Further opportunities for excellent SA developers and startups

By now, most SA developers will have heard of Hasso Plattner [founder of enterprise software giant SAP] and his new R350 million venture capital fund launched in South Africa recently.

In fact, I imagine many will be incredibly keen to somehow get in on the action and spearhead South Africa's revolutionary development arena [after all, a little financial backing never hurt anyone, did it?]. Hopefully HP Ventures Africa will generate more innovation and provide a more sound international platform than other local venture capital funds have done.

For those interested, I suggest listening to this iinnovate interview with Mr Plattner. It's not too long and touches on how he started SAP, as well as giving a little bit of insight into their approach to keeping a growing company innovative. At about 10 minutes in gets to probably the most interesting part of the talk. Worth listening to once - you never know when you might run into Mr Plattner in an elevator...

Local relevance. Global excellence.

Why not? Many companies have proved it, and in fact it’s the way that businesses have grown throughout history… starting off small and growing from there by taking a successful formula and replicating it elsewhere.

It’s funny how some people think this doesn’t apply to technology/internet businesses as well. Just have a look at Justin's comment on this previous post – spot on, and sadly where many local investors fall short. Where’s the vision to see what others don’t see?

Incredibly successful businesses are often built on one key element – community.

Just think of a simple example [I’ll borrow here from muti’s functionality a bit, so please forgive me Dave]:

How often do you go around looking for someone who can help you with handyman-type-work at home, or someone to install a pool-net, or possibly even paint and seal your roof [yes, those heavy rains a while ago bring this clearly to mind]? But you don’t want just anyone – you want someone reliable. Where do you go? The yellow pages and local newspapers are littered with names, and more often than not, the one you choose brings along a suitcase full of shoddy service, leaving you wondering why you bothered in the first place.

Enter a community website listing local suppliers [similar to Muti’s listing of posts] and where community members vote suppliers up or down [with more detail as to who voted and why, to maintain integrity], with tags for the different types of services. Surely this would make finding good people for the job much easier? It offers something for everyone:

• for community members, a trustworthy source of reliable local suppliers;
• for suppliers, a good way to leverage word-of-mouth referrals, where good service really does pay off; and
• for the developer, a great way to reach a focused community and a way to earn revenue while doing so [most obvious way is targeted advertising for that community]

Sounds silly and simple, but if you can make this work in one small community [I would love a service like this], who’s to say you couldn’t make it work in 100 small communities, and then 1,000, and then 1,000,000. And in that case, wouldn’t a “small” investment in making the first one work pale in comparison to the potential rewards to be earned from a locally-global business.

So then how can you say you won't invest in a small business without global appeal? Look a bit further!

Locally, relevant.

Globally… excellent!

Since the real players won't help, how do we put the fun back in funding?

Looking at the response to this latest post on funding, it seems this matter is close to many people's hearts. But while it generated a little bit of textbook debate, the main issue was left largely untouched.

Yes, I do REALLY wish that those guys would step up to the plate and go for a home run [better to swing and miss than never to swing at all]. But that was not the point of my previous post - if it was only to rag the guys who are equipped but are not really bothered, that would be unhelpful. Okay, I admit that was a part of the reason, but not all of it - the main agenda was really to generate some real interesting ideas on how it can be done.

Unfortunately nobody was willing to provide even the slightest hint of a solution as to how we can spur on SA's young rising stars and turn immense upside-potential into real exponential growth. [One late comment was a welcome relief - thanks Grant for your contribution regarding business incubators].

With that in mind, I would like to get the ball rolling here, because leaving people hanging with an unanswerable question is entirely pointless. So here's a starting point.

Most of the people seeking funding have heard the same questions over and over again - such as "Revenue model?", "Sustainability?", "Other funding?" and "Global appeal?". All good questions in their own right, and sometimes the answers are not pretty. But the truth is, more often than not there are definite ways to make something work [admittedly, if you can find the right pieces] - but the funders-in-waiting are often not willing to put in the effort to make it work [sadly they are blind to the real value] and the entrepreneurs simply don't know what pieces to look for.

Can we not get creative with solutions to this? Bridge this divide? When looking for answers to crazy situations, sometimes we need to get crazy too.

