Funding Options
Bank loans:
This is the best route for companies looking for funding of less than R1 million.
There are very few venture capital or private equity firms that will invest amounts less than R1 million.
Another alternative to a bank loan is angel funding. Banks will require security for the loan which is why many entrepreneurs turn to VC/PE or angel funding.
Angel Investors:
A term used for private, wealthy individuals that generally invest in young start-up companies, angel investments are sometimes
made in exchange for equity or could be in the form of a loan. Unfortunately the network of business angels in South Africa is
not developed and there is no formal association. However, there are a number of initiatives designed to bring together Angel
Investors such as Quickberry.
www.quickberry.co.za
Micro-financing:
If a company is looking for very small amounts, micro-financing is a good route to take. Micro-financers are organisations
which offer finance quickly without requiring security. Great for immediate funding but interest rates can be extremely high.
Government Funds:
The South African government has a number of good incentive programmes for entrepreneurs and exporters.
Some of these are readily accessible but the paperwork can take a lot of time. The Department of Trade and Industry
website offers information on the various government incentives.
www.dti.gov.za
Export Incentives:
The Small Enterprise Development Agency website offers comprehensive information on financing small businesses
through the Industrial Development Corporation (IDC). The IDC provides matching funding to entrepreneurs who intend
establishing or taking over businesses.
www.dti.gov.za/thedti/seda2.htm
The Innovation Fund:
Provides grants to fund the end-stage research process where research knowledge can be translated into new and
improved products, processes or services. It has set itself a mission to promote the economic competitiveness of
South Africa through investments in technological innovation that lead to the establishment of new enterprises,
and the expansion of existing industrial sectors, to the benefit of all South Africans.
www.innovationfund.ac.za
The National Research Foundation (NRF):
The objective of this foundation is to support and promote research through funding, human resource development and
the provision of the necessary research facilities, in order to facilitate the creation of knowledge, innovation and
development in all fields of humanities, technology and the natural and social sciences. In so doing, it contributes
to the improvement of the quality of life of all people within the country. The organisation was established in 1999 as a result of The NRF Act.
www.nrf.ac.za
Incubators:
An incubator is a facility from which various support services are provided to small start-up companies at special rates.
The support services usually include physical infrastructure such as bandwidth and office space, but can also include mentoring or referral services.
