Publications
Partners
ONE of the regular complaints I hear as a financial journalist is that South Africa doesn't have a culture of investing in start-ups or promising entrepreneurs.
And yet venture capitalists argue there simply aren't enough businesses in which to invest; that they are crying out for investment opportunities.
But the Western Cape could be leading the way to closing this disconnect between a culture of historic non-investment in technology and clear evidence of growing interest in the sector.
David Murray, managing director of Cape Venture Partners, said recently South Africa's fledging venture capital market was finally starting to mature. In fact, he said, we were starting to see some successes with incubators such as those run by Allon Raiz at Raizcorp, Bandwidth Barn and Biotech Bics coming through.
Experienced investors are now guiding start-up businesses and know the best ways to assist them to allocate the capital that is invested in their ideas.
However, I believe where the Cape has stood head and shoulders above the rest of the country is its ability to uniquely market itself.
About six years ago, certain individuals in the Cape decided they would create this concept of a technology and investment hub; in effect, South Africa's own Silicon Valley.
The idea was that the Cape would focus on developing its understanding of technology, biotechnology and other innovative offerings. This would, in turn, provide potential investors with a pool of knowledge and ultimately some quality investment opportunities.
Those decisions taken a few years back have started to play out, with a number of entrepreneurs such as Vinny Lingham, Justin Stanford, and Charl Norman being able to bring their offerings to market.
The
But specialist attention is needed.
Brett Commaille, CEO of Invenfin, made an important comment this week when he claimed South Africa needed to focus on developing industry specialist funds.
Specialist funds and experts who understand specific sectors will give a business idea the best chance of reaching the market. However, I think it goes a step further.
It takes more than just a few funds investing in specific sectors to promote a long-term culture of investment in innovation.
Just as the Cape has developed its technology and innovation concept, so the rest of the country needs to focus on developing "hubs", where entrepreneurs and investors can come together.
There is no reason why Port Elizabeth can't establish itself as an internationally recognised hub in the pharmaceutical sector, or Gauteng province as a prime location for innovation around energy projects.
And what about the Free State as a globally recognised developer of agricultural solutions? Kwa-Zulu Natal... I haven't quite worked out what it would be good at apart from being an "also-rans in the Super 14", but I'm sure it has something to offer somebody!
Incentives needed to liberate ideas
However, to get this right, it takes "buy-in" from all the role players including local government, academics, learning institutions and investors.
Government needs to provide tax incentives for the development of certain start-up sectors in the economy. I want to be motivated to take the risk.
Academics and learning institutions need to start getting their research projects out in front of venture capitalists and to avoid potentially good technology being hidden in research archives without seeing the light of day.
Investors themselves need to highlight the projects on which they are working and get these out in front of the media. We need to establish the "poster boys (or girls)" in specific industries so that we can use these people to inspire the next generation of young entrepreneurs and business owners.
Finally, I'd like to point out that some of the big dreams that came out of the Cape have resulted in businesses that now operate on an international playing field.
South Africa has the capacity to compete with the best in the best and if we continue to invest in innovative ideas we can take on the rest of the world.
- Fin24.com