And I'm willing to bet that there are solutions that everyone in SA can implement in some way or other. Let me share some of my thoughts quickly here [with their potential implementors]

Campus kings [Government]

Within the university environment, create a research lab where guys are employed to innovate as they research and learn [is it really just coincidence that both Yahoo and Google were birthed in the hallowed halls of Stanford?]

Innovation hubs [Property owners and business people]

Develop multi-purpose communes [ie a place to work and live, equipment, food and basic living amenities included] where all the talented people live, work and build things together. Not living the high life, and not suitable for those that are married, but provides an electric environment where substantial innovation could take place.

Free-to-grow time [Corporates and larger businesses]

'Force' candidate employees to utilise a portion of their paid-for time to develop new ideas that have absolutely nothing to do with the rest of their work [3M implemented their '15% time' very successfully, and Google took it a step further with their '20% time', ie 1 day a week] - and then help them to push winning ideas. What would you do if you had one full day a week to pursue your most outrageous ideas?

Expert advice [Professional service firms]

Dedicate time for a team [doesn't need to be hundreds of people, can be one to start off with] to assist entrepreneurs in developing their businesses, providing free advice on legal matters, support in establishing businesses [registering with all the correct bodies, etc], and most vitally - serious feedback on business models and helping in the development of these. [Yes, various organisations provide mentoring programmes, but feedback I've received is that they don't work like intended - we need 'experts' that entrepreneurs are comfortable to approach to handle specifically the matters they struggle with]

Future fund [Younger generation along with entrepreneurs]

Start a fund where you build a network of young crazy people willing to put in a bit of money [whatever they can or want to - rather than spending it on McDonalds, movies or a GTI] - and make it absolutely plain in the prospectus about the risk : "This investment is HIGH risk. There is very, very little chance that you will ever see any of your money again, and the possibility of becoming a millionaire is slim, to say the least. BUT if this works, you'll be part of something special that will make the world look at SA and gasp. Welcome to the Fund of the Future". [Heck, I'd probably even go for that]

Living fund/honorary seats [Older generation along with entrepreneurs]

Many of today's boomers are sitting in the pound seats, and have much to offer a young up-and-coming company [great article]. After a 'lifetime' of hard work and very little enjoyment, I believe there are some boomers out there who would be willing to pay to be part of a young vibrant company that's doing exciting things and having fun in the process. Set up a company and let them 'buy' a position in this company - CIO [Chief Innovation Observer] or CTO [Chief Tea and coffee Organiser] or whatever - and allow them to find fun and enjoyment in every day they live [I can almost guarantee they will LOVE it]. Have you ever really listened to Sheryl Crow's "All I wanna do [is have some fun]"? Perhaps you can find Billy and give him somewhere better to hang out than the bar - where he would be more than willing to pay for the privelege of being surrounded by young guns [and help fund the ideas at the same time].

Again, these are just ideas to illustrate that we need not be bound by shackles of traditional solutions. Some have been done in some way before elsewhere, some are just strange. But they're ideas - and my intention here is to stimulate some creative solutions. Just because venture funding is traditionally done in specific ways doesn't mean it always has to be done that way.

I realise that these ideas [and many others] are more "big picture" and you may not see it as an immediate solution to your problem. Can I say, all you entrepreneurs with great ideas, there's more than one way to enamour a funding partner, and there are definite practical ways to make your plans and ideas speak, no, SHOUT to these people [in more traditional ways - but still with a business/creative element] - so think about how best you can do that [I'll try touch on this in a bit more detail sometime soon].

So please, if you have ideas or experience with some interesting ways of doing this - put them out there. Lets talk about it, throw it around, beat it to death if we must... and get it to work!

To the non-believers - that's your choice, but remember that those who expect nothing will never be disappointed.

To the believers - open your eyes and lift your head to the horizon - the answers are out there. Allow your creativity to flow and be part of the solution.

Calling all the real players in SA - put your money where your mouth is!

Forgive my departure from the norm here, but ENOUGH IS ENOUGH... SOMEONE HAS TO SAY SOMETHING!

I don't like writing this - it pains me to do so, but I'm sick and tired of our very own "successful entrepreneurs" doing precious little to share even a tiny bit of their success to spur others here on to the same [and higher] levels.

