Funding opportunities for small businesses highlighted at Maxum workshop

	Workshop participants listening intently to the day's presentations
	Members of the venture capital panel

Are you looking for financing and do not know where to go? Have you tried all avenues and had the door slammed in your face because you were considered too 'risky' - a seed or start-up company with no tangible return or collateral?

The survival rate of start-up and small companies in South Africa is than 20%. This is alarming considering that the sector is deemed to be an economic driver internationally. Most start-ups face financial challenges as they find it difficult to access funding and too often discover that most financial backers only pay lip-service to this sector as these companies are considered to be too risky and the economies of scale too low.

The Maxum Business Incubator at The Innovation Hub - well aware of the challenges and frustrations faced by smaller companies - recently facilitated a workshop, in conjunction with the Industrial Development Corporation (IDC) to facilitate a dialogue between funders and entrepreneurs.

During the workshop, the IDC briefed workshop participants on two funding mechanisms, namely the Support Programme for Industrial Innovation (SPII grant) and the Venture Capital Strategic Business Unit (VC SBU) Fund. The event was also used to expose entrepreneurs to possible funding opportunities, provide a platform for the Maxum incubatees to present their companies and attract investment, and to allow funders to engage with the audience and explain in detail the criteria they use when assessing applications.

SPII Grant

Dr Ntokozo Mthembu of the IDC gave an introductory presentation to the SPII Grant which is funded by the Department of Trade & Industry (the dti) and managed by the IDC. The grant has been put in place to promote technology development in innovative products and/or processes. It begins at an idea or development phase and ends when a pre-production prototype has been produced. They do not get involved with marketing, research or commercialisation but only the development phase. The fund has an allocation of R100 million which is up grabs for enterprising developers.

The SPII grant is divided into three categories:

• Product Process Development Scheme - a non-returnable grant of 50% to 85% of developmental costs to a maximum of R500 000, targeted at small entities.
• Matching Scheme - a non-returnable grant of 50% to 75% of developmental costs to a maximum of R1.5 million, targeted at small entities.
• The Partnership Scheme - conditional grants of up to 50%, repayable on completion in the form of a levy on sales and targeted at all companies.

Venture Capital SBU Fund

Mr Christo Fourie gave an overview of the new VC SBU Fund by the IDC which is targeted at seed and start-up technology-driven companies with development and successful commericalisation. The Fund's allocation of R250 million is invested in amounts from R1 million to R30 million per project. The fund can be applied to all factors of the business and the IDC is looking at mid-term investment. They will expect to take a stake of between 25% and 50% in the company during the investment period but do not look to become permanent investors. Prospective applicants are expected to submit a full business plan which describes their company - funding requirements, management team, full commitment to the project, exit opportunities and return on investment among other things.

"Elevator Pitch" Presentations

Four brave entrepreneurs from Maxum addressed the Venture Capital panelists and the audience about their businesses and their financial requirements.

• Skills Trac - Helene de Ridder explained how Skills Trac assists companies to improve and monitor employee performance and competence levels
• Tuune Mobile - Mark Mugarura presented his invention to download applications to cell phones anywhere in the world at 50c per minute
• MMB Service Providers - Dries Prinsloo presented MMB's management solution, which can ingest, convert, manage, net edit, offer third party storage and distribution, and distribute client content to multiple user interfaces and devices
• Observo -Tonie Deen explained his IT security invention that works '24/7', independently, accurately, comprehensively and cost effectively, making it easier to comply and report on statutory audits, regulatory compliance, threat proliferation and skills shortage.

Feedback from Venture Capital Panel

The panel members were requested to critique the 'elevator pitch' presentations to make the event more interactive and educational. The panel was suitably impressed by the presenters and the level of professionalism shown. Their feedback included:

• Companies seeking funding should always verify the criteria and/or requirements of potential funders and align their presentations accordingly.
• Most venture capitalists need to know how much funding is needed, how it will be utilised and how much money will be made from the project/business concept.
• The need to have a properly drafted and defined business plan.

The workshop certainly served as a learning experience, arming entrepreneurs with the resources and tools needed when requesting funding.

Seed and start-up companies are starved for information and financial backing to enable them to take their ideas and developmental projects forward. As Maxum, we see this intervention as one of the value-added services we can offer our entrepreneurs to ensure their prosperity and meaningful growth in the economy. This was the first of a series aimed at expanding the knowledgebase of entrepreneurs and facilitating access to relevant services and service providers.

Visit the Maxum website for more information.