South African entrepreneurs want more business development support, while entrepreneurship is declining as a career option among young people, according to the results of the latest Seed Academy startup survey.
Conducted by Seed Academy and the WDB Seed Fund for the third year running, the “Real State of Entrepreneurship in South Africa” survey polled 1,200 entrepreneurs operating across any stage of business development.
Responses highlighted that South African entrepreneurs feel they need more business development support, covering business basics such as business planning and marketing support.
This was a key finding of the survey echoed across the well-educated and experienced group of participants – with 65 per cent of survey respondents in possession of a post-matric qualification, and 85 per cent having at least one year’s work experience before starting a business.
The survey showed a decline in young entrepreneurs (aged below 35 years), from 63 per cent of respondents in 2016 to 57 per cent in 2017. Seed Academy flagged this as “cause for concern”, given South Africa’s unemployment figures.
“Given the strategic focus on youth owned businesses by the South African Government, why is the participation of youth in entrepreneurship moving in the opposite direction to what we would expect?” the report asks.
In more positive findings, the survey revealed a rise in female entrepreneurs, who accounted for 47 per cent of respondents.
“Encouragingly, we are seeing the gap between the number of male and female entrepreneurs start to narrow as women represented 47 per cent of entrepreneurs surveyed. This gives some indication that efforts focused on the development of women owned businesses are beginning to pay off. Similar initiatives are now urgently needed to develop youth entrepreneurs so that entrepreneurship is viewed as a ‘real’ career option,” said Donna Rachelson, chief executive officer (CEO) of Seed Engine.
Access to financing continues to be a sticking point for entrepreneurs, with 43 per cent of respondents citing financing as their most pressing challenge. Only 18 per cent of those surveyed said they had previously applied for funding from banks or development institutions; while 95 per cent said their businesses were primarily self-funded, or funded by family and friends.
“Some entrepreneurs indicated that they simply don’t know where to go for funding, especially in light of the fact that most early-stage business funding requirements are below the ZAR100,000 (US$7,660) threshold. There is certainly a case to be made for funding providers to revise certain requirements to better accommodate the unique needs of small and early-stage businesses,” said Rachelson.
“Of course, one unfortunate implication of self-funding is that growth potential is limited to the owner’s own pocket and diminishes the ability for a small business to increase capacity, hire more staff, and make a more meaningful impact on the South African economy.”