Entrepreneurship is a powerful method for job creation, with small businesses forming the backbone of the economy. However, despite its importance, only eighteen out of every 100 South Africans aged 24 to 34 are entrepreneurs, according to the Mail & Guardian.
This low rate highlights a critical need for increased support to help businesses not only sustain themselves but also achieve significant growth and scale. Simply meeting compliance requirements is often not enough to secure funding. You need to know how to stand out by demonstrating significant promise and potential for growth.
This article walks you through actionable steps to improve your chances of being noticed and funded, especially by venture capitalists, private equity firms, angel investors, development finance institutions, and even government grant panels.
1. Position Your Business as a Problem Solver
Funders are looking for more than a well-managed business. While that goes a long way, they want scalable problem-solvers. Good businesses solve problems and stand out to funders. In South Africa’s context, funders look for solutions that relate to the economic and social climate.
Let’s say your business sells natural hair care products, to stand out, consider how you differentiate yourself. Perhaps you use indigenous ingredients to reduce import dependency or upskill and work with local communities to decrease the unemployment rate.
Use data to validate the problem and illustrate how funding can create opportunities to solve it effectively.
2. Build a Story That’s Bigger Than the Brand
What separates great businesses from forgettable ones isn’t just the product, it’s the story behind it.
When funders sit across the table from you, they want to know who you are. Not just your CV, but your why. Why this product? Why now? Why are you the one to deliver it?
Tell a story that connects your personal background to the market’s needs. Investors are more likely to bet on founders with deep insight and connection to the problem they’re solving.
This doesn’t mean throwing around a bunch of sad stores. It means showing them that you understand your audience better than anyone.
3. Validate First, Fund Later
One of the biggest mistakes young entrepreneurs make is waiting for funding before starting. In today’s lean startup environment, funders want proof of traction before they put down a cent.
Focus on showing traction by acquiring customers without external funding. Test your service in a targeted area, such as a specific township, street, or province.
Gather testimonials, build a waiting list, or get user feedback, even if your product is still in development. Validation reduces risks to the investment for funders and shows you’re serious.
4. Learn the Language of Funders
You might have heard about speaking the language of funders, but what does that really mean? You must know how to translate your idea in a way that aligns with what the funder is looking for. This could be anything from matching their criteria or researching the funder to ensure you have common values.
You might have a powerful idea, but if you don’t speak investor language, you’ll lose the room. Additionally, learn to present your business in terms of unit economics (cost per product vs. revenue per product), customer acquisition cost, lifetime value, gross margin, and market share opportunity.
Funders are looking for the business beneath the idea. If you’re going for grant funding or government support, understand their metrics. This could include job creation, B-BBEE compliance, rural outreach, and female empowerment.
5. Build Social Proof
One of the fastest ways to gain funder trust is by showing who already trusts you. This could be through participation in a business incubator, media profiles of your story, or partnerships with schools, municipalities, or NPOs to distribute your product.
Social proof tells investors others have already vetted you. Additionally, knowing how to manage your business’s reputation is crucial. Make it a priority to encourage your customers to leave reviews of your business.
6. Be Financially Organized
Yes, registering with the CIPC is important. So is having a tax number, B-BBEE certificate, and business bank account. But that’s not enough.
If you want to stand out, your financials need to be clean, tracked, and explainable. Have an income statement and cash flow projection, even if it’s just for six months.
Use accounting tools that are suitable for SMEs. These tools should be easy to use, especially if you’re a one-person business and don’t have hours to waste learning a new system.
Stand Out and Get Funded
Now that you have these tips, you can go back to the drawing board: position yourself as a problem-solver, clean up your finances, and articulate your unique value proposition.
Show funders not just a business, but a movement, a solution to a real-world challenge. This isn’t just about securing capital, it’s about building a sustainable future for your business.
