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Fertile grounds need careful tending - the value of accelerator programmes to SA's start-ups

When Cape Town-based software development company Exclr8 was selected to be part of the Grindstone Accelerator Programme, CEO Alexander Mehlhorn wasn't sure what to expect. "We had already participated successfully in Microsoft's BizSpark+ programme for some time, and I thought this would simply be an evolution of that process. We quickly learned it was more like a revolution."

Mehlhorn says that, despite the programme's value proposition of potentially unlocking investment opportunities for participating companies, the real value for him lay elsewhere. "At our first session with the other finalists, the Grindstone team highlighted the fact that we were selling many different versions and iterations of our products and services. It became clear to us how confusing that must be to potential clients."

Keet van Zyl, co-founder of Grindstone, says the programme is designed to take high-growth companies out of their comfort zones and assists with packaging them for scaling up as a business. "Scale-up businesses will learn to identify and understand their growth gaps and be enabled to accelerate the execution of their business strategy. The desired outcome is that they are more sustainable and ready for investment by the end of the programme."

One of the most important questions Mehlhorn was faced with was: What processes do they need to put in place to become an established, mature company? "The honest truth is we didn't have these processes in place. As a small but growing company our focus rests on staff retention, client acquisition and getting work done. But this won't enable us to grow sustainably and become more successful. We needed a more refined strategy and renewed focus on how we want to do business. Since we undertook this process, it's turned the company around much better than we would have been able to do otherwise. And from this business strategy, a sales strategy has been solidified – we're already seeing the benefits."

Other questions were obvious once they were asked, but Mehlhorn says he didn't necessarily think of them before. "As an example, they asked whether we have a company financial dashboard that tells us what our current expenses and income is. It makes perfect sense to have it in place, but in a fast-paced entrepreneurial environment these procedures and practices are often lower on the list of priorities than day-to-day operational and client-facing activities. "

For Mehlhorn, it's critical to understand where they are going as a business and to communicate this to staff to get their buy-in. "We need to have the processes in place to grow as a business. You can't micro manage a large team, so you need to have formalised processes in place that ensure the entire team's activities are aligned and we are all working toward a common, shared purpose."

South Africa does not feature on the global list for top tech innovation hotspots, where emerging countries like Singapore and Israel rank highly. According to Van Zyl, however, South African entrepreneurs are different to those in more developed markets. "Local entrepreneurs generally focus on building sustainable companies with a long-term view, while in other parts of the world entrepreneurs often just hope to quickly sell the company at a huge profit. South Africa operates in an interesting space. We are at the mezzanine between First and Third World, making us a great test market for emerging technologies. Our entrepreneurs are renowned for applying inventiveness and tenacity to solve the very real problems we face."

He says the companies he's worked with during the Grindstone programme have fairly similar challenges in terms of their growth. "Most companies list funding and strategy as their main challenges. There's also the matter of building sales traction - nothing happens until you're selling something in large quantities. The good and bad of the type of companies we work with is that they often have a number of mutually exclusive revenue stream options, all with their own risk/return trade-offs. It boils down to choosing the right strategies and backing it up with the right resources - and this is where we can play a key role."

Van Zyl adds that the corporate partners bring immense value to the process. "Our biggest challenge is the opportunity cost of time. To aggressively grow companies is as hard as it's ever been, and there's typically no quick fix. We'd love to spend more time with each of the companies taking part in Grindstone, but the programme is more scalable when we bolster our skill-set with subject matter experts. Contrary to what the detractors say, there is money to invest in SA technology companies. We have many innovation-driven entrepreneurs and raw deal flow. What's missing is the conduit - packaging these opportunities in a way that makes the companies more sustainable and investment ready. That's the true value of Grindstone."

Applications for the next Grindstone intake commencing September 2014 are now open. Innovation driven SMEs that already have revenue and proven traction can apply by completing the KnifeCap Venture Funding Metrics Survey: https://www.surveymonkey.com/s/SAFundingMetricsGS

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Exclr8
Nicky Lundin
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