Building local wealth to build a local economy
Fostering a culture of entrepreneurship has become the core initiative in many countries that have struggling economies. But these attempts become meaningless if the businesses are unsuccessful.
Cherishing the culture
In order to nurture such a culture locally and eventually across the African continent, Vusi Thembekwayo founded MyGrowthFund: a high-growth venture capital fund that works with entrepreneurs who are in the growth phase of their businesses and to help them reach the next level of operations. To ensure that the company became a strong force, Thembekwayo recruited serial entrepreneur and charted accountant, Boitumelo Mofikoe, as Managing Director of MyGrowthFund Thembekwayo, described as a leadership genius, maverick and self-made millionaire, explains, “We are not a start-up fund. If you have an idea, fantastic, go and find what’s in the market. “A plethora of other providers will help you with capital. That’s not what we do. What we are really good at, is taking businesses and assets that are marginal and on the brink of growth, and accelerating them through the process of growth. That’s why we are a growth fund.” He adds that through MyGrowthFund they want to create 300 sustainable businesses, which they will first take through a process of mentorship. Whereas for most of the funds you go and apply for funding, they provide you with the capital and take a portion of equity and then work through the processes with you.
Building a mega venture fund
Managing Director Mofikoe is also a force to be reckoned with. After spending years building a reputable knowledge base in the financial landscape, he says, “We are essentially building Africa’s biggest venture capital fund. “The five-year vision is not just for South Africa. We want to dominate in the African continent. “We are spreading our wings, but the focus is development and making sure we build sustainable businesses, not just a straightforward capital model, but an impact venture capital fund.”
MyGrowthFund is the first growth accelerator firm that employs mentorship as an element within a focused methodology, catering only for high-growth entrepreneurs
Unlike other providers, at MyGrowthFund they do not believe they can fix entrepreneurs and businesses over the short-term. Thembekwayo says, “We first take you through a process of training, coaching and mentoring. “The reason we do this, is because in the early days of the fund we had an uncomfortable number of losses because we did everything the other funds did. We assumed money was the problem. “Now we work with entrepreneurs to see what the issues in the businesses are, take them through a focused methodology of training, mentoring and coaching and only when we believe they are investment-ready, then we put in capital. “Just to be clear, our capital is for the purpose of growth not for plugging a waterhole. “That’s essentially what we do. Additionally, we want to have 300 businesses in the portfolio in the next decade.”
Top 40 initiative - MyGrowthFund
Towards reaching their overarching vision of building 300 sustainable businesses, MyGrowthFund introduced its Top 40 initiative recently during an elegant Phantom of the Opera-themed event in Sandton.
The initiative is an 18-month programme in which entrepreneurs and businesses are groomed for the next high growth level of business.
Thembekwayo adds that this is the reason why their programme is delivered over 18 months. During this period, they will identify all the issues relating to the business. He says it is important to have somebody who has walked the path before you, to guide you through the various challenges. In May when the call for entries was opened to entrepreneurs in need of support, Mofikoe says they were flooded. “We received over 4 000 applications. You can imagine the amount of work that was cutout for us. “We were further pleased that most of applicants met the criteria and therefore had to extend the application deadline.”
Focusing on the real issues
Mofikoe says many entrepreneurs look at funding as the issue but it actually isn’t. “Often entrepreneurs think they need funding and come to us looking for funding, but upon an in-depth assessment of their business needs, one realises that funding is not the priority issue.
“A good illustration is when entrepreneurs say they need a million rand to grow, however, the mentorship process will reveal that growth funding is different to operational cash-flow needs.”
Thembekwayo advises entrepreneurs to disclose everything concerning their business during application for funding at government institutions or private organisations, because in most cases, people are rejected due to omitting essential information.
Close to 80% of entrepreneurs who go for state funding institutions get turned down due to non-disclosure of crucial operational information, like a tax certificate.
“It’s not in the development finance institutions’ business to say you should have disclosed that you have a tax liability, therefore if you don’t have tax clearance certificate, they will turn you down as they are not banks.”
Global vision and local development
Thembekwayo and Mofikoe seek to inspire and uncover the true essence of global entrepreneurship and apply this locally. This is evident from the different ventures they have pursued, like the Dragon’s Den (Thembekwayo) and the different entrepreneurial ventures they have taken to.
Mofikoe says travelling exposes you to other economies and what has been done elsewhere and opens your eyes to what you can implement because we are still a developing country.
Through MyGrowthFund, the dynamic duo plans to establish over 200 incubation centres in townships and rural areas around South Africa.
“There are over 200 municipalities in this country and I want an incubation centre, in each of the municipalities,” says Thembekwayo. Even though South Africa has one of the most dysfunctional education systems, Thembekwayo believes we can still produce entrepreneurs of great standing. He says education is not critical in the process of entrepreneurship, further adding that in entrepreneurship one needs to have high toler-ance of pain, consistency, persistence and be able to view the world through a third eye. “The ability to see what social ills can be turned into opportunity.”
Avoid overthinking the business
Thembekwayo says one actually needs to be ‘stupid’ because smart entrepreneurs create problems. “When you’re smart, you think through things all too often and all too much and the problem with that is thinking through takes time and time is lost opportunity. “Think about the best industry black people have invented in this country. It is the taxi industry. Now, with the greatest of respect I have never met a taxi owner with a PhD and I have never met a person with a PhD who is a taxi owner. Why? Because people with PhDs want to analyse. They must write a report, there must be evidence. The taxi driver goes, ‘Is there a route? Yes. Are people going there? Yes. Will I charge them? Yes. Faka itaxi. “He will work out the business model later. He doesn’t even know the cash flow model of his business. He doesn’t even know the repay rate. He doesn’t know the cost of capital, and he is just faka iline. I say being stupid with the greatest of respect but you have to dumb yourself down, to stop looking at the details. That’s why the worst entrepreneurs are the people with the best level of education.”
Capital needs to feed the local economy
The two men are passionate about growing and developing the African entrepreneurial landscape.
They echo similar sentiments that Africa’s problem is not talent and never has been. They maintain Africa’s problem is that capital generated here, doesn’t stay here.
“Often wealthy Africans will invest and buy a house in the south of France, in Lyons or in Switzerland. I have never met one Swiss person that takes money out of Switzerland and buys a house in the south of Soweto. “The problem is that capital flies the wrong way. You might not think that’s a problem but if the money doesn’t circulate here, it means it is not generating new capacity here,” says Thembekwayo.
MyGrowthFund endorsement
MyGrowthFund has been endorsed by Dr. Richard Maponya who accepted the position of honorary patron of the venture capital fund. Maponya says Thembekwayo’s vision of entrepreneurship resonates with his own ideas of the type of initiatives needed to take the South Africa economy forward. “I am eager to lend my support and champion your organisation’s objectives as you seek to unlock funding opportunities, provide access to markets and accelerate business growth in revenues, technical competence and personal leadership,” Dr. Maponya said in his acceptance letter to Thembekwayo.
MyGrowthFund promises great success for the forum, the entrepreneurs, and all parties look forward to seeing the end result.
