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Where to go to fund your start-up business

Posted  November 19, 2018

You have a great business idea and it’s sure to change your world and maybe everyone else’s too. Now if you could just get some funding…The good news is that there are several different organisations that you can approach to fund your business, from banks and venture capitalists to government.

Venture capital financeThis is where private equity capital is used as seed funding for businesses that are considered high-growth with high potential. You can access a detailed list of venture capital and private equity firms on the South African Venture Capital Association website. Some funders will provide funds specifically for research and development while seed funders will help you finance your business so that it is ready to take to market. You will also find what is known as post-revenue generating funders. These funders require you to have a sales track record and proven market interest in your product or service.

The Department of Trade and Industry (DTi)The DTi has an incubation support programme which helps new businesses during their first three years, usually the most critical time for a new business. The programme offers funding of up to R10 million per enterprise, in partnership with larger companies that contribute funds and also play a mentorship support role. Details are available on the DTi website.

Small Enterprise Finance Agency (Sefa)Sefa is a result of the merger of the South African Micro Apex Fund, Khula Enterprise Finance Ltd and the small business activities of the Industrial Development Corporation (IDC). Sefa offers loans from R500 up to R5 million. There are several criteria if you want to access funding via Sefa. For example, the business must operate within South Africa and you have to be a sole trader with a fixed physical address. You have to have a written proposal or business plan and you must be able to show that you are able to repay the loan.

Business PartnersBusiness Partners considers all business finance applications up toR50 million, regardless of what sector of the economy you want to engage in. 

Business Partners considers financing options from R500 000 up to R50 million per application. Property transactions up to R30 million and joint venture multi tenanted properties of up to R75 million may be considered.

Bank fundingIf you are starting a small business, you can approach your bank for a business loan. In recent years, the banks have woken up to the huge potential for business within the small start-up enterprise industry and have started catering for this market with specialist products such as Absa’s Enterprise Development unit  and Nedbank’s Small Business Service unit.

CrowdfundingThis is a relatively new way to finance something and is quite the craze internationally although it has still to gain traction in South Africa. Websites such as www.investmentnetwork.co.za offer you the platform to showcase your project or business idea and interested members of the public then pledge money towards your project. The website is affiliated to the Angel Investment Network, which has 30 networks worldwide covering more than 80 countries across Europe, North America, South America, Africa and Asia. After an initial contact fee they charge no additional fees or commissions, as you then deal directly with your investors.

“I’m convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance.” – Steve Jobs, co-founder and former chief executive of Apple.

What are you waiting for?With a wealth of options so readily available, it’s worth trying to get your business the funding boost it needs. You may have to contend with quite a bit of paperwork, so get yourself ready… It could be the cleverest move you’ve ever made.

Original article published on: 17th October 2014
Updated on: 19th November 2018

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