Online portal Corculture, which acts as a way to bring entrepreneurs and investors together, has received more than 250 applications from entities seeking funds since its launch about six months ago.
Corculture came about as the result of CEO David Seinker's own bid to raise funding, which led him to a global site that allows people to list ideas and raise capital. He says he successfully raised cash through the venture, and decided there was a gap for such a venture in SA.
Seinker took the concept to Brian Horwitz a qualified chartered accountant with a background in finance and property, who took on the role of CFO. The site offers an opportunity to early-stage entities to raise funding across several sectors, including technology and telecoms, says Seinker.
Assessment criteria
Entrepreneurs submit their application through Corculture's online platform and should their application be compelling enough, Corculture will meet with the entrepreneur, and a review and assessment of the business plan, historical financials and projections will be conducted.
After reviewing the business plan and key financial indicators, approved entrepreneurs will then present a deal summary to Corculture's investment group, says Seinker.
Opportunities are listed on the site for three months and, if investors are keen, they can watch a video pitch of the opportunity, says Seinker. He adds that Corculture also does the introduction between the entrepreneur and investor.
Funding gap
Corculture focuses mostly on early-stage businesses to determine whether they have the potential to emerge into profitable and sustainable growth companies suitable for providing an exit strategy for its group. Only those businesses that meet its approval criteria will qualify to present to its investment group.
Although Corculture targets early stage post revenue companies, the investment group also invests in more established later stage organisations. Its funders seek to invest between R5 million and R30 million per transaction, although it will look at deals up to R100 million.
Once investment has been raised, Corculture charges a fee of 5% of the value of the funding and does not take an equity stake, says Seinker.
"Some see us as the 'Dragon's Den' of SA, as we have a group of high-net worth individuals who are eager to engage in investment opportunities. Banks are not lending to early stage companies, so this leaves a gap in the funding market.
"The bottom line is that the venture capital market in Africa is underdeveloped but still has much growth potential, and we believe that new digital platforms such as this will help accelerate this growth, particularly due to the online focus and measurability." says Seinker.
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