rich Intellectual Property (IP).
Case-by-case +27 (0)11 269 3000
How to access IDC fundingThe IDC assesses applications for funding based on (but not exclusively) job creation potential, rural development, urban renewal and poverty alleviation, the employment of women and youth, as well as skills development.All projects funded must show economic viability and sustainability and should target previously disadvantaged groups, women, people with disabilities, low income working groups and marginalised communities.
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Supplied by Uzenzele Holdings. This list is non-exhaustive and Uzenzele Holdings does not facilitate funding for all of the above funds.
Phase Finance Name of Fund Mandate Eligibility Criteria Contact
SEFA
Bridging Loans/ Term Loans / Structured Finance
Direct Lending SMEs and co-operatives operating in all sectors of the economy.
51% South African ownership, and in certain cases 51% Black ownership.
+27 (0)12 748 9600
Development Bank of Southern Africa
Upfront Grant
The Jobs Fund To co-finance public and private sector projects that will significantly contribute to job creation.
Dependent on the window for funding. +27 (0)12 406 9166
jobsfund@treasury.
gov.za
SARS
PAYE reduction on monthly returns
Employment Tax Incentive (ETI)
The ETI encourages employers to hire young work seekers.
Must be paying PAYE to qualify; 18 to 29 years old; Is paid the minimum wage applicable to that employer.
0800 00 SARS (7277)
Independant and Non-Government Capital
Phase Development Finance Mandate Eligibility Criteria Contact
Debtor & Trade Finance
Randtrust Debtor Finance
Cash flow financing solutions that allow creditors to be paid.
Debtors book of R10 million+, debt must be insurable; exclusion of public debt.
+27 (0)11 844 7160
Reichmans Debtor Finance/ Asset Finance / Trade Finance
Working capital and medium-term finance. Established businesses that do not qualify for commercial bank finance or have exceeded the end of their overdraft.
info@reichmanscapital.
co.za
Retail Capital Merchant Cash Advance (MCA)
Unsecured business finance for working capital, expansion and growth
Minimum 6 months trading history, minimum R30 000 monthly debit & credit card turnover.
0861 17 17 17 or
enquiries@retailcapital.
co.za
Royalfields Invoice Discounting/ Long-Term Loans
Debt funding to SMEs that are unable to access bank or Development Finance Institution (DFI) capital.
Minimum 12 month contract; predominantly for supply agreements.
086 178 9607,
Tebfin Invoice Discounting
Bridging finance and working capital. Predominantly for supply agreements.
+27 (0)11 301 3607
Long Term Funders
Business Partners
Structured Finance
Deals are structured using equity, shareholders’ loan accounts, revenue sharing and term loans or any combination of these.
Established businesses and experienced owner with own capital to contribute to the financial requirement. Collateral required.
0861 SMEFIN
(0861 763 346)
enquiries@
businesspartners.co.za
Business Partners
Structured PropertyFinance
Finance of up to 110% of the purchase price for owner-occupied business properties, the purchase of business properties for leasing back in order to unlock capital for business expansions.Up to 100% finance on existing business-occupied properties to unlock capital for business expansion or other requirements. Tailor-made property financing solutions.
Established businesses with own capital to contribute to the financial requirement. Collateral required.
Same as above
Grofin Debt Specialises in financing SMEs across Africa and the Middle East, with a focus on franchisees and manufacturing
Established businesses with own capital to contribute to the financial requirement. Collateral required.
FUNDING DIRECTORY PHASE KEY
SEED START-UP GROWTH ESTABLISHED EXPANSION
For more information and a more comprehensive list of VC and PE funds, visit www.savca.co.za (South African Venture Capital and Private Equity Association).
Phase Investor Name of fund Mandate Eligibility Criteria Contact
VENTURE CAPITALISTS
Angelhub Ventures
Angel seed fund
Invests in lean start-ups with disruptive business models and technologies.
Existing, profitable, in industries prime for disruption (SaaS, m-commerce and big data).
Brett Commaille
+27 (0)21 888 0947,
4Di Capital
4Di Capital Fund 1
An independent seed- and early-stage technology venture capital firm. Technology-focused (Internet, software, mobile).
Founder teams; commitment; domain expertise and deep insights into the large market problems they wish to solve.
Lungile Makhanya
+27 (0)21 659 2042
Grovest Venture Capital Company
Grovest Venture Capital Fund
To build a portfolio of high growth SMEs. Diversified industry preferences.
Revenue producing; potential for rapid growth; defensible market position; dynamic and motivated management team.
Jeff Miller
+27 (0)11 262 6433
Grovest Venture Capital Company
Grotech To invest and build a portfolio of disruptive digital technology high growth companies.
Innovative, technology-based solutions with an innovative business model.
Clive Butkow
+27 (0)11 262 6433
Invenfin Invenfin Priority sectors are Technology and Food & Beverages.
Businesses that have achieved meaningful market traction, are on-trend globally, are poised for rapid growth, and have strong IP.
Stuart Gast
+27 (0)21 888 3355
ENTERPRISE DEVELOPMENT
Edge Growth
Vumela Enterprise Development
Capital raised from third parties. No preferred industry, if addressing broader social need.
Established business. No seed or angel funding.
Richard Rose
+27 (0)10 001 3715
Edge Growth
Edge Action Fund
No preferred industry. Established business. No seed or angel funding.
Richard Rose
+27 (0)10 001 3715
Edge Growth
ASISA Enterprise Development Fund
Focused on suppliers to the financial services sector. Mainly loan funding.
Established business. No seed or angel funding.
Richard Chapman
+27 (0)10 001 3715
IDF Managers
IDF 1, IDF 2 Invests in economically viable and innovative black-owned and women-owned (and managed) businesses within South Africa.
Must be able to yield commercial returns. Show high growth potential and have innovative business ideas.
Polo Leteka
+27 (0)11 772 7900
PRIVATE EQUITY
RMB Corvest
RMB Corvest Participate predominantly in management buy-outs and buy-ins, leveraged buy-outs and BEE transactions.
South African companies making sustainable annual earnings above R30 million EBITDA; profitable and cash generative; experienced and competent management team.
Neil Page
+27 (0)11 380 8300
Sasfin private Equity Fund Managers
Sasfin Private Equity Fund
Backs management teams who have or can build the business further and actively seek minority equity stakes in such companies.
High-growth companies with an enterprise value above R50 million.
Neil Eppel
+27 (0)11 809 7500
Zico Capital
Zico Capital Fund
Interested in these sectors: Automotive; Operational services, Media and advertising; Human capital recruitment, training and development; Financial services; Infrastructure and manufacturing; Mining and resources; Alternative energy.
Businesses with minimum company earnings of R20 million EBITA
Tshego Sefolo
+27 (0)11 217 3300
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