Access to Funds: List of Funders for Youth Entrepreneurs. Entrepreneur options and strategies to explore and secure venture capital. Youth disillusioned by job hunting or unsuccessful at finding further education and training should consider alternatives.
The Youth Entrepreneurs Programme: Access to Funds
Entrepreneurship options and strategies for access to funds.
Access to Funds for Youth Business Ventures
Youth entrepreneurs in South Africa, like entrepreneurs in any other country, often face challenges when it comes to funding their business ventures. However, there are several options and strategies they can explore to secure funding:
1. Government Grants and Programs: Access to Funds:
South Africa offers various government grants and programs aimed at supporting youth entrepreneurship. These include initiatives from organizations like the National Youth Development Agency (NYDA) and the Small Enterprise Development Agency (SEDA). Research and apply for these programs that match your business’s needs.
2. Angel Investors: Access to Funds:
Seek out angel investors who are interested in supporting startups. Angel investors are often individuals with high net worth who provide capital in exchange for equity in your business. South Africa has a growing community of angel investors and venture capitalists.
3. Venture Capital:
If your business has significant growth potential and is in a high-growth sector, consider seeking venture capital funding. Venture capital firms in South Africa may be interested in backing innovative startups with the potential for large returns.
4. Business Incubators and Accelerators:
Joining a business incubator or accelerator program can provide not only funding but also mentorship, networking opportunities, and access to resources. Organizations like 22 on Sloane and Founders Factory Africa run such programs.
Platforms like Thundafund and BackaBuddy enable entrepreneurs to raise funds from a large number of individuals. This can be an effective way to validate your business idea and gain initial capital.
6. Bank Loans:
Explore traditional bank loans and financial institutions for business financing. Many banks in South Africa offer loans specifically designed for small and medium-sized enterprises (SMEs).
7. Grants and Competitions:
Keep an eye out for business competitions and grants offered by organizations, corporations, and foundations. These can provide funding and exposure for your business. Organizations like the Tony Elumelu Foundation and the Anzisha Prize have offered such opportunities in the past.
While not a source of external funding, consider starting your business with your savings and reinvesting profits to grow. This approach allows you to maintain full control but may limit the speed of growth.
9. Peer-to-Peer Lending:
Platforms like RainFin and FundingHub offer peer-to-peer lending options where individuals lend money to businesses. Interest rates and terms may vary, so be sure to research thoroughly.
10. Family and Friends Access to Funds:
Don’t underestimate the support you can receive from family and friends who believe in your business idea. However, be cautious about mixing personal relationships with business ventures, and ensure clear terms are in place.
11. Partnerships and Joint Ventures:
Collaborating with other businesses or individuals can provide access to funding as well as shared resources and expertise.
12. Microfinance Institutions:
Microfinance institutions in South Africa provide small loans to entrepreneurs, often in underserved communities. These loans can help you start or expand your business.
Remember that securing funding is often a combination of various sources and strategies. It’s essential to have a well-prepared business plan and financial projections to attract potential investors and lenders. Additionally, networking and building relationships within the South African entrepreneurial ecosystem can open doors to funding opportunities and valuable support.
Entrepreneur Youth Find Your Freedom: Access to Funds
In 2000 the government announced the establishment of the Umsobomvu Youth Fund, out of the proceeds of the demutualisation of Old Mutual and Sanlam. The fund started operating in 2001, with the mandate to facilitate the involvement of young people in economic activities. Umsobomvu implements a youth enterprise programme, providing both financial and non-financial support to youth enterprises.
The youth entrepreneurship programme has three major projects:
- Enterprise funding.
- Business development services.
An estimated 700 SMMEs and 3 640 micro-enterprises will benefit from these projects over the next three years, and approximately 17 000 jobs are expected to be created.
|Enterprise funding||Recently launched FNB-Momentum-UYF Progress Fund, which complements the Franchise Fund, launched in partnership with business partners.|
|Micro-finance||Focus on entry-level investments, and its pilot projects with the Nations Trust and Micro Enterprise Finance are funding micro-enterprises and co-operatives.|
|Business development services voucher||Helps young entrepreneurs to access quality business support from approved service providers through vouchers, ranging in value from R1 500 to R23 000.|
|Take it to the People project||Launched recently to create locally based economic opportunities for young people. The project focuses on income generation and self-employment for young people living in 21 urban and rural areas identified as significant “poverty pockets”. The project aims to develop local solutions to unemployment by investigating options for youth development in the form of micro and small businesses and co-operatives. It will work in conjunction with local municipalities and donors.|
|Contact, information & counselling||Aim to reach more than 730 000 young people over the next three years, offering information and counselling support regarding career development, employment and entrepreneurship through a youth line, advisory centres and an Internet portal. The first 12 of 33 planned advisory centres have already opened in the provinces of Gauteng, KwaZulu-Natal, Limpopo, Northern Cape, North West, and Western Cape.|
|School to Work||Is designed to transfer high-level technical skills and to facilitate work experience for unemployed matric and tertiary graduates. It also aims to introduce black youth to previously inaccessible careers, such as IT and accounting.|
|Youth Service||Focuses on unemployed youth who have no tertiary education, enabling them to acquire the skills, competencies and experience they require to achieve economic independence. This is done through a structured learning programme and accredited through a SETA.|
Small, Micro and Medium Enterprises (SMME’s) Support: Access to Funds
In addition to the listed institutions, there are also NGOs, donors and private sector organisations (e.g. the programme by the Banking Council of SA) who support SMMEs. The Black Economic Empowerment Commission, an initiative of Black businesses, also highlighted the importance of SMME development for broad-based black empowerment.
The institutions listed in the table below support small businesses.
|Centre for Small Business Promotion||This is a Chief directorate in the DTI, responsible for policy and coordination of support programmes for SMMEs. It also mobilises funds and supervises the establishment of new institutions.|
|Ntsika Enterprise Promotion Agency||Provides non-financial support such as mentoring programmes, business advice, help with government tenders and technology support to small enterprises, through:||Targets survivalist, micro and very small enterprises.|
The majority of the LBSCs focus on a start-up businesses, targeting the unemployed, women and youth.
|Khula||Provides access to finance through:||Mainly targets very small, small and medium enterprises, with two small programmes for the survivalist and micro sectors.|
|NAMAC||Two key programmes|
The MACs are mainly for small and medium, more formal businesses.BRAIN for the entire spectrum of SMMEs.
|Provincial SMME desks||To provide a one-stop information centre to SMMEs and develop enabling government policy to support SMMEs in each province. Activities of the SMME desks include (though not in all provinces):|
|Land Bank||Finance agricultural businesses||From small to large-scale farmers.|
|Industrial Development Corporation||Supports and funds various industrial development programmes.||Predominantly large-scale projects, but some small to medium enterprises. Has a specific BEE mandate.|
|National Empowerment Corporation||Funded by government, it provides funding for black economic empowerment ventures||Funded by the government, it provides funding for black economic empowerment ventures|