The topic is always a touchy one - funding for new businesses [here's a ThoughtLeader article that had lots of people up in arms]. Although this happens in all industries, in this context, I'm referring specifically to new tech and web development opportunities where SA has some amazing talent just waiting to be unleashed on the world, but instead these guys and girls sit trapped in a 9 to 5 job with no room to breathe, let alone move, and their awesome ideas sometimes never see light of day or get given a chance to grow to their full potential

We often ask "How can it be that young creative entrepreneurs struggle to find funding?" Okay, so we can't expect government to help [too much else to do]. Or banks [too much risk]. Or private equity players [too much effort]. Or seemingly even venture capitalists [exactly what is their problem?]

So I thought that if we could count on anyone, it would be guys who have already walked that road. It incensed me recently, no... UTTERLY OUTRAGED me to hear that even these guys have turned their backs - thinking rather of their own wallets and 'safer' opportunities. They are perfectly positioned to help [experience, contacts, cash, understanding] but just couldn't be bothered to make a difference! Even going so far as to put down the country for its lack of progress and "global" opportunities!? Excuse me? Then get off your backside, put your money where your mouth is and do something about it!!! Yes - you know who you are guys. Don't stuff around blogging about facebook and other useless trash or building mediocre businesses that have about as much potential to change the world as the Teletubbies have of restoring peace to Zimbabwe.

Think of magnesium: an amazing catalyst when placed in water - and the hydrogen it creates, seemingly out of nowhere. Guys, if you want to be a catalyst - DON'T sit around waiting for the perfect glass of water - just jump in the water you've been given, with the tools you have - and help make some magic happen.

COME ON!

Put the fun back in funding!

I think the reason why VC's shy away is because to them, its all about the tangible cash returns. And our local "success stories" I'm talking to here have somehow managed to pick up the same terrible thought-pattern [this is what kills innovation and vision]. Can I say this - big picture view for anyone even remotely interested in making a difference - while its all about the money, its actually got nothing to do with the money!!!

So what if it takes a few hundred thousand or even a million bucks to pour into a small innovative company with some amazing minds - and just let them run with the horses for a year, why not do it? Just think what could happen if it works! And even if its a write-off in financial terms - so what? That's not a lot of money to you, is it? No. But imagine the learnings, the publicity, the contacts... what would the rest of the world say about you, your company, our country, and our deep desire for success at all cost? This could change the nation!

If you don't know any people like this to invest in [and I know you do] then please contact me and I'll give you a few good starting points.

You have all the tools and resources... you've already overcome the fear of failure in getting where you are. Why not dare to defy comfort and convenience! Step out and take a chance! What are you really afraid of losing?

There are some things more important than just money, aren't there?

If this post has offended you... GOOD! At least that means I'm starting to get through to you. I've written this with good cause, and I know there are many others out there who feel the same way [and who can't write this for various reasons]. So before you think I'm just mouthing off, sit back and think about it for just a moment, and then try tell me I'm wrong.

HAIR RAISING venture capital statistics!

I just can't get this out of my mind. I saw it a few days ago, and when I close my eyes, it sits there haunting me!

1 in 10,000

In this MBA.co.za article, this is said to be the number of new ventures have venture capital in hand when starting out [and thats in the US - I shudder to think what SA's stats look like].

1 in 10,000.

1 in 10,000?

1 in 10,000!

Heaven help our fired up, driven, WOW entrepreneurs! We've got to find a way to change this!

More on this soon. Its too scary to be left alone.

What we have here is... failure... to communicate

Please, read this post about VC funding on Thought Leader - it sounds like the world has gone mad... or business in general anyway.

On one hand - VC funders saying they don't get enough good proposals, cancelling events due to lack of interest, looking for the best place to invest their war-chests.

On the other hand - entrepreneurs struggling to obtain funding, trying to raise capital from "friends, family and fools" [Tycoon - "Finding startup capital"], and just generally spending more time trying to fund the business than actually running the business.

Lets be honest - there are some absolutely mind-blowingly, awesome ideas out there. Yes, many of them internet-based businesses [Justin Hartman - you're spot on with your comments in the VC article!] - my personal favourite in terms of stunning growth potential and making the most out of "systems" [I hate the word, but love the concept].

Do any of the VC's have the guts to go with this? Vinny, you know how to do it - Lingham Capital could prove to be the groundbreaker in this field and show government and the dti how to 'do it'!

To the dreamers... keep dreaming! To the funders... get funding! And to the business people... let's help put this together and make it work!

[BTW - my belief - this is SA's greatest opportunity, and will solve many of our legacy problems]