Business Partners Limited, a specialist risk finance company for formal small and medium enterprises (SMEs), has announced the launch of the R400 million (US$45 million) Business Partners Limited Venture Fund, one of the largest Small and Medium Enterprise (SME) financing funds in South Africa.
The fund will also look for tech startups to fund.
According to Gerrie Biljon, Executive Director at Business Partners Limited, SMEs are key drivers of wealth in South Africa and it is reported that SMEs contribute 40 percent of GDP and employ 60 percent of the workforce in formal employment.
Biljon said that although South Africa is ranked 37th out of 144 countries for venture capital funding by the Global Competitiveness Report 2012/2013, small businesses, particularly those in the concept or start-up phase, struggle to find funding as financiers are reluctant to enter this high-risk funding arena.
The above can be attributed to the high failure rate of start-ups and the lack of security available for financiers to compensate risk and the high gearing required for seed capital.
Biljon continued “This limited funding and support for SMEs often results in innovative business ideas, many of which are developed at tertiary institutions, incubator programs, innovation hubs and industry groups, never getting off the ground.The Business Partners Venture Fund can now plug this hole.”
The fund will consider first round finance deals up to R10 million (approximatelty US$1.2 million), with the focus on the venture’s viability and high potential for growth. Consideration will be given to early stage investments after the research and development phase.
“We recognise the potential benefit that innovative and high growth enterprises can bring to the country. It is for this reason that the company is launching the fund – to finance exactly this type of high impact entrepreneur,” Biljon added.
Biljon said that often, the majority of financing deals are made available to SMEs in typical lifestyle businesses, such as coffee shops or small manufacturing outlets, which are considered the ‘safer’ option. “We feel that all businesses with the potential to reach ‘blue sky’ should be considered for funding, as SMEs within all sectors have the potential to flourish. We currently see great potential and opportunity within clean energy, agri-processing, bio-tech and ICT sectors, and want to give entrepreneurs the opportunity to develop new products or to take existing businesses to a new level.”
He also said that in order to achieve the goal of 5 million jobs created by 2020 set by government in the New Growth Path, businesses and in particular SMEs need to expand and provide more job opportunities for South Africans.
Business Partners Limited has more than 30 years experience in the SME sector, having assisted more than 69 000 businesses.“We understand that entrepreneurs need more than just money to be successful. Support, advice and mentorship are equally essential. SMEs funded by the Business Partners Venture Fund will benefit from our wisdom, experience and advice,” concludes Biljon.
Contact details for the Venture Fund
021 464 3600
021 464 3600
011 395 4150
Thys van Zyl
0 11 679 1110
031 240 7700
031 240 7700