Adrian Gore on the the only real sustainable job creator for South Africa

The South African economy and jobs market will reap the benefits if we are able to accelerate the growth and extend the reach of high-impact local entrepreneurs onto the global stage, says Adrian Gore, chief executive officer of Discovery and chair of the SA SME Fund.

Speaking at the launch of the Endeavor and SA SME Fund Local Scale Up programme on Thursday (25 March), Gore said: “Successful entrepreneurs are economy agnostic. Smart entrepreneurs know that cycles come and go, and that the best time to invest and build is when times are tough. When others are distracted and ambivalent, opportunities are underpriced.”

The Local Scale Up (LSU) programme is focused on expediting the local and international growth of successful entrepreneurs who run high-impact businesses. These are primarily tech-enabled businesses, built by experienced entrepreneurs, which scale quickly and outperform their peers, driving revenue growth and creating jobs.

The LSU is led by Endeavor South Africa, whose model is geared at helping scale high growth businesses locally and prepare them for the global stage.

Between 2017 and 2020, the 28 companies in the Endeavor SA’s portfolio had an average annual revenue of R200 million, a realised weighted average revenue growth of 24% per annum, and had increased employment by 16% annually (a total of 11,535 employees in 2020 alone, of whom more than 75% are black).

These SA Endeavor entrepreneurs tripled their capital raising from R700 million in 2019 to R2 billion in 2020, and are forecast to raise more than R3 billion in 2021, an increase that has been fueled by the growth of quality businesses and an increased appetite for these type of companies from international venture capital firms.

Gore said it is also a myth that big business can drive the job creation this country needs, saying that entrepreneurial activity is the only real sustainable job creator.

“Big business, at scale, can only sustainably increase their top lines at GDP growth levels, so in order to achieve earnings growth that shareholders require, they have to focus on efficiency and expense reduction, which inevitably results in headcount squeeze. High-impact entrepreneurs, on the other hand, have the ability to quickly absorb capital and create jobs.”

A central plank of the SA SME Fund’s mandate is to create an innovative and entrepreneurial local ecosystem and help scale high-growth entrepreneurs. It does this via its investments in numerous venture capital funds, including Knife Capital, the University Technology Fund, and 4Di, and by supporting the growth of highly scalable, more established businesses.

Alison Collier, MD of Endeavor South Africa, said: “We are seeing more and more SA tech enabled entrepreneurs successfully setting up their businesses and tech development teams in South Africa, and selling their solutions to the large international markets, including the US, Europe and Asia.

“The last year’s boom in remote working has only increased this opportunity for SA and it’s great to see local entrepreneurs capitalising on this.

“The right introduction into a trusted network saves entrepreneurs months, or even years of work. This minimizes cash burn and fast tracks the business’ revenue growth. Learning from successful entrepreneurs who have ‘been there and done it’ is invaluable.

“The advice shared refines a business’ value proposition and growth plans, ensuring teams avoid many costly pitfalls. This model is gold for accelerating their success.”

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