September 2022 Newsletter
Dear Friends of Endeavor,
Our core belief at Endeavor is that high-growth entrepreneurs have the ability to transform economies. It is quite a bold claim but one that has been proven across the over 40 markets where Endeavor has a presence, in fact, Endeavor has research that shows that high growth entrepreneurs have a 20 times multiplier in their ecosystems and local economies. This is what continues to drive our enthusiasm in South Africa, where Endeavor opened its doors in 2004, just 10 years into a democracy.
Despite the massive potential here in South Africa, our Start-Up Ecosystem lags other African countries, it is clear that policy change is required if system change is to be made. This article, the Rise of Africa’s digital economy published in the Mail and Guardian shows that South Africa is behind its counterparts, Nigeria and Kenya when it comes to attracting venture capital. Together with partners including SiModisa, SAVCA amongst others, Endeavor SA has been engaging government to reform policy governing start-ups. Read Four quick fixes to spur SA’s Entrepreneurial growth and job creation
It is crucial that we keep our eyes on another important aspect of transformation and that is the fact that in South Africa, many of the tech-driven businesses are focused on solving challenges faced by the mass market or lower end of pyramid. A prime example of this is Aura, a SA entrepreneur who developed a security platform that links all private security providers together on one platform meaning that the user has on-demand private security wherever they are. This already successful model was made even more impactful by a partnership with another Endeavor entrepreneur, HelloPaisa who have the largest presence across South African townships in spaza shops. This partnership between Aura and HelloPaisa means that every spaza that uses HelloPay now receives the private security protection for emergencies that’s provided to them through to Aura.
Endeavor SA entrepreneurs continue to reinforce our core belief by delivering growth in revenue and job creation despite the hardships faced by other businesses in the economy. The latest round of impressive results come from the Local Scale-Up an initiative launched 18 months ago in partnership with the SA SME Fund to stimulate innovative growth and jobs. The cohort of (now 30 companies) has already made considerable impact, with revenue growing 61% in 2021 and at 300% for the first half of 2022 and on track to reach R2.8bn by year end. They created +1817 additional jobs over the past 18mths (+75% of black SA youth) and currently employ 3,435 people. See our portfolio’s impact stats here. In this interview with Ketso Gordhan, the CEO of the SASME Fund, we talk about the opportunity tech start-ups offer South Africa and the key challenges start-ups face in SA and how Endeavor has set itself up to support their growth.
There are several pillars of support offered by Endeavor, the first is mentorship. Entrepreneurs thrive with timely tailored mentorship and it is for this reason that Endeavor matches the mentors to the entrepreneurs’ needs at that particular point in their journey. As a global entity, Endeavor enables entrepreneurs to tap into both local and international mentor networks with its community of +5,500 mentors globally, with +150 in South Africa. A shout-out to the South African Endeavor mentors for your ongoing support — offering up 435 hours of pro-bono mentorship time in 2022 to date and many have invested in Harvest Fund II too. Thank you!
South African entrepreneurs also need access to capital at the different growth stages. Endeavor offers both capital mentorship and facilitates the connection for entrepreneurs either to venture capital (Endeavor’s partners with +500 VC’s internationally and +30 VC’s locally) or to debt providers. In addition, there are two funds, the Global Catalyst fund (Fund IV $280m) and Endeavor’s South Africa Harvest fund (Fund II R190m). Importantly and differently from others, our Endeavor Funds are rules-based, co-investment Funds with 20% of the carry being reinvested back into the ecosystem and remains founder aligned.
There is cause for us to celebrate the gains of the businesses in our network and the growth in our Catalyst and Harvest II funds but more needs to be done, not only to nurture the existing businesses in our network and to continue to identify more high-growth start-ups but also to contribute to the systemic changes to our tech start-up ecosystem that will really transform the South African economy. Africa is at an inflection point and South Africa cannot afford to miss this wave.
The next time we blink, there will be a King on the throne of England and it’ll be Christmas.
Kind regards,
Alison Collier
Managing Director: Endeavor South Africa
