[SA Innovation Summit] Emerging companies insights: Where do we stand?

The two organisations recently published a survey of 743 respondents - in collaboration other stakeholders - which scratches beneath the surface of the entrepreneurial ecosystem in South Africa.

#emergingcompanies insights results show that we have to look at positive and support #entrepreneurs - job creation! pic.twitter.com/OEZOv86tRF

- Berlise Louwrens (@BerliseLouwrens) August 26, 2015

The publication defines 'emerging companies' as "tech-enabled businesses in all industries, progressing through the early/incubation and the intermediate/acceleration phases of the business lifecycle". It includes companies from early stage (

The bad news

South Africa has one of the highest business failure rates in the world at 75%, and there is a drop off in the number of people entering the entrepreneurial field. Coupled with an education legacy that lacks focus on maths and science, cultural and social challenges and a perceived tough regulatory environment also play a role.

Silver linings

On the up side, South Africa has one of the two largest economies on the continent, a sound financial infrastructure and diversified industries.

"But we make the mistake of comparing ourselves to developed markets, rather than other emerging markets. We perform better on certain defined indicators than other BRICS countries," says De Rijk-Uys.

"We have to focus on the positives, because the benefits of entrepreneurship include boosting economic growth and the country's gross domestic product through creating jobs and uplifting society," she explains.

The two also point out that there are budding pockets of innovation, particularly in major centres such as the Western Cape and Gauteng.

Exploding myths

The survey also debunks popularly held myths about entering the entrepreneurial sphere.

• Myth 1: Funding. Interestingly, 22% of the entrepreneurs surveyed say that access to markets and customers rather than funding is their major concern.
• Myth 2: Cash constraints. Although this is a real worry to entrepreneurs, this is largely due to them being reluctant and sceptical about using experienced advisors to access government funding. 

"In order to contribute to improving targeted outcomes, engaging the services of an expert that has 'done it before and seen it before' and who has relevant networks and contacts may be the right route to follow," the survey says.

• Myth 3: Red tape. Although navigating the bureaucracy of business is a headache, it's not the biggest challenge. Where part of the problem lies is in SMEs spending work hours on dealing with labour legislation and other regulatory matters, rather than focusing on developing their business.

Ripe for the picking

Of the companies surveyed, 43% say they will be looking for funding in the next 12 months. The problem is that many budding entrepreneurs don't know how to package their business to appeal to the right sort of funders.

The global trend of e-commerce is also the way forward, 65% of the entrepreneurs surveyed are embracing online channels to market their products or services, while 55% expect to do more than half of their business online in the next five years.

So where to next? De Rijk-Uys and Fraser say that to make entrepreneurship a real contributor to the South African economy, there needs to be more collaboration and access to the procurement pie. In addition, improving mentoring opportunities and a focus on education that fosters entrepreneurial skills will help.

"The opportunity is now, they conclude."

The SA Innovation Summit is taking place at the Cape Town Stadium from 26-29 August. For more info, go to www.innovationsummit.co.za.