25 Mar New Scale Up programme to drive local and global growth of high-impact SA entrepreneurs
Adrian Gore: high-impact entrepreneurs create jobs quickly, and are not dependent on thriving economies to achieve growth.
The South African economy and jobs market will reap the benefits if we are able to accelerate the growth and extend the reach of high-impact local entrepreneurs onto the global stage; and this is already happening.
This is according to Adrian Gore, CEO of Discovery and Chair of the SA SME Fund, who spoke at the launch of the Endeavor and SA SME Fund Local Scale Up programme today.
The Local Scale Up (LSU) programme is focused on expediting the local and international growth of successful entrepreneurs who run high-impact businesses. These are primarily tech-enabled businesses, built by experienced entrepreneurs, which scale quickly and outperform their peers, driving revenue growth and creating jobs.
The LSU is led by Endeavor South Africa, whose model is geared at helping scale high growth businesses locally and prepare them for the global stage. Endeavor operates in 38 markets and has over 2000 entrepreneurs and over 5000 mentors as part of its global network.
Gore noted that successful entrepreneurs do not require thriving economies or political stability in order to prosper.
“Successful entrepreneurs are economy agnostic. Smart entrepreneurs know that cycles come and go, and that the best time to invest and build is when times are tough. When others are distracted and ambivalent, opportunities are underpriced,” says Gore.
Indeed, between 2017 and 2020, the 28 companies in the Endeavor SA’s portfolio had an average annual revenue of R200 million, a realised weighted average revenue growth of 24% per annum, and had increased employment by 16% annually (a total of 11,535 employees in 2020 alone, of whom more than 75% are black).
These SA Endeavor entrepreneurs tripled their capital raising from R700m in 2019 to R2bn in 2020, and are forecasted to raise more than R3bn in 2021, an increase that has been fueled by the growth of quality businesses and an increased appetite for these type of companies from international venture capital firms.
Being selected to be part of the LSU programme provides significant opportunities for local growth. Once they complete the LSU, these entrepreneurs may be chosen by Endeavor’s rigorous selection panel to become global Endeavor Entrepreneurs, which helps catapult them onto the international stage. Examples of companies that have been selected for the LSU include Voyc, StructureIT and Snode.
Melvyn Lubega, a SA Endeavor Entrepreneur, exemplifies this journey. In 2014, He co-founded go1, an online learning platform for corporates. go1 has been listed on both the Deloitte Fast500 list of the world’s fastest-growing companies, as well as the Disrupt100 list of the world’s most disruptive companies. They have received over US$80m investment backing from Microsoft, Salesforce, SEEK, Oxford University and Y-Combinator among others.
Gore said it is also a myth that big business can drive the job creation this country needs, saying that entrepreneurial activity is the only real sustainable job creator.
“Big business, at scale, can only sustainably increase their top lines at GDP growth levels, so in order to achieve earnings growth that shareholders require, they have to focus on efficiency and expense reduction, which inevitably results in headcount squeeze. High-impact entrepreneurs, on the other hand, have the ability to quickly absorb capital and create jobs.”
A central plank of the SA SME Fund’s mandate is to create an innovative and entrepreneurial local ecosystem and help scale high-growth entrepreneurs. It does this via its investments in numerous venture capital funds, including Knife Capital, the University Technology Fund, and 4Di, and by supporting the growth of highly scalable, more established businesses. Supporting and sponsoring the Local Scale Up programme will help realise this objective.
Alison Collier, MD of Endeavor South Africa, says: “We are seeing more and more SA tech enabled entrepreneurs successfully setting up their businesses and tech development teams in South Africa, and selling their solutions to the large international markets, including the US, Europe and Asia. The last year’s boom in remote working has only increased this opportunity for SA and it’s great to see local entrepreneurs capitalising on this.
“The right introduction into a trusted network saves entrepreneurs months, or even years of work. This minimizes cash burn and fast tracks the business’ revenue growth. Learning from successful entrepreneurs who have ‘been there and done it’ is invaluable. The advice shared refines a business’ value proposition and growth plans, ensuring teams avoid many costly pitfalls. This model is gold for accelerating their success.”
Vinny Lingham, an Endeavor SA alumnus and serial entrepreneur, has blazed a trail from Cape Town to Silicon Valley. He is a classic example of the power of Endeavor’s trusted global network and the multiplier effect. Vinny has founded 4 companies, is an active investor in 46 companies, is a key player in various VC funds in the US and SA, including Newtown Partners, and is mentoring a further 20 entrepreneurs locally and abroad. As the founding Chairperson of Endeavor South Africa, Gore saw first-hand how Endeavor’s model drove the scale-up of numerous businesses. “I’m excited by the SA SME Fund’s partnership with Endeavor to support the Local Scale Up programme over the next three years. Working with like-minded organisations creates a virtuous cycle and helps create a thriving entrepreneurial ecosystem in SA.”