SPECIAL FEATURE Business funding There is a massive amount of funding available for businesses, from multi-national corporations through to SMMEs. The key is knowing how to access it. SOUTH AFRICAN BUSINESS 2016 26
SPECIAL FEATURE “Before any bank funding is sought, a business needs to have equity, a proven track record and experienced team, guaranteed inputs or raw materials, proven market demand; and a robust project finance model,” says Andre Pottas, Corporate Finance Partner at Deloitte. “If these attributes are not all in place, as is common for startups and new, innovative technologies, then alternatives to bank debt must be sought.” Pottas stresses that it all depends on the type of business that is being developed, in addition to the level of the returns that can be realistically predicted. “For innovators and disruptors, who often have little own equity to contribute, selling their idea can be really difficult and self-funding may be the only option available in the short term. For example, to get equity finance, it is a trade-off between the new networks and expertise you expose your business to, and the percentage of equity and control that you are willing to give away. Loan finance on the other hand guarantees that you keep all of your shares and can run the business as you like, yet the loan can create a strain on the cash flow of the business,” says Pottas. An alternate source of funding that is gaining in popularity is crowdfunding, which allows business owners to raise capital in small amounts from a variety of funders, typically via social media. “Crowdfunding had been incredibly successful in the United States and Europe, but those are very developed markets, and they are working from a much higher base of business skills and IT penetration. In South Africa, there are so many people and youth coming out of school, starting up ideas, but our education system has not actually prepared us to run enterprises. Coming up with ideas we are good at. Figuring out how to make them ideas that will work we’re not so good at,” says Thundafund co-founder Patrick Schofield. “There are several reasons for that prudence, or inability to take risk by the venture capitalists. Most importantly is that they can’t get their money back. If you loan someone money, below R500 000, because of the legal processes it takes to get the cash back, you might as well give the damn stuff away. If they don’t give it back, to get it back through the legal routes is very expensive and almost not worth it. So it makes it very difficult for anyone to loan cash, which 27 SOUTH AFRICAN BUSINESS 2016
Vall exclusive economic zone limits
OVERVIEW NEED PIC Mining The South
OVERVIEW Mineral beneficiation The
PROFILE The Council for Geoscience
OVERVIEW Energy The South African e
INTERVIEW Cummins South Africa Cumm
OVERVIEW Manufacturing Increasing m
OVERVIEW Automotive International i
OVERVIEW Automotive components Incu
OVERVIEW Chemicals and pharmaceutic
OVERVIEW Healthcare South Africa’
OVERVIEW Water Severe water restric
OVERVIEW Improving quality The intr
Our Vision is is “Quality water f
OVERVIEW 107 SOUTH AFRICAN BUSINESS
OVERVIEW airports in India and Braz
affords, while maintaining its envi
kets, except Australia. In Africa,
Rosebank, Johannesburg, renamed ‘
Trade with Africa Improved infrastr
FOCUS MTN plugs R1.2-billion into K
MTN rolls out fibre infrastructure
OVERVIEW community engagement. The
PROFILE For BEE Verification and is
OVERVIEW attracting and retaining c
OVERVIEW Small business is taken ve
Franchise Fund—an innovative plat
educating young people in fields th
OVERVIEW Management Plan has divert
hazardous waste is also not being c
INTERVIEW yourself up as a Tier 1 o
OVERVIEW Renewable energy South Afr
INTERVIEW Plenty of scope for solar
LISTINGS South African business org
LISTINGS South African National Gov
LISTINGS Department of Communicatio
LISTINGS Department of Human Settle
LISTINGS Department of Science and
OVERVIEW Regional overview: Eastern
INTERVIEW Buffalo City on the rise
OVERVIEW Regional overview: Free St
OVERVIEW Regional overview: Gauteng
FOCUS A Catalyst for Economic Devel
FOCUS business people and tourists
OVERVIEW Regional overview: KwaZulu
OVERVIEW Regional overview: Limpopo
OVERVIEW Regional overview: Mpumala
The powerhouse of Africa Mpumalanga
Mpumalanga: Key Sectors Mpumalanga
Nkomazi Special Economic Zone The N
INVEST IN THE PROVINCE OF THE RISIN
OVERVIEW Regional overview: Norther
OVERVIEW Regional overview: North W
OVERVIEW Regional overview: Western
FOCUS Khayelitsha - the power of to
INDEX INDEX Abeco Tanks ...........
ENSafrica.com ENSafrica | Africa’
Loading...
Loading...
Loading...