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You have a great business idea, a business plan and know how much money you need to get your business up and running. The good news is that there are several different organisations you can approach to fund your business, from banks and venture capitalists to angel investors and incubators, as well as government departments and crowdfunding platforms.
Venture capital finance
This 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 (SAVCA) website. Some funders will provide funds specifically for research and development while others will help you finance your business so that your product is ready to take to market.
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Funding from Government departments and agencies
Numerous government departments and agencies offer support to start-up businesses, ranging from small loans of a few thousand to loans into the millions. Government agencies to approach include:
- Department of Trade and Industry
- Industrial Development Corporation
- National Empowerment Fund
- Small Enterprise Development Agency
- Small Enterprise Finance Agency (SEFA)
- Technology Innovation Agency
- National Youth Development Agency
Some provincial and local governments and municipalities offer businesses support, such as the Gauteng Growth and Development Agency (GGDA) and Western Cape Department of Economic Development and Tourism. You can approach your province or metro for support and be sure to follow them on social media as they often announce programmes on these platforms.
You can also approach government departments such as the Department of Agriculture, Land Reform and Rural Development, the Department of Sports, Science, Art and Culture, or the Department of Tourism, depending on what’s relevant to your business, as they often have programmes in their sectors.
Business funders and incubators
These businesses are set up to help individuals and companies start and run their businesses. Their services include providing finance as well as support. Some will offer finance options only, such as loans, while others will want a stake in the business or a percentage of the profits, and a say in how the business is managed.
Incubators help individuals and businesses to grow their businesses and offer a range of services from premises to work in, to finance, marketing support and mentoring.
- Business Partners
- Raizcorp
- Aurik Business Accelerator
- The Innovation Hub
- Digital Africa Initiative
- Akro
- South African Future Trust
Some of South Africa’s largest companies, such as mining companies, banks and telecommunication companies, also run incubators. These may run for a few months, or a few years, so it is worth contacting them to find out about any incubator or development programmes. SME South Africa also has a list of potential funders and incubators, as well as fantastic information for entrepreneurs!
Always ask about the costs of accessing and using funds
Angel investors
Angel investors are usually wealthy individuals who loan money to individuals and companies with business ideas they believe will succeed. You may be familiar with some international angel investors from television programmes such as Dragons’ Den.
They usually want a stake in the business, with many prepared to invest in businesses that have potential but don’t qualify for a bank loan. South Africa has numerous angel investors such as Jozi Angels. You can also find angel investors on the Investment Network. Remember you are not limited to getting funding from South Africa only, so you can also investigate international angel networks.
Crowdfunding
South Africans have access to websites offering crowdfunding from BackaBuddy to Thunda Fund, JumpStarter and Uprise.
Top tip: When you are registering or accepting offers, always find out if there are any additional costs you need to pay to access platforms and what the exact terms and conditions are of the finance and support offered, as well as any fee or commission payable to the platform.
Bank funding
If you are starting a small business, you can approach your bank for a business loan. South Africa’s large banks all have small business departments with specialist small business consultants to offer advice and review funding applications.
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, but remember once it is done, you can start growing your business.
Original article published on: 17th October 2014
Updated on: 8 October 2020
Updated on: 19th October 2